Impact of Financial Budget on Startups

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The Union Budget 2025-26 has brought several key measures and believed to promisingly shape the future of the Indian startup ecosystem. It laid out some essential steps to sSupport startups in fundraising, credit access and innovation. One significant announcement is the extension of Startup Mission’s flagship INR 10,000 crore fund. The financial support available to the startups will now be doubled.

Another notable step is the extension of tax exemptions under Section 80-IAC for startups until April 1, 2030. The government wants to give more financial room to scale their operations by reducing tax burden. This will lead to more investment in research and expansion of workforce. Announcement was also made to enhance credit guarantees from INR 10 crore to INR 20 crore for startups in key sectors which aligns with the broader push for self-reliance.

The budget simultaneously is also looking ahead to strengthen the manufacturing sector and it is a crucial area for startups which are seeking to build hardware and electronic products domestically. Import duties for critical minerals used in EV batteries and electronics have been reduced to lower the production costs and make local manufacturing more viable. An increase in customs duty on certain components is believed to encourage Indian companies in developing indigenous alternatives. It may help in strengthening a stronger domestic supply chain and could benefit startups amid an attempt to position India as a competitive player in global manufacturing.

The establishment of digital public infrastructure BharatTradeNet (BTN) for trade documentation and financing is learned to simplify export processes. This may reduce barriers for startups which are aiming to enter global markets. The introduction of the Export Promotion Mission is further said to help businesses and particularly in the MSME sector to access international trade opportunities.

Proposal has been made to explore a deeptech fund of funds and this reflects an acknowledgment of the need to nurture startups working on advanced technologies.

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