Paridhi Choudhury & Tharuniyaa Lakshmi | February 1, 2025

Chennai: The Budget 2025-26 expanded financial support for startups, boosting innovation, sustainability, and funding access to help smaller businesses grow and compete in emerging industries.

The government has set up a fund of Rs.10,000 crore for startups through Alternative Investment Funds(AIF), said Finance Minister Nirmala Sitharaman in the Parliament.  Startup eligibility for benefits extends until April 1, 2030, with improved loan access and a 1% guarantee fee.

“The Union Budget 2025 has taken important strides in fostering sustainability-driven economic growth. The expanded Fund of Funds for startups is a promising step toward supporting innovation in sustainable materials and packaging solutions. It will be critical in the adoption of eco-friendly alternatives to plastic,” said Vaibhav Anant, Founder & CEO of Bambrew.

The AIF has received more than 91,000 crore commitments. This initiative builds on previous efforts to support Indian startups. The latest budget extends the eligibility period for startup benefits, giving emerging companies a longer window to access support. A Deep Tech Fund of Funds is also being explored to nurture industries focused on advanced technology.

Loans for startups in key sectors have been made more accessible, with relaxed terms designed to encourage entrepreneurship, said Sitharaman. 

“I urge the government to prioritize practical, on-ground support and to ensure that the regulatory sandbox and infrastructure improvements translate into real-world benefits for startups and technology innovators,” said Priyadeep Sinha, Vice President of Product, Teumio Inc.

The Fund of Funds scheme primarily supports smaller startups, while larger startups benefit less since they typically attract investments from venture capitalists, said Rohit Pandharkar, Partner, Consulting at EY. Some businesses will gain significantly from these changes, while others may continue to rely on private funding to scale their operations.