India's Union Budget 2025: Boosting Startups, MSMEs, and Innovation

How Startups & MSMEs are ready to boost-up with Union Budget 2025

Transformative Budget That Fuels Innovation, Strengthens Financial Access, and Accelerates India's Self-Reliance The Union Budget 2025 has set the stage for a transformative leap in India's startup and MSME ecosystem. At a time when entrepreneurship is driving economic growth and job creation, the government has introduced a series of bold measures that provide not just financial support but a clear roadmap for innovation, expansion, and global competitiveness. One of the biggest takeaways from this budget is the enhanced access to capital. The expansion of the Credit Guarantee Scheme will make it easier for MSMEs and startups to secure funding without collateral, addressing one of the biggest pain points for emerging businesses. The Mudra loan limit has been significantly increased, ensuring that early-stage entrepreneurs can scale their ventures without financial roadblocks. Additionally, the rationalization of tax structures, lower corporate tax rates, and simplified GST compliance will ease cash flow constraints, allowing startups and MSMEs to reinvest in growth. Beyond financial reforms, the budget has taken a futuristic approach by integrating infrastructure development with digital transformation. The allocation for plug-and-play industrial parks and logistics hubs will provide businesses with ready-to-use infrastructure, significantly reducing setup costs and accelerating time-to-market. The introduction of e-commerce export hubs will open new global opportunities for startups and small businesses, particularly in manufacturing, agritech, and handicrafts. Moreover, a renewed push for AI-driven automation and deep-tech innovation ensures that Indian startups remain at the forefront of global technological advancements. Perhaps the most game-changing aspect of this budget is its emphasis on regulatory simplification and skill development. By easing compliance norms, streamlining FDI regulations, and encouraging private sector collaboration in skilling initiatives, the government has created an ecosystem where startups can focus on scaling rather than navigating bureaucratic hurdles. With these measures, the Union Budget 2025 is not just a policy announcement -- it is a bold commitment to making India the world's most dynamic startup hub. By fostering financial inclusion, technological progress, and business-friendly regulations, this budget ensures that Indian startups and MSMEs do not just survive but thrive on the global stage, accelerating the nation's journey toward Atmanirbhar Bharat. Ankit Kumar, CEO, Skye Air said, "The Union Budget 2025 strengthens India's startup and MSME ecosystem with a ₹10,000 crore fund, ensuring better access to capital and innovation support. Transforming India Post into a vast logistics network with 1.5 lakh rural post offices will enhance supply chain efficiency, benefiting small businesses nationwide. Simplified tax structures and compliance reforms will further ease operations, fostering growth and scalability. By integrating digital infrastructure with financial incentives, the budget paves the way for startups and MSMEs to expand, innovate, and compete globally, reinforcing India's position as a hub for entrepreneurship and self-reliance under Atmanirbhar Bharat". We, at WTC Business and Industry Association (WTCBIA), welcome the government's initiatives to boost economic growth, entrepreneurship, and innovation. The budget announcements, particularly those related to MSMEs, startups, and exports, are a step in the right direction. The introduction of the Mutual Credit Guarantee Scheme for MSMEs and the expansion of SIDBI branches will improve access to credit. The government's focus on promoting entrepreneurship, innovation, and skill development will also foster a culture of innovation among our youth". We believe that these initiatives will have a positive impact on the industry and the economy at large, said Mr Pradeep Agrawal, President, WTC Business & Industry Association (WTCBIA) The announcement of the National Geospatial Mission is a game-changer for India's startup and MSME ecosystem. By enhancing geospatial data capabilities, this initiative will empower businesses with better insights for logistics, infrastructure, and resource management. Leveraging AI and advanced computing, startups can drive innovation in sectors like agritech, smart mobility, and climate tech. The mission's open data-sharing framework will reduce dependency on foreign sources, fostering self-reliance and accelerating growth. With greater access to accurate geospatial data, MSMEs and startups can optimize operations, expand efficiently, and contribute to India's vision of Viksit Bharat as a global technology leader, said Saurabh Rai, CEO, Arahas Technologies The government's initiatives to boost India's startup ecosystem and MSME sector are a welcome move. The extension of the period of incorporation for startups by five years will provide a significant boost to innovation and entrepreneurship. Additionally, the allocation of ₹20,000 crore to support private sector-driven research and the expansion of infrastructure at IITs will create a conducive environment for innovation and growth. The introduction of the Credit Guarantee Startup Scheme (CGSS) and the Customised Credit Card for Micro Enterprises (ME-Card) will improve access to credit for startups and MSMEs, driving growth and development. Furthermore, the Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME) will facilitate collateral-free loans, giving a major boost to the manufacturing sector. These initiatives will empower the next generation of entrepreneurs, researchers, and innovators, and we look forward to seeing the tangible results of these efforts", said Mr. Ashish Gupta, CEO, Fretbox The government's initiatives to boost MSME growth, a significant step towards furthering the Make in India vision. The Mutual Credit Guarantee Scheme for MSMEs, with guarantee coverage of up to ₹100 crore, will facilitate collateral-free loans and boost the manufacturing sector . Enhanced credit assessment models utilizing digital footprint scoring will improve access to credit. Expansion of SIDBI branches and increased Mudra loan limits will provide direct credit to more MSMEs. These initiatives demonstrate the government's commitment to supporting MSMEs, which account for 45% of India's exports", said Dr Mahesh Gupta, CMD, Kent RO

Budget 2025: Startups Cheer Doubling Fund Of Funds, Credit Support, Inclusive Steps

The budget also introduced a scheme providing term loans of up to INR 2 Cr for five lakh first-time women, Scheduled Castes (SC) or Scheduled Tribes (ST) entrepreneurs The Union Budget 2025-26 has reinforced the government's commitment to fostering India's thriving startup ecosystem, which is the third largest in the world. With startups being crucial in the country's economic growth and innovation landscape, the budget has introduced significant financial support and policy measures to accelerate their progress. After a challenging phase of funding winter marked by mass layoffs and shutdowns across 2022 and 2023, the Indian startup ecosystem has shown signs of revival in 2024. According to the 'Annual Funding Report 2024' by Inc42, homegrown startups secured over $12 Bn in fresh investments, which was a steep 20% increase from the $10 Bn they had raised a year back. This upward trend set an optimistic tone for 2025, which was firmed up further by the budget boosters. Finance Minister Nirmala Sitharaman in her budget speech today (1 February) announced an expansion in credit guarantee cover and a INR 10,000-Cr government-backed Fund of Funds to catalyse flow into Alternate Investment Funds (AIFs). The budget also introduced a scheme providing term loans of up to INR 2 Cr for five lakh first-time women, Scheduled Castes (SC) or Scheduled Tribes (ST) entrepreneurs for the next five years, building upon the success of Stand-Up India. Sitharaman's eighth budget could be a game-changer, especially for early-stage startups in the deeptech domain that often struggle for investor attention. According to experts, these measures will drive innovation, bolster deep-tech growth, and create a more inclusive entrepreneurial landscape. Doubling Of Fund Of Funds One of the most appreciated moves in the budget was doubling the corpus for Fund of Funds for Startups (FFS) scheme, adding INR 10,000 Cr to the existing INR 10,000 Cr kitty. "The Alternate Investment Funds (AIFs) for startups have received commitments of more than INR 91,000 Cr. These are supported by the Fund of Funds set up with a government contribution of INR 10,000 Cr. Now, a new Fund of Funds, with expanded scope and a fresh contribution of another INR 10,000 Cr will be set up," Sitharaman said. "My take is that this fund should be deployed more towards start-ups that struggle to secure funding easily, particularly deep-tech start-ups. These ventures often face challenges in attracting VC investments because their journey to revenue and profitability is much longer," suggested Rajesh Rahthi, founder of GRIDsentry and a CII Member. Rathi was echoed by Chirag Shah, who leads fundraising and strategy at BlackSoil. Shah said the boost to the FFS will drive innovation across sectors like fintech, healthtech, and clean energy, providing crucial support for early-stage startups. The FFS scheme was launched in 2016 to provide a boost to the Indian startup ecosystem and drive capital inflow. The Centre committed more than INR 10,500 Cr for AIFs under the FFS scheme by the end of 2023-24. Rathi said that from a broader perspective, expanding the scope of the Fund of Funds will have several key outcomes. First, it will help smaller start-ups meet their initial funding needs, letting them implement and scale their ideas. But to support larger and more ambitious innovations, the quantum of funding must continue to grow. At the same time, there needs to be better oversight on fund utilisation. Whenever such financial support is introduced, there will always be elements looking to exploit it. Stronger monitoring mechanisms are needed to ensure that the funds reach the right startups and are used effectively. "By routing funds through SEBI-registered AIFs, the government leverages the expertise of professional fund managers, minimising the risk of inefficient capital allocation and reaffirming its confidence in startups as engines of economic growth and job creation. The scheme's long-term success will hinge on sectoral priorities, regulatory reforms, and infrastructure," Shah said. Deeptech Fund: A Boost For AI According to industry experts, what is more important for the startup ecosystem is the commitment for deeptech funds. The doubling of the corpus for Fund of Funds is a step in the right direction, said Ankit Kedia, founder and lead Investor of Capital-A. "What really stands out is the proposed Deep Tech Fund of Funds - recognising that frontier innovation in AI, manufacturing, energy transition, semiconductors, and cybersecurity needs patient capital," he said. The finance minister allocated INR 20,000 Cr to implement a private sector-driven research, development, and innovation initiative. As part of this effort, a Deeptech Fund of Funds will also be explored to catalyse the next generation of start-ups, she said. Ashish Bhatia, founder and CEO of India Accelerator, is upbeat on the Deep Tech Fund of Funds. This initiative will provide the capital necessary to scale disruptive ventures in AI, quantum computing, and frontier technologies, strengthening India's position as a global leader in deeptech innovation, he said. "The move signals a clear intent from the government to position India strongly in the global AI race, which is a much-needed boost for deeptech startups, specially in AI and space tech," Sridhar Parthasarathy, cofounder and general partner at Bluehill.VC, said. Higher Credit Support For Growth Besides increasing the funding support, the government has also introduced measures to improve access to credit for start-ups. The credit guarantee cover will be enhanced from INR 10 Cr to INR 20 Cr, with the guarantee fee moderated to 1% for loans in 27 focus sectors crucial to the Atmanirbhar Bharat initiative. According to Mayuresh Raut, cofounder and managing partner at Seafund, the credit guarantee enhancement will not only help startups gain access to debt capital, it will also help them scale faster with less equity dilution. "It will lead to a virtuous cycle of higher topline, less equity dilution, better valuation and better fundraise," he said. Experts believe that it will also boost the manufacturing sector, particularly for startups that lack sufficient collateral to secure loans from banks. This move is expected to improve their access to credit and support their growth. Parthasarathy said that while equity funding through AIFs is essential, there is an urgent need for debt financing for startups. The introduction of a credit guarantee will help them achieve a balanced mix of equity and debt funding, making the growth more sustainable. Rathi, however, noted that credit guarantees are generally offered at the higher levels, but when implemented by banks, there are still several hurdles. "I hope the process will be made more flexible, as banks often require extensive personal guarantees from directors, making access to credit difficult. The implementation needs improvement, and hopefully, the government will address these challenges," he said. Towards Inclusive Growth Along with financial aid, the government has taken measures to make the startup ecosystem more inclusive. Sitharaman said that a scheme will be launched for five lakh women entrepreneurs from SC or ST sections. This will provide term loans of up to INR 2 Cr in the next five years. "The scheme will incorporate lessons from the successful Stand-Up India scheme. Online capacity building for entrepreneurship and managerial skills will also be organised," Sitharaman said. "Historically, these groups (SCs and STs) have encountered barriers such as limited access to capital and inadequate managerial support, hindering entrepreneurial pursuits. This initiative not only provides financial assistance but also includes online capacity building for entrepreneurship and managerial skills, empowering marginalised groups to establish and grow their businesses," Pallavi Shrivastava, cofounder of Progcap, said. Out of the 1.57 Lakh-plus startups recognised under the Startup India initiative, nearly half are led or co-led by women. This announcement comes at a time when women-led startups raised more than $930 Mn across 136 deals till the end of 2024, marking a steep 93.75% surge from the $480 Mn raised across 118 deals a year back, according to Inc42's Startup Funding Report. Industry experts said that be it startups or MSMEs or employment, women still have a long way to go to achieve equal opportunities. Any initiative that supports greater inclusion in these sectors is always welcome, they said. While this budget addresses many issues for startups, some burning issues remain unaddressed, experts said. One of the most pressing topics on everyone's mind is the ESOP tax. There's a lot of confusion around phantom stocks and similar matters, and startups often resort to workarounds, which shouldn't be necessary if the government recognises these challenges and makes the necessary amendments. Another issue that the startup ecosystem was hoping would be addressed was the 15% tax rate on manufacturing income, which was introduced previously but not continued in the previous budget tabled last July.

Union Budget 2025: A Game Changer for Startups, MSMEs, and VC Investments

The Union Budget 2025 is a transformative step towards strengthening India's entrepreneurial ecosystem and positioning the country as a global leader in innovation. With a strong emphasis on startups, MSMEs, and infrastructure development, the government has created a policy environment conducive to investment-driven growth. The budget highlights the government's commitment to fostering entrepreneurship and creating an attractive landscape for VC investors. Key Measures for Startups and MSMEs A major highlight is the significant enhancement of the Credit Guarantee Scheme for Startups, which has been increased to ₹20 crore. This move directly addresses the funding challenges faced by first-time entrepreneurs, particularly in terms of collateral requirements and high interest rates, providing much-needed capital for early-stage ventures. Additionally, the introduction of customized credit cards for micro-enterprises will empower small businesses, especially in Tier 2 and Tier 3 cities, to access credit more easily and boost grassroots entrepreneurship. Venture Capital and Investment Growth For VCs, the budget provides a strong framework for investment growth, emphasizing investment as a core driver of economic growth. I believe that the government's push for a National Manufacturing Mission aligns with initiatives like Make in India, encouraging investments in deep-tech, robotics, and hardware startups. The focus on infrastructure development -- spanning logistics, digital payments, and green energy -- will create new market opportunities for tech startups by reducing operational bottlenecks. These steps show a robust deal pipeline in sectors like manufacturing, supply chain optimization, and renewable energy. Moreover, the FDI liberalization in the insurance sector, with the limit raised from 74% to 100%, signals the government's commitment to attracting global VC funds into sectors like fintech and insurtech. The Partial Credit Enhancement Facility by NaBFID will facilitate corporate bonds for infrastructure, providing alternative funding avenues for late-stage startups. Also, the Investment Friendliness Index will incentivize emerging business hubs across the country, strengthening the overall startup ecosystem. Regulatory Reforms and Ease of Doing Business In a bid to ease regulatory bottlenecks, the budget emphasizes transformative reforms in taxation, financial regulations, and the power sector, making India a more startup-friendly environment. Simplifying capital inflow regulations will ease compliance burdens for foreign VC firms, making India a more attractive destination for global investment. The introduction of clearer angel tax provisions and faster exit mechanisms for investors could increase India's appeal as a startup hub. For international investors, the expansion of safe harbor rules and clarification of AIF tax benefits will reduce litigation risks and enhance the overall tax certainty for long-term investments. These changes, along with the extension of Startup India benefits until 2030, demonstrate a strong commitment to ensuring that startups and investors benefit from favorable tax structures. Women Entrepreneurship: A Transformational Shift One thing that stood out to me is the launch of a new scheme for 5 lakh women entrepreneurs, aimed at providing term loans over the next five years. This initiative, aimed at addressing the funding gap for female founders, could significantly boost the number of women-led startups in sectors like fintech, edtech, and healthcare. With women currently receiving less than 2% of total VC funding in India, this move has the potential to transform the entrepreneurial landscape by driving greater gender diversity in the startup ecosystem. Sector-Specific Implications for Startups The budget places particular focus on fintech, agri-tech, and healthcare -- sectors that are poised to benefit from increased funding and policy support. In fintech, the expansion of the Kisan Credit Card (KCC) loan limit and the enhanced classification of MSMEs will open new avenues for alternative lending and digital payment solutions, particularly in rural India. The Dhan Dhanya Krishi Yojana, targeting 100 low-productivity districts, presents opportunities for precision agriculture startups, farm-to-fork platforms, and AI-driven agritech solutions. The continued emphasis on nutritional well-being through programs like Saksham Anganwadi & Poshan 2.0 also supports startups working in food processing, nutraceuticals, and AI-driven health solutions. These initiatives create a fertile ground for innovative startups in the healthcare and nutrition sectors to thrive. Enhanced Credit and Investment Guarantees The credit guarantee cover for startups from ₹10 crore to ₹20 crore ensures greater financial backing for early-stage ventures. MSMEs, which form a significant part of VC-backed businesses, now have an enhanced credit guarantee cover from ₹5 crore to ₹10 crore. For exporter MSMEs, the availability of term loans up to ₹20 crore will ease capital constraints for businesses with global ambitions, thus supporting India's broader goal of increasing exports. Research and Development Support A significant allocation of ₹20,000 crore for private-sector-driven research and development (R&D) will stimulate innovation in high-growth sectors like deep-tech, AI, and biotech. The creation of a Centre of Excellence in Artificial Intelligence will help address skill gaps and prepare India's workforce for the future, creating a conducive environment for AI-driven startups to flourish. Exit Pathways and Liquidity for VCs For VCs, exit strategies are crucial, and the budget introduces measures to accelerate M&A approvals and enhance IPO regulations. Rationalizing company merger approvals and expanding tax certainty for electronics and fintech IPOs, it makes public offerings a more viable exit route for VC-backed tech startups. These initiatives increase liquidity in the startup ecosystem, allowing investors to recycle capital into new ventures. Despite these positive measures, some challenges remain. The New Income Tax Bill raises concerns about potential changes to capital gains taxation, which could affect investor returns. Additionally, while the government has liberalized foreign investment rules, expanded safe harbor rules may create greater compliance requirements for cross-border VC funds. Moreover, sectors like consumer tech may not benefit as directly from the budget's provisions, as much of the focus is on high-growth areas like fintech, AI, and deep-tech. Conclusion: India's Path to Becoming a Global VC Hub Overall, the Union Budget 2025-26 demonstrates a clear vision for fostering innovation and entrepreneurship, positioning India as a global hub for startups and venture capital investments. With enhanced credit guarantees, FDI liberalization, tax incentives, and a strong push for infrastructure development, the budget provides a solid foundation for future growth. While challenges like regulatory complexities and potential taxation changes remain, the overall policy direction is highly favorable for VC investments, particularly in high-growth sectors like fintech, AI, deep-tech, and agri-tech. The government's focus on empowering women entrepreneurs, expanding startup benefits, and improving exit pathways signals a long-term commitment to creating a robust, innovation-driven economy. This budget could indeed mark the beginning of a golden era for India's startups, with the potential to define the country's economic future and shape global investment trends. Author: Mr. Milan Sharma, Director of 35North Ventures (A SEBI Accredited VC firm based out of Mumbai), on Startups & MSMEs on VCs and Investment Growth, Regulatory Reforms and Ease of Doing Business, Women Entrepreneurship - a transformational shift, Sector- Specific Implications for Start-ups, Enhanced Credit and Investment Guarantee, Exit Pathways and Liquidity for VCs

What Indian Startups Want From Budget 2025?

Indian manufacturers expect the Indian government to introduce a new scheme focussed on R&D in deeptech sectors such as AI, robotics, and advanced weapon systems Caught in a whirlwind of capital drought, mass layoffs and shutdowns in 2022 and 2023, the Indian startup ecosystem emerged somewhat stronger in 2024. Funding numbers improved last year as investors, albeit cautiously, began reposing their faith once again in the world's third-largest startup ecosystem. The valuation bubble of 2021 was effectively non-existent as new-age tech founders focussed more on growing their ventures sustainably and profitably. Under the shadow of this waning funding winter came the once-in-a-lifetime disruptor - generative artificial intelligence (GenAI) - and, unsurprisingly, the homegrown new-age tech ecosystem has latched on to this opportunity like never before. Now, as finance minister (FM) Nirmala Sitharaman is all set to present her eighth consecutive Union Budget on Saturday (February 1), the Indian startup ecosystem is looking intently towards her to announce measures to give it a further boost. But before we dive into what India's new-age tech ecosystem wants from the government on the D-Day, let's take a little detour and see what the Economic Survey 2024-25, tabled in the Parliament a day before the budget, had to say about the state of India's digital economy. In line with the trend, AI featured in the Survey, too, with it highlighting the need for rapid adoption of the technology in sectors such as banking, finance, healthcare, telecom, retail and transport. The Survey also called on the government to increase spending on R&D in advanced battery technologies (such as sodium-ion and solid-state batteries) to spur India's transition to electric vehicles (EVs). Besides, it also noted that the country has reduced its dependence on smartphone imports, with 99% of these phones being manufactured in India now. It added that more than 4.6 Lakh 5G Base Transceiver Stations (BTSs) have been installed across the country. Making note of the government's regulatory and financial push for women entrepreneurship, the Survey said more than INR 3,000 Cr have been invested across 149 women-led startups through alternative investment funds (AIFs). That said, the Indian startups are hoping that the FM would provide sops and cut tax rates to rejuvenate the ecosystem and spur consumption. To understand what the startup ecosystem wants from the budget, Inc42 spoke to founders across sectors and segments. A key demand across the board is streamlining regulatory compliances and fostering innovation. That said, just like every year, we, at Inc42. will bring you live updates and startup perspectives on this year's budget. This will be Inc42's 10th edition of #Budget4Startups. So, without further ado, let's dive right into the wishlist of Indian startups from FM Sitharaman. Spurring Consumption To Boost Economy Just like every year, Indian startups continue to bat for rationalising GST slabs. Besides, from deeptech to chip makers, stakeholders want the government to reduce import duties on semiconductor-grade inputs. This, they believe, would catalyse growth for homegrown tech companies and pave the way for a vibrant innovation ecosystem. Then, there is the gaming sector which has been rueing the 28% GST on first-time deposits made by registered users, which is applicable uniformly to both skill-based and chance-based games. Industry insiders told Inc42 that the sector expects the government to revisit its current stance and lower the GST rate on skill-based games to 18%, aligning it with the tax framework applied to other service sectors. Meanwhile, another key demand of the ecosystem is instituting sweeping measures to stimulate consumption for the new-age economy. This comes in the backdrop of consumption being sluggish for several quarters. As a result, sectors dependent on the digital economy, especially consumer services and ecommerce, are now vocal about "long overdue" tax relief, which are essential to drive disposable incomes and consequently boost consumption. Alongside, industry watchers also want the Centre to increase spending on job creation, especially by way of production linked incentives (PLIs), employment schemes and infrastructure development. What Do Chip Makers Want? India's burgeoning semiconductor ecosystem wants higher allocation of subsidies under the PLI scheme and higher monetary support for the design ecosystem. The India Electronics and Semiconductor Association (IESA) has urged the finance ministry to extend the PLI scheme beyond the current allocation of INR 76,000 Cr (about $10 Bn), with an additional provision of $20 Bn for the next five years. Besides, the players in the space also believe that lower import and GST levies on indigenously manufactured components, as well as zero to low interest funding for domestic companies, can catalyse growth for home-grown semiconductor manufacturers. There are also demands from semiconductor industry bodies for a separate INR 10,000 Cr budget allocation for targeted R&D initiatives for the ESDM (Electronics System Design and Manufacturing) sector on a PPP model to improve product creation and intellectual property (IP). What's On The Anvil For Manufacturers & Deeptech Players? The manufacturing industry contributes around 17% to the nation's GDP. As such, it expects the central government to make some important announcements in the Budget 2024-25 to boost the renewable energy sector, micro, small and medium enterprises (MSMEs), and electronics manufacturing industry. Industry stakeholders want the government to expand the PLI scheme for manufacturing in deeptech, including green energy, advanced materials, and semiconductors. The budget could also see the government increase its focus on building technology for defence via increased allocation for aerospace manufacturing and custom duty rationalisation. In addition, the Centre may also earmark additional outlay for credit support for MSMEs to push domestic manufacturing companies in EVs, renewable energy, components and other supply chains. On top of this, the industry is also expecting the Centre to introduce a new scheme focussed on R&D in deeptech sectors such as AI, robotics, and advanced weapon systems. Within deeptech, EV players continue to press the government to reduce the GST rate on EV charging services and lithium-ion batteries from 18% to 5%. "The (EV) sector is hoping for some level of rate rationalisation to reduce interpretative issues and litigations. The EV ecosystem urgently needs scalable infrastructure, including widespread deployment of EV charging stations, battery-swapping hubs and integration with renewable energy sources," said Mehta Equities in a report. But, beyond sops and incentives, manufacturing startups also want the government to prioritise focus on upskilling the country's large labour force, which they believe will benefit the manufacturing sector in the long run. Tax-Laden Gaming Startups Seek Relief Grappling with mounting regulations and rising tax load, India's online gaming ecosystem expects the FM to address the GST and retrospective taxation issues. These steps, the industry believes, would provide much-needed clarity and create an environment conducive to further growth and innovation in the sector. Alongside, the online gaming ecosystem will closely watch the budget announcements related to industries such as AI and semiconductors, which have a direct bearing on game development and their hardware capabilities. "We hope to see measures that accelerate the growth of India's gaming and esports industry. Incentives for semiconductor design and manufacturing could bolster the tech ecosystem and elevate gaming hardware standards. Similarly, tax relief for middle-income groups could boost disposable income, creating opportunities for studios to develop India-centric gaming IPs," Akshat Rathee, cofounder and managing director of NODWIN Gaming, said. The industry is also pitching for the upcoming budget to include provisions for reduced customs duties on gaming hardware, tax incentives and investments in digital infrastructure to enhance accessibility and affordability for gamers across the country. In addition, they also want the government to prioritise sops for IP creation, reduction in TDS on digital platforms, and tax benefits for gaming and esports companies to develop the country as a gaming and esports hub. Startups Bat For ESOP Tax Relief Employee stock option plans (ESOPs) have become a key talent retention tool for startups. But, these stock options continue to be a bittersweet pill to swallow for employees as they are yet to come on par with the conventional capital gains from the market. Liable to pay taxes on two different occasions - once when they exercise the option and when they sell them, employees are saddled with a heavy taxation approach towards ESOPs. Advocating for a more employee-friendly ESOP taxation framework, founders want the tax on ESOPs to be deferred until employees sell their shares, rather than being levied at the time of exercise. "In the upcoming budget, I anticipate tax reforms to tackle these hurdles - simplifying ESOP taxation, streamlining capital gains tax structure across asset classes or introducing tax exemptions for angel investors and aligning them with global standards to encourage greater inflows of private capital into the startup ecosystem," said Ashwani Singh, managing director of 35 North Ventures. Another critical demand is revising the turnover threshold for startups eligible for tax benefits, as only startups with an annual turnover of less than INR 100 Cr qualify for a tax holiday. As per industry stakeholders, increasing this limit would allow more startups to access tax relief, thereby fostering a more supportive environment for innovation and talent retention.