By Erick None of the links below are affiliate links, and I am not earning any commission from any of these services or websites. The purpose of these links are only to serve as examples to get my point across to you, which is that the Union Government basically wants numerous new Tech startups in India this year.
It’s been just over a week since the 2025 Union Budget was announced. Everyone is still talking about the ₹12 lakh tax bracket, but that’s not what I’m going to talk about (I’d like to pretend taxation is my area of expertise when nothing could be further than the truth). Let’s look at something that may be equally (if not more) impactful for the economy and India’s road to global tech dominance in the long run.
I was looking for incentives announced by the Finance Minister – and incentives particular to the ecosystem of startups in the field of Tech India. And there’s good news there.
It feels in some way that the 2025 Union Budget is designed as a “transformative blueprint” for India’s startup ecosystem, particularly targeting tech-driven ventures. I mean, there are financial commitments, tax reforms, and innovation-focused policies. The government clearly aims to advance India’s position as a global hub for cutting-edge entrepreneurship.
Let me remind you that my writing is entirely independent and objective – free from any pressure arising out of affiliate / monetization programs and political connections or politically exposed persons. You are free to disagree with my reasoning below – but do our community a service and comment your agreement or disagreement on this post.
Let’s get into why and how. And if you’re a tech startup founder in India – let me send you my CV (*bats eyelids*) please.
1. Massive Capital Infusion for Startups
My favorite acronym from now is FFS – Fund of Funds for Startups (not what you were thinking).
The budget contains the ₹10,000 crore expansion of the Fund of Funds for Startups (FFS). This scheme channels capital through SEBI-registered Alternative Investment Funds (AIFs), which then invest in high-potential startups.
FFS, managed by SIDBI, bringing the total corpus to over ₹1 lakh crore. This fund provides indirect equity support to startups via SEBI-registered Alternative Investment Funds (AIFs). Since its inception, the FFS has served as a catalyst for over ₹90,000 crore in investments, and this fresh allocation will further democratize access to domestic capital.
For deep tech—a priority area spanning AI (*eyeroll*), quantum computing, and semiconductors—a dedicated ₹20,000 crore Fund of Funds was announced. Structured to empower professional fund managers, this initiative aims to de-risk R&D investments and accelerate commercialisation of breakthrough technologies.
2. Easier Credit Access for Early-Stage Ventures
Recognizing the funding challenges faced by startups, the Credit Guarantee Scheme has been enhanced:
- Coverage doubled from ₹10 crore to ₹20 crore per startup.
- Guarantee fee reduced to 1% for loans in 27 critical sectors under Atmanirbhar Bharat, including clean energy and semiconductors.
This move is expected to incentivize banks to lend to startups, reducing reliance on equity dilution during fragile growth phases. Maybe this will also ease up the IPO craze, or at least not have “IPO stage” as one of the objectives of starting up.
Of course, the issue with credit is you have to pay it back… unless you’re Vijay Mallya.
3. Tax Incentives and Compliance Simplifications
- Tax holiday extension: Startups incorporated before 31 March 2030 can now claim a 3-year tax holiday. This is HUGE – ask your CA because I’m bad at explaining Tax related stuff (if you’re Mr. Prasanna Kumar from Loyola College – my old Tax professor – sorry Sir).
- Reduced TDS/TCS burdens: Provisions aim to ease cash-flow constraints for small businesses.
- Updated return filing window extended from 2 to 4 years, providing flexibility for corrections.
Nothing about GST – and that in itself is a Tax related win. Yay.
4. AI and Deep Tech: Building a Future-Ready Workforce
I promise you there will be a day very soon when we can go one full frikkin’ day without talking about AI. Anyway.
The budget earmarks ₹500 crore for a Centre of Excellence (CoE) in AI to drive innovation in education and industry. Additionally, 10,000 PM Research Fellowships will support AI, robotics, and semiconductor research at IITs and IISc.
As Prashanth Prakash of Accel India noted, “This ensures homegrown startups can compete globally”.
5. Support for Gig Workers and MSMEs
- Jan Arogya health insurance extended to gig workers (freelancers, informal sectors, etc.), alongside identity cards for formal recognition.
- MSME credit limits raised, with customised credit cards for micro-enterprises and revised thresholds to encourage scaling.
6. Regulatory Reforms for Faster Growth
- Faster mergers enabled via simplified processes. How this will work remains to be seen.
- 27 focus sectors prioritized under Atmanirbhar Bharat, including EVs, drones, and agritech.
The Road Ahead
The 2025 budget signals a clear vision: India’s tech startups are vital to achieving the Viksit Bharat 2047 goal. By combining capital access, tax relief, and sector-specific innovation programs, the government is empowering young entrepreneurs to solve local and global challenges.
As Siddarth Pai of 3one4 Capital emphasized, “These measures will foster a new generation of deep-tech entrepreneurs shaping global markets”.
For aspiring founders, there’s never been a better time to innovate, scale, and lead India’s tech revolution.
On a personal note – I used to be a startup founder in India, it was the best year of my life. I moved back into corporate slavery that included leaving India to work elsewhere. In hindsight, if I had used any or all of the Government led incentives offered to the startup ecosystem, life would have surely been different and I would have built something of value, which almost every startup founder wants to do. It is my wish that Indian tech geniuses (what’s the plural of genius) continue to stay in India and contribute to Tech India while making enough money for themselves and the community.
If you’re a startup in India – the road will still not be easy, but more power to you!
Thank you for reading! My name is Erick and I am an Indian Tech blogger and content creator. I talk about more than just new gadgets and software – I talk about tech policy, trends and consumer behaviors that you need to know about and that could be affecting you, so you can make more informed tech related decisions. I stay out of sponsorships, affiliates or sponsored content so that you can be assured that my reporting is completely independent.
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