Budget 2025 Startup Initiatives: ₹10,000 Cr Fund, New Credit Schemes & More

Union Budget 2025 introduces key measures for startups, MSMEs, and entrepreneurs, including a ₹10,000 crore Fund of Funds, tax exemptions, a Deeptech Fund, and Mudra Loans to empower homestay entrepreneurs.

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Manoj Singh
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Budget Announcement for startups

Fund of Funds Boosts Startup Ecosystem with ₹10,000 Crore Contribution

Union Budget 2025: Transformative Initiatives for Startups, MSMEs, and Innovation

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In a bid to bolster the entrepreneurial ecosystem and drive economic growth, Finance Minister Nirmala Sitharamanintroduced a series of transformative measures in the Union Budget 2025, aimed at fostering innovation, entrepreneurship, and sustainable growth across India. These initiatives are designed to enhance the startup ecosystem, support MSMEs, and promote cutting-edge technologies, positioning India as a global leader in key sectors.

Fund of Funds Boosts Startup Ecosystem with ₹10,000 Crore Contribution

One of the key announcements was the establishment of a new Fund of Funds (FoF) with a fresh contribution of ₹10,000 crore. This fund will be set up to support startups, particularly in high-growth sectors like technology and innovation. The FoF, which has already received commitments exceeding ₹9 lakh crore, aims to offer increased financial backing to help startups scale and thrive.

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Deeptech Fund of Funds and PM Research Fellowship Scheme

Further advancing technological innovation, the government will launch a Deeptech Fund of Funds to support advancements in artificial intelligence, robotics, and clean tech. This initiative aims to attract deeper investments in cutting-edge technologies, establishing India as a global leader in technology and research. In addition, the PM Research Fellowship Scheme will offer 10,000 fellowships for tech research at IITs and IISc over the next five years, fostering tech innovation and enhancing research capabilities.

80 IAC Tax Benefits Extended for Startups 

In a major boost to India’s startup ecosystem, the Government of India has extended the tax exemption under Section 80-IAC of the Income Tax Act until April 1, 2030. This exciting move offers eligible DPIIT Recognized startups a 100% tax deduction on profits for three consecutive years within their first ten years of operation. The extension of this 80-IAC tax benefit is set to provide much-needed financial relief to startups, enabling them to reinvest in innovation, expand operations, and drive growth without the burden of heavy taxes. This initiative reflects the government's ongoing commitment to nurturing entrepreneurship and fostering a dynamic, self-sustained startup ecosystem in India.

Enhanced Credit Guarantee for Micro-Enterprises

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In a move to enhance the accessibility of capital for micro-enterprises, the government has increased the credit guarantee cover from ₹5 crore to ₹10 crore. This measure will unlock an additional ₹1.5 lakh crore in credit over the next five years, helping small businesses expand operations and contribute to the economy. In line with this, the government is also increasing the investment and turnover limits for MSMEs, facilitating tech upgrades and business growth.

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Dedicated Scheme for Footwear and Leather Sector

Building on its commitment to empowering various industries, Sitharaman announced a dedicated scheme for the footwear and leather sector, which is expected to create 22 lakh jobs and contribute to a revenue target of ₹4 lakh crore. This initiative aims to position India as a global leader in the sector, with exports expected to surpass ₹1.1 lakh crore.

New Scheme for Women Entrepreneurs

The government’s emphasis on inclusive growth is evident in the introduction of a new scheme offering five-year term loans for SC/ST women entrepreneurs. This initiative will benefit over 5 lakh women from these communities, improving access to finance and helping them scale their businesses. Additionally, the government will launch another scheme providing term loans of up to ₹2 crore for first-time entrepreneurs from women, Scheduled Castes (SC), and Scheduled Tribes (ST) communities, further promoting entrepreneurial diversity.

Mudra Loans to Boost Homestays

To support the tourism sector and small-scale hospitality businesses, Mudra loans will be extended to homestay entrepreneurs. This initiative is expected to empower local entrepreneurs, enhancing the overall tourist experience and promoting sustainable growth in rural areas.

Establishing India as a Sustainable Toy Manufacturing Hub

The toys sector also received attention, with the launch of a scheme designed to position India as a global manufacturing hub for sustainable toys. The government will facilitate the creation of a Made in India brand, aimed at boosting both domestic and international demand for Indian-manufactured toys, driving economic growth in the sector.

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Atal Tinkering Labs and Broadband Connectivity in Schools

To ignite curiosity and foster innovation among the youth, the government will establish Atal Tinkering Labs in 50,000 government schools over the next five years. These labs will encourage scientific temper and experimentation. Additionally, broadband connectivity will be extended to all secondary and primary schools, ensuring seamless access to digital learning resources across the country.

Launch of Urban Challenge Fund for Growth Hubs

Further driving regional development, the government will introduce the Urban Challenge Fund, with an allocation of ₹1 lakh crore to transform cities into growth hubs. This initiative will finance 25% of bankable projects, while the remaining 50% will be funded through bonds, bank loans, and public-private partnerships (PPPs).

Atmanirbharta Mission for Pulse Production

In the agricultural sector, the government will launch the Atmanirbharta Mission for pulses, aiming to achieve self-sufficiency in the production of key pulses like tur, urad, and masoor over the next six years, addressing growing demand and ensuring a steady supply.

Manufacturing Mission under Make in India Initiative

Lastly, under the Make in India initiative, a new Manufacturing Mission will support industries of all sizes. From small businesses to large corporations, the mission will include policy support to foster innovation in sectors such as solar PV cells, electrolysers, and grid-scale batteries, aligning with the government’s vision for sustainable growth.

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₹20,000 Crore Fund for Innovation in Partnership with the Private Sector

The government will allocate ₹20,000 crore to promote innovation through partnerships with the private sector. This fund will focus on advancing research, development, and innovation across various industries, positioning India as a hub for groundbreaking technologies and startup growth.

Export Promotion Mission with Easy Credit Access

As part of efforts to promote exports, the government will launch an export promotion mission that will have specific targets for improving credit access. This initiative aims to support Indian exporters, ensuring they have the necessary resources to scale and compete globally.

Global Capability Centres in Tier-II Cities

To decentralize innovation and growth, the government will also set up a national framework for promoting global capability centres in emerging Tier-II cities. This move will create more opportunities outside major urban centers, encouraging regional development and helping to establish India’s global presence in key industries.

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These sweeping announcements in Union Budget 2025 reflect the government's commitment to empowering entrepreneurs, strengthening MSMEs, and ensuring inclusive, sustainable growth. By prioritizing innovation, technology, and self-reliance, India is set to emerge as a leader in global entrepreneurship and economic development.

Fund of Funds Atal Tinkering Lab Startup Scheme Union Budget 2025