The countdown has commenced. On February 1, 2026, Finance Minister Nirmala Sitharaman will unveil the Union Budget. For the everyday citizen, the focus is often on income tax slabs. However, for India's startup ecosystem, this budget represents a critical opportunity for survival and growth.
The year 2025 served as a period of adjustment. The funding environment improved, leading to the emergence of profitable unicorns. As we enter 2026, expectations are notably high.
Indian founders are seeking more than just tax reductions; they are advocating for comprehensive reforms to enhance competitiveness with China and the US, covering areas from AI regulations to incentives for DeepTech. Below is a detailed overview of the demands from the Indian Startup Ecosystem for Budget 2026.
1. The 'AI Mission' Funding
In light of the global emergence of AI models such as DeepSeek and ChatGPT-5, it is crucial for India to remain competitive. This year, there is a significant need for a dedicated "Sovereign AI Fund."
Startups like Krutrim and Sarvam AI require substantial computing power (GPUs) to develop Indian Large Language Models (LLMs). Founders are looking to the government for support in subsidizing GPU imports or establishing public AI infrastructure that early-stage startups can utilize at a reduced cost.
2. Simplifying 'Ghar Wapsi'
In our earlier analysis of the Reverse Flip trend, we observed that prominent startups such as Razorpay and Zepto are relocating their headquarters back to India.
Nonetheless, the tax implications associated with this transition are significant. The industry anticipates that the Finance Minister will consider reducing the tax on "Share Swaps," which involve merging foreign entities with Indian counterparts, to incentivize more companies to establish their domicile in GIFT City without incurring substantial tax losses.
3. The Elimination of the 'Angel Tax' (For Real)
While the government has abolished the Angel Tax in previous years, uncertainties remain concerning valuation standards for foreign investors. Founders are advocating for a "Single Window Clearance" system to facilitate foreign investments in Indian startups, ensuring a smoother process for Foreign Direct Investment (FDI).
To achieve the goal of becoming a $5 trillion economy, it is essential for global capital to flow into our startups without bureaucratic obstacles.
Conclusion: A Budget for Builders?
Budget 2026 should be characterized as a "Builder's Budget." We possess the talent, the market potential, and the ambition necessary for success. What we require now is policy support that empowers us rather than hinders our progress.
The Finance Minister's announcement on February 1st will reveal the outcome. However, one fact remains evident: India is poised to build for the global market.
FAQs: Budget 2026 for Startups
Q1: What is the date for Budget 2026?
.jpeg)
