India’s Budget 2026: Startups seek stronger incentives, easier credit and tax relief

Ahead of the Union Budget 2026 to be presented on February 1, startups across sectors have urged the government to announce stronger incentives, easier access to institutional credit, and simplified compliance norms to support early-stage ventures and ensure long-term growth.

Industry representatives said that despite several government schemes being in place, gaps remain in implementation, particularly in funding access, taxation, and regulatory compliance, which continue to constrain young startups.

Many founders are calling for targeted subsidies linked to actual vehicle sales to strengthen domestic manufacturing. They said extending subsidies and providing support based on vehicle sales can significantly strengthen manufacturing capabilities, especially for smaller and emerging companies. Such measures would enable startups to scale production, invest in technology, and build long-term operational capacity.

Several entrepreneurs have flagged challenges in accessing government-backed credit. They pointed out that while schemes such as CGTMSE, MUDRA, and PMEGP are intended to improve funding access, collateral requirements imposed by banks and NBFCs continue to limit approvals. The sector has urged the government to issue clearer and more uniform guidelines to ensure lending institutions fully implement guarantee mechanisms.

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Startups working in social and impact-driven sectors are also seeking focused policy support. Early-stage ventures are looking for enhanced incentives, simplified compliance structures, and improved access to funding and grants.

They have also sought tax benefits for startups investing in family-focused innovation, women-led enterprises, and technology-enabled education, while calling for greater budgetary emphasis on early childhood development and mental health.

Industry players said the budget offers an opportunity to strengthen labour reforms, workforce readiness, and employer confidence. They added that increasing employer-led training and supporting technology adoption could encourage hiring and reskilling.

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According to startup representatives, complex compliance requirements and fragmented funding access are major hurdles. They have called for simpler and more predictable financial support mechanisms and urged the government to raise the GST registration threshold from Rs 20 lakh to at least Rs 1 crore, citing inflation and rising operational costs.

The startup sector is hopeful that Union Budget 2026 will bring cheerful news for the whole ecosystem and there will be many boosters for the growth of this crucial sectors.