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Budget 2025 Explainer: What It Means for Startups, Entrepreneurs & SMEs
The Union Budget 2025, which Finance Minister Nirmala Sitharaman presented, introduces transformative policies and financial support for startups, MSMEs, and entrepreneurs in India. Key highlights include a ₹10,000 crore Fund of Funds, extended tax exemptions for DPIIT-recognized startups until 2030, the launch of a Deep Tech Fund, Mudra Loans to empower homestay entrepreneurs, and targeted initiatives to boost sectors such as clean tech, medical tourism, and sustainable manufacturing. With a strong emphasis on innovation, inclusivity, and self-reliance, the budget sets the stage for India’s emergence as a global powerhouse in entrepreneurship and technology.
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Team TICE has created this Startup Budget 2025 Guide for Entrepreneurs to provide an in-depth analysis of the budget’s policy announcements and their impact on businesses and the economy.
Fund of Funds for Startups 2025
"Now, we will set up a new Fund of Funds with expanded scope and a fresh contribution of another Rs. 10,000 crore."
Likely Impact
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- Capital mobilization will continue: The additional Rs. 10,000 crore infusion will foster a robust startup ecosystem, promoting new ventures and high-growth entities.
- New funding instruments will support startups: The expanded scope will allow for more flexible and diverse financial instruments.
- Employment and inclusivity will receive a boost: Increased capital availability will support employment generation and the growth of women-led startups and ventures beyond metro cities.
- Critical sectors will receive strengthened support: We will strategically allocate the funds to key sectors, promoting self-reliance and domestic innovation.
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New Credit Guarantee Scheme for Startups (CGSS)
"To improve access to credit, we will enhance the credit guarantee cover from Rs. 10 crore to Rs. 20 crore."
Likely Impact:
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- Startups will have increased access to non-equity funding: Lower guarantee fees will make debt capital more affordable, reducing reliance on equity funding.
- Financial institutions will show stronger financial inclusion: They will be more willing to extend credit to high-risk startups.
- Select focus sectors will experience sectoral innovation: Targeted financial support will encourage innovation.
- Liquidity and working capital will improve: This is crucial for high R&D-driven startups with long gestation periods.
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Deep Tech Fund of Funds
"We will also explore a Deep Tech Fund of Funds to catalyze the next generation of startups."
Likely Impact:
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- We will encourage disruptive innovation: This fund will support visionary technologies with large-scale socio-economic impact.
- We will provide patient capital: Catering to long-gestation, high-risk deep-tech startups.
- The initiative will attract new investors: Future-focused investors will enter the ecosystem.
- We will fund larger ticket sizes: Supporting intensive R&D and commercialization efforts.
Extension of Section 80-IAC Benefits For Startups
"We will extend the incorporation period for startups to avail tax benefits by 5 years, until 1.4.2030."
Likely Impact:
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- Startups will have greater liquidity and cash availability.
- Policy certainty will allow for long-term planning.
- Startups will attract high-skilled talent and expedite product development cycles.
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Toys: Making India a Global Manufacturing Hub
"We will develop new schemes to create clusters, skills, and a manufacturing ecosystem for high-quality, innovative, and sustainable Indian toys."
Likely Impact:
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- We have achieved a 37% decline in toy imports and a 227% increase in toy exports over the past decade.
- MSMEs, SHGs, and artisans will receive a boost, creating employment.
- We will enhance India's competitiveness in global toy markets.
- We will reduce import dependence, promoting self-reliant toy manufacturing.
PM Gati Shakti & National Geospatial Mission
"We will make PM Gati Shakti portal’s data accessible to the private sector."
Likely Impact:
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- We will optimize logistics and last-mile delivery solutions.
- We will modernize land records and urban planning through geospatial data integration.
- We will improve infrastructure project efficiency, reducing litigation risks.
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Footwear & Leather Industry Focus Product Scheme
"We will introduce a scheme to enhance the productivity, quality, and competitiveness of India's footwear and leather sector."
Likely Impact:
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- We aim for a Rs. 4 lakh crore turnover, including Rs. 1.1 lakh crore exports.
- We will generate employment for 22 lakh people.
- We will focus on non-leather footwear manufacturing to reduce import dependence.
- We will encourage sustainable and innovative design capacities.
Ease of Doing Business & Regulatory Reforms
"We will form a High-Level Committee to review non-financial regulations and enhance the ease of doing business."
Likely Impact:
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- We will simplify compliance and inspections to strengthen economic governance.
- State-level competitiveness will increase through the Investment Friendliness Index.
- The Jan Vishwas Bill 2.0 will decriminalize over 100 legal provisions.
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Manufacturing & Clean Tech Mission
"We will support small, medium, and large industries through a National Manufacturing Mission."
Likely Impact:
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- We will boost Make in India & Clean Tech sectors, focusing on EV batteries, solar PV cells, and wind turbines.
- We will strengthen MSMEs by integrating them into global value chains.
- We will build a future-ready workforce for in-demand job sectors.
Budget 2025: Paving the Way for a $5 Trillion Economy
The Union Budget 2025-26 brings a pro-business, innovation-driven approach. Startups, manufacturing, and infrastructure will benefit from targeted fiscal measures. With strategic funding, regulatory simplifications, and sectoral focus, the government aims to drive India towards a $5 trillion economy while promoting self-reliance, employment generation, and global competitiveness.