Top 10 Takeaways for Tech & Start-up Sector From Budget 2025

Finance Minister Nirmala Sitharaman presented her 8th union Budget 2025 today (February 1). Here's what all she announced about the start-up sector:

1. A Fresh Rs 10,000 Crore Fund Of Funds Scheme

Finance Minister Nirmala Sitharaman announced a fresh Rs 10,000 crore Fund of Funds (FFS) for the start-ups. The finance minister further added that FFS has already led to the creation of a Rs 91,000 crore investment corpus for start-ups via Alternative Investment Funds.

Expert View- "This initiative will provide much-needed growth capital to early-stage startups, further strengthening India’s position as a global innovation hub. We are supremely excited about this development and look forward to actively participating in this next wave of investment momentum"- Anirudh A. Damani, Managing Partner, Artha Venture Fund

2. Govt to Explore Deep Tech Fund of Funds

With the aim to increase deep tech investment in the country, the government has announced that they will explore a deep tech fund of funds. This comes at a time when deep tech investments in the Indian start-up ecosystem has been low. One reason for the same is the long gestation period of deep tech start-ups which leads to lack of VC interest. India’s G20 Sherpa and former NITI Ayog CEO Amitabh Kant also talked about a fund of fund for the deep tech ecosystem at an event earlier. He said, "The government should focus on two key actions: creating a fund of funds and launching large-scale challenges that address India's critical needs. The only way to capture the market is by launching new disruptive start-ups. Only way India can raise its GDP nine times is with the help of deep-tech."

Expert View- "Given the capital-intensive and long-gestation nature of deeptech ventures, we hope this fund is structured as a Fund of Funds (FoF), allowing experienced deep tech-focused fund managers to deploy capital effectively."-Anirudh A. Damani, Managing Partner, Artha Venture Fund

3. Rs 500 crore Allocation to Three AI Centres of Excellence

With a focus on AI push, the government has also allocated Rs 500 crore to three AI Centres of Excellence for education. However, some experts believe that the allocation is too low given the requirement of the country.

Expert View: "Allocation of Rs 500 crore for setting up 3 centres of excellence for AI seems to be lower than what India really requires, especially considering amounts committed by other countries," said Pranay Bhatia, Founder and Managing Partner, EFFIINEXT Advisory LLP.

4. Proposal to Increase Period of Incorporation

The Finance Minister in her speech indicated that the government will propose to extend the period of incorporation of start-ups to 5 years. Period of incorporation basically means the day when a start-up is registered or comes into existence. As per the DPIIT, "An entity shall be considered as a startup up to 10 years from the date of its incorporation."

Expert View- "This extension will allow emerging businesses more time to establish themselves and benefit from government support. This extended period aims to provide a longer runway for emerging businesses, giving them enough time to grow and scale," said Siddharth Mody, Equity Partner, JSA

5. Scheme Proposed for First Time Women Entrepreneurs

Finance Minister Nirmala Sitharaman in her budget speech also proposed a scheme for first time women entrepreneurs. The scheme says that five lakh first-time entrepreneurs, will be provided term loans up to Rs 2 crore during the next 5 years.

6. 10,000 R&D Fellowships for IITs, IISc

Finance Minister Nirmala Sitharaman announced the introduction of 10,000 fellowships under the Prime Minister's Research Fellowship Program (PMRF). The fellowships will be available at prestigious institutions like the Indian Institutes of Technology (IITs) and the Indian Institute of Science (IISc) over the next five years. The intent for the same is to significantly increase the quality of R&D in the country.

Expert View- "A visionary Deeptech Fund of Funds to fuel cutting-edge innovations, combined with 10,000 fellowships under the PM Research Fellowship Scheme, will ignite a new era of technological sovereignty. These initiatives will not only empower India to develop revolutionary solutions for the world but also reaffirm our commitment to becoming a self-reliant, innovation-driven superpower."-Vishesh Rajaram, Managing Partner, Speciale Invest

7. Extension of time limit u/s 80-IAC for startups

In a major relief to start-ups, the government has extended the benefit provided under Section 80-IAC to startups for another five years. Sitharaman said in her speech, "It is proposed to extend the benefit provided under Section 80-IAC to startups for another period of five years, i.e. the benefit will be available to eligible start-ups incorporated before 01.04.2030."

8. Increase in Loan Limit

The government has highlighted that for start-ups 27 key sectors crucial to the Atmanirbhar Bharat initiative, the loan limit has been increased from Rs 10 crore to Rs 20 crore. Finance Minister Nirmala Sitharaman said in her speech, " For Startups, from ` 10 crore to 20 crore, with the guarantee fee being moderated to 1 per cent for loans in 27 focus sectors important for Atmanirbhar Bharat."

9. Tax certainty for electronics manufacturing Schemes

For non residents providing services to Indian companies involved in electronics manufacturing, the government has decided to introduce a simplified tax system for them. To add to it, a safe harbour rule will be introduced to ensure tax certainty for non-residents storing components for supply to specific electronics manufacturing units. The FM said in her speech, "I further propose to introduce a safe harbour for tax certainty for non-residents who store components for supply to specified electronics manufacturing units."

10. A Push to the Gig Economy

In a major push to the gig economy, the government has highlighted that one crore gig workers will be getting ID cards. This in turn will help them get more social benefits. To add to it, under the PM Jan Arogya Yojana, 1 crore gig workers will also get healthcare benefits. The registration for the same will be done via the e-Shram portal.