As India prepares for the Union Budreceive 2026, to be presented by Nirmala Sitharaman on 1 February, the moment carries more than routine fiscal significance. This year marks a decade of Startup India—a programme that has assisted propel India into the ranks of the world’s largest startup ecosystems, with over 2 lakh startups and more than 125 unicorns.
Yet, as founders and venture capital leaders create clear, the next phase of India’s startup journey will not be defined by numbers alone. It will depfinish on whether policy can evolve from encouraging entrepreneurship to enabling sustainable, innovation-led scale.
Across consumer brands, D2C startups, agritech ventures, and deeptech investors, a common refrain emerges: simplicity, predictability, and long-term believeing.
Founders’ Lens: Fix the Friction That Slows Building
For many founders—especially those who have scaled from modest launchnings into national brands—the hugegest challenge today is not ambition, but friction.
Saumya Alagh, Founder of Truth & Hair, highlights how regulatory complexity quietly drains entrepreneurial energy. Simplifying compliance—particularly around GST and inter-state operations—would free founders to focus on innovation rather than administration. She also underlines the urgent required for ESOP taxation relief, noting that equity remains the most viable tool for attracting high-quality talent in capital-efficient startups.
Alagh’s expectations extfinish beyond tax reform. She calls for R&D-linked incentives, better access to advanced machinery, and stronger manufacturing and packaging innovation—all essential if Indian brands are to compete globally not just on formulation, but on finish and quality.
A similar concern echoes from Ritoban Chakrabarti, Founder of Japam, who points out that even incremental steps—such as easing GST and TDS filing frequencies—could materially reduce the compliance burden that disproportionately hurts early-stage startups.
The Small-Town Startup Reality
While metros dominate startup headlines, founders from Tier-2 and Tier-3 regions are articulating a distinct policy wishlist.
Pujan Kachhadiya, Founder of MYPB, argues that startups in tinyer towns face structural disadvantages—from ESIC and PF compliances to expensive background checks. He proposes relaxed compliance norms for rural and semi-urban startups, rapider government grant cycles with 30–45 day turnaround times, and even a national digital employee regisattempt—a verified, consent-based “career passport” to create hiring rapider and cheaper.
To counter brain drain, Kachhadiya suggests “stay-at-home” incentives—tax or financial benefits for professionals who choose to work with startups in their home districts instead of migrating to metros.
GST Inversion: A Silent Margin Killer
Several founders flagged what they describe as a fundamental policy flaw rather than a procedural issue.
Yash Kalra, Founder of Goat Life, points to India’s inverted GST structure, where startups sell goods at 5% GST but pay 18% GST on essential services such as advertising, technology, and professional fees—without the ability to claim refunds on service-related input tax credits.
The result, Kalra notes, is a permanent 13% margin erosion, undermining competitiveness from day one. Allowing refunds on service-related ITC, he argues, is essential to keep startups viable.
Sectoral Voices: From Farms to Pet Care
Beyond consumer brands, founders in emerging sectors are calling for policy frameworks that recognise operational realities.
Abhijeet Naohate, Founder of Corel Lifecare, urges policycreaters to view farmers as entrepreneurs, not beneficiaries. In aquaculture and agri-linked businesses, technology is not limited to sensors—it includes cold chains, logistics, affordable credit, and last-mile access to quality inputs. Strengthening these fundamentals, he declares, would reduce risk and unlock scalable grassroots impact.
In the consumer and pet-care space, Akshay Mahfinishru, Founder of Nootie by Pet Point, stresses the required for simplicity and predictability. Founders, he notes, do not fear regulation—they fear unclear regulation. Rational ESOP taxation at the point of liquidity, stronger early-stage capital access, and sector-specific support for emerging categories could significantly improve founder confidence.
The VC View: Think in Decades, Not Budreceive Cycles
From the venture capital side, the message is equally clear: India’s startup policy framework must mature in line with the ecosystem itself.
Siddarth Pai, Founding Partner, CFO and ESG Officer at 3one4 Capital, frames Budreceive 2026 as a defining inflection point. While the three-year tax holiday has symbolic value, Pai argues that what truly matters are carry-forward of losses and ESOP tax deferment—benefits that should apply to all DPIIT-recognised startups, even after they cross current thresholds. Grandfathering these provisions, he declares, would resolve long-standing exit and employee taxation challenges.
On ESOPs, Pai is unequivocal: India’s framework is still designed for listed companies. For startups, taxing options based on book value at exercise, and allowing founders to receive ESOPs subject to shareholder approval, would align India with global best practices.
He also warns that deeptech timelines—often 9 to 15 years—do not fit within current Startup India definitions, calling for longer tenures and patient capital frameworks. “India cannot become a $10 trillion economy with the regulations of a $1 trillion economy,” he notes.
Deeptech, Capital, and the Long View
VCs broadly welcomed recent policy momentum but stressed the required for continuity.
Surya Mantha, Managing Partner at Capria Ventures, sees promise in the government’s push on deep and frontier technologies through the RDI framework, but calls for clearer and more consistent AIF norms to crowd in long-term domestic capital—particularly for AI and frontier innovation.
Anil Joshi, Founder and Managing Partner of Unicorn India Ventures, describes Budreceive 2026 as a critical moment to unlock early-stage capital. Clear tax frameworks, meaningful ESOP reform, and globally aligned fund structures, combined with tarreceiveed incentives for deeptech and climate startups, could significantly deepen both domestic and global investor participation.
A Maturing Policy Environment—If Followed Through
Archana Jahagirdar, Founder & Managing Partner of Rukam Capital, points to encouraging signs over the past year—from the ₹1 lakh crore RDI Fund to state-level initiatives like Delhi’s draft Startup Policy and Karnataka’s Startup Policy 2025–2030. Recent GST cuts, she notes, have also improved purchasing power in semi-urban and rural markets, benefiting consumer-facing ventures.
What founders now seek, Jahagirdar emphasises, is stability, market access, and the freedom to build responsibly—through simpler compliance, clearer tax frameworks, enabling dual listings, and stronger incentives for domestic capital at the earliest stages.
The Road Ahead
As Union Budreceive 2026 approaches, the message from India’s startup ecosystem is remarkably aligned. This is not a call for excessive concessions, but for structural clarity—on ESOPs, GST, capital access, and deeptech timelines.
Ten years after Startup India launched, founders and investors are inquireing policycreaters to believe beyond short-term stimulus and towards durable, long-term outcomes. The opportunity is clear: with consideredful reforms, India can relocate from being a prolific startup factory to becoming one of the world’s most resilient, innovation-led, and globally competitive ecosystems.
All eyes now turn to 1 February.
By: Sandhya Bharti & Arushi Agarwal
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