Startups get a leg up in Budget 2025

Finance minister Nirmala Sitharaman announced a slew of measures in the budget to bolster the startup ecosystem, including a new Fund of Funds for Startups (FFS) with a corpus of ₹100 billion ($115.5 million) and an enhancement of credit availability.

The fresh contribution to the Fund of Funds for Startups adds to the original ₹100 billion funds, first set up in 2016, which has already leveraged over ₹910 billion in investor commitments to startups.

To boost ease of doing business for startups, Sitharaman proposed extending benefits provided under Section 80-IAC of the Income Tax Act to startups for another period of five years. The benefits will now be available to eligible startups incorporated before 1 April 2030.

Additionally, Sitharaman earmarked ₹200 billion for a private sector-led research, development, and innovation initiative from the July budget. She also proposed exploring a Deep Tech Fund of Funds to propel next-generation startups as part of this initiative.

The government’s new National Manufacturing Mission will extend its reach across small, medium, and large industries to advance the “Make in India” agenda, offering policy support, execution roadmaps, and a governance framework for both central ministries and states, Sitharaman said.

The government also plans to support 500,000 women, scheduled castes, and scheduled tribe entrepreneurs with term loans up to ₹2 crore over the next five years. It will also introduce specific policy measures to boost employment and entrepreneurship in labor-intensive sectors.

To enhance the productivity and competitiveness of the footwear and leather sector, a new scheme aims to create jobs for 2.2 million people, aiming for ₹400,000 crore in revenue and over ₹100,100 crore in exports.

Other initiatives include establishing the National Institute of Food Technology, Entrepreneurship and Management in Bihar, part of the Purvodaya plan, which focuses on human resource development and infrastructure improvements across several states.

The launch of Clean Tech Manufacturing will increase domestic production of solar PV cells, EV batteries, and other high-tech equipment, supporting the ecosystem for renewable energy and advanced manufacturing, Sitharaman said.

Lastly, the ministry has also boosted credit for micro and small enterprises, raising the limit for startup loans from ₹10 crore to ₹20 crore, or about $2.31 million, while reducing the guarantee fee to 1% for loans in 27 key sectors vital for achieving an Atmanirbhar Bharat, or a self-reliant India.