Union Budget 2025-26: Key Announcements and Benefits for Startups in India

The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman, has introduced a series of measures aimed at fostering India’s growing startup ecosystem. From a ₹10,000 crore Fund of Funds to tax exemptions until 2030, the government is reinforcing its commitment to innovation and entrepreneurship.

However, while these policies provide crucial support, startups need the right strategy to take advantage of them effectively. Whether it’s securing funding, navigating tax incentives, or scaling operations, understanding the roadmap is key.

Key Announcements for Startups in Budget 2025-26

1. ₹10,000 Crore Fund of Funds for Startups

A ₹10,000 crore Fund of Funds (FoF) has been announced to boost venture capital investments in early-stage startups. This initiative builds on the 2016 FoF, providing easier access to funding for emerging businesses.

What This Means for Startups:

• More opportunities to attract venture capital and institutional funding.
• Greater financial backing for early-stage startups.
• Potential ease in securing investment for high-growth sectors.

2. Tax Exemption Extended Until 2030

Startups incorporated before April 1, 2030, can avail tax benefits under Section 80-IAC, allowing eligible businesses to claim tax exemptions for three consecutive years.

Why It Matters:

• Reduces the financial burden in the initial growth years.
• Encourages more entrepreneurs to formally register their startups.
• Provides a longer runway for startups to establish sustainable revenue streams.

3. Enhanced Credit Guarantee for Startups

The credit guarantee cover for startups has been doubled from ₹10 crore to ₹20 crore, supporting businesses in 27 focus sectors, including aerospace, defense technology, IT, and renewable energy.

How Startups Benefit:

• Easier access to credit for expansion and operations.
• Improved financial stability for capital-intensive startups.
• Greater alignment with the government’s Atmanirbhar Bharat initiative.

4. Incorporation Period Extended for Tax Incentives

The eligibility period for startups to avail tax benefits has been extended by five years, allowing more startups to qualify for incentives until 2030.

Why This Is Important:

• Gives startups more time to register and qualify.
• Aligns with India’s long-term startup growth strategy.
• Supports innovation across multiple emerging industries.

5. Deep Tech Investments & a New Fund of Funds

The government is considering a dedicated Deep Tech Fund of Funds to promote startups working in AI, blockchain, quantum computing, and advanced robotics.

Opportunities for Startups:

• Increased investment in cutting-edge technology.
• More research and development opportunities.
• Encouragement for Indian deep-tech companies to compete globally.

How to Maximize These Opportunities?

While these policy measures offer a favorable environment, startups need a structured approach to turn these benefits into real growth.

Here’s how you can take action:

• Explore Funding Options: Apply for Fund of Funds opportunities or approach venture capitalists who benefit from these initiatives.
• Leverage Tax Exemptions: Ensure proper registration and tax compliance to avail Section 80-IAC benefits.
• Utilize Credit Support: If you’re in manufacturing, renewable energy, or deep tech, consider applying for enhanced credit guarantee schemes.
• Stay Updated: Follow government notifications and schemes to ensure you don’t miss out on critical incentives.

Need Help Navigating the Startup Ecosystem?

If you’re looking to start or grow your business with minimal investment, programs like LIST (Low-Investment Startup Training Program) offer valuable support.

How LIST Supports Startups:

✔ Funding & Investment Guidance: Learn how to access government funds and investor networks.
✔ Tax & Compliance Support: Step-by-step guidance on tax exemptions and startup incorporation.
✔ Idea Validation & Business Structuring: Get expert advice on validating your business idea and creating a sustainable model.
✔ Proprietary Tools & Templates: Access resources like business plan templates, pitch decks, and financial models.
✔ One-on-One Mentorship: Gain insights from successful entrepreneurs and investors.

Whether you’re a first-time founder, student, freelancer, or aspiring entrepreneur, this is the time to take action!

The Union Budget 2025-26 reflects the government’s strong focus on empowering Indian startups. These measures provide financial relief, investment opportunities, and credit support, creating a promising environment for entrepreneurs.

To make the most of these opportunities, startups need clear strategies, mentorship, and access to funding resources. Whether you are in deep tech, manufacturing, or services, this is the right time to act.

What’s Next?

If you found this helpful, share it with fellow entrepreneurs and stay tuned for more updates on startup-friendly government initiatives!