India Budget Boosts Startup Ecosystem: Fund of Funds, Tax Benefits

New Delhi, Feb 1 (PTI) The Union Budget 2025-26 marks a significant milestone for India's startup ecosystem and reinforces the nation's position as a global innovation powerhouse, say startup players.

On Saturday, Finance Minister Nirmala Sitharaman announced a new Fund of Funds Scheme (FFS) with a corpus of Rs 10,000 crore to promote the growth of budding entrepreneurs in the country.

"This budget is a big win for India's startup ecosystem. The Rs 10,000 crore Fund of Funds, along with extended tax benefits and regulatory reforms, will provide the much-needed capital and ease of doing business for emerging ventures," said Shashvat Nakrani, Founder, BharatPe.

Startup Policy Forum (SPF) President and CEO Shweta Rajpal Kohli said the creation of a new Fund of Funds will provide crucial financial support to emerging startups.

"The introduction of a new scheme to support 5 lakh first-time women entrepreneurs is a bold and inclusive step forward. Furthermore, the establishment of 50,000 Atal Tinkering Labs and a Centre of Excellence for AI in education, with an outlay of Rs 500 crore, will further strengthen India's innovation ecosystem, enabling future generations of tech leaders.

"These initiatives, coupled with extended tax benefits and the ability to carry forward losses for three years, provide the stability and support that startups need to thrive, paving the way for sustainable growth and success," she said.

In 2016, the government launched a similar scheme with a corpus of Rs 10,000 crore, with contributions spanning the 14th and 15th Finance Commission cycles.

The scheme was set up to catalyse venture capital investments and is operationalised by the Small Industries Development Bank of India (SIDBI), which provides capital to the Securities and Exchange Board of India (SEBI)-registered AIFs, which in turn invests in startups.

Zepto CEO Aadit Palicha stated that the budget reflects a consistent effort to guide India's economy with a mindset of free enterprise, while promoting growth and sustainability.

"As a consumer tech company, we are excited about the opportunity to add buoyancy to the economy, especially as demand increases across emerging markets," he said, adding that a push towards entrepreneurship and the internet ecosystem will build the foundation for the country's growth story.

Rukam Capital Founder & Managing Partner Archana Jahagirdar welcomed the move, saying, the Fund of Funds for Startups (FFS) scheme reaffirms the government's dedication to fostering innovation and entrepreneurship.

"This renewed fund which aligns with the Startup India Action Plan and initiatives like the Startup Mahakumbh has played a pivotal role in driving India's startup boom since its inception. We believe that increased financial support from the government, alongside efforts to reduce capital constraints and collaboration with industry will further accelerate the growth of Indian startups," she said.