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CA Deepak Maheshwari, Co-Founder DealPlexus com
The Union Budget 2025-26 brings a promising boost for the Indian startup ecosystem. The extension of tax holidays, expansion of the Fund of Funds, and the introduction of a dedicated Deep Tech Fund are welcome moves that will enhance capital availability and encourage innovation. The emphasis on research fellowships and AI-driven education will help build a future-ready workforce, supporting long-term growth. Additionally, the inclusive entrepreneurship initiatives signal the government’s commitment to fostering a diverse startup culture. We look forward to seeing swift implementation and industry collaboration to maximize these benefits. This Union Budget 2025-26, presented by Hon’ble Finance Minister Smt. Nirmala Sitharaman, underscores the Indian government's commitment to fostering innovation and entrepreneurship within the startup ecosystem.
Key announcements aimed at bolstering startups include:
1. Enhanced Funding Initiatives
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New Fund of Funds for Startups: The government has introduced an additional ₹10,000 crore to the existing Fund of Funds, effectively doubling its support to ₹20,000 crore. This move is anticipated to catalyze significant investments into early-stage startups, providing them with essential growth capital.
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Exploration of a Deep Tech Fund: Recognizing the potential of emerging technologies, the government plans to establish a dedicated Deep Tech Fund. This initiative aims to support startups specializing in advanced sectors such as artificial intelligence (AI), robotics, blockchain, and clean energy, ensuring India remains at the forefront of technological innovation.
2. Tax Incentives and Regulatory Reforms
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Extension of Tax Holiday: The eligibility window for startups to claim tax holidays has been extended until March 31, 2030. This extension provides startups with a longer horizon to benefit from tax exemptions, thereby enhancing their financial viability during the critical early years.
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Simplification of Taxation: The forthcoming introduction of a new Income Tax Bill aims to simplify tax structures, provide greater certainty, and reduce litigation. This reform is expected to create a more conducive environment for startups by minimizing compliance burdens.
ey.com
3. Support for Research and Development
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Technological Research Fellowships: The government has announced 10,000 fellowships for technological research at premier institutions like IITs and IISc under the PM Research Fellowship Scheme. This initiative is designed to foster innovation and support startups engaged in cutting-edge research.
4. Empowerment of Women and Marginalized Entrepreneurs
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Inclusive Entrepreneurship Scheme: A new scheme targeting first-time women entrepreneurs, as well as those from Scheduled Castes and Scheduled Tribes, has been launched. The program aims to support 500,000 entrepreneurs over the next five years, promoting diversity and inclusivity within the startup ecosystem.
5. Infrastructure and Skilling Initiatives
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Global Capability Centres (GCCs) in Tier II Cities: A national framework will be established to assist states in promoting GCCs, thereby enhancing talent availability and infrastructure in Tier II cities. This move is expected to decentralize startup activities and stimulate regional innovation.
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Centre of Excellence for AI in Education: With an allocation of ₹500 crore, a Centre of Excellence for AI in Education will be set up to integrate artificial intelligence into the educational sector, fostering a future-ready workforce adept in emerging technologies.
m.economictimes.com
Industry leaders have lauded these initiatives, viewing them as transformative steps toward strengthening India's startup ecosystem. The enhanced funding, coupled with regulatory reforms and a focus on research and inclusivity, is anticipated to drive innovation, attract investment, and position India as a global leader in technology and entrepreneurship.