Start-up sector pushes for tax incentives, capital access and stronger IP protection in pre-budget meeting with Finance Ministry

India's start-up ecosystem has sought a comprehensive set of fiscal and regulatory measures to strengthen innovation, expand global competitiveness and ease long-standing funding constraints during its recent pre-budget consultation with Finance Minister Nirmala Sitharaman and senior officials of the Finance Ministry, sources told CNBC-TV18.

According to sources, representatives from across the start-up landscape urged the government to prioritise enhanced access to capital, targeted tax incentives and deeper administrative reforms as part of the upcoming Union Budget’s policy framework for entrepreneurship. The discussions highlighted the sector’s need for both direct and indirect support as macroeconomic headwinds and funding pressures continue to weigh on growth-stage companies.

Sources said the "sector placed substantial emphasis on increasing the corpus for the Fund of Funds, arguing that additional allocations are critical at a time when equity funding cycles have slowed and early-stage ventures need institutional capital to scale."

Start-ups conveyed that the Fund of Funds plays a catalytic role in unlocking investments through venture capital partners, especially for technology-led companies operating in high-growth segments, sources added.

Another major point raised during the meeting, according to sources, was streamlined credit access. Founders stressed that despite multiple initiatives over the years, banking norms remain restrictive for companies without established assets or long credit histories. To mitigate this, start-up representatives sought administrative reforms that would enable banks and financial institutions to provide larger term loans, particularly for first-time entrepreneurs and women-led companies, who face disproportionate challenges in securing credit.

In addition, sources said the sector sought tax breaks for early-stage start-ups, noting that such fiscal relief would ease working capital pressures during their formative years. Several founders pointed out that flexibility in tax compliance and reduced burdens on angel and early-stage investments could help accelerate company formation and improve survival rates in the first three years — a period considered most vulnerable for new ventures.

Another key priority presented during the discussions was strengthening intellectual property protection frameworks, sources added. Start-ups argued that in a globalised technology environment, delays in patent approvals, limited enforcement capacity and high IP litigation costs remain deterrents for companies operating in innovation-intensive areas. They urged the government to build a system that supports faster processing timelines and provides more robust safeguards to protect homegrown technologies.

Beyond immediate financial incentives, the sector urged the government to allocate greater funding for research and development, particularly in emerging domains such as AI, deep-tech, sustainability-focused technologies and frontier innovations, sources told CNBC-TV18. Adding that, global peers benefit from significant government-led R&D support, and a similar push in India could help level the playing field for domestic companies aspiring to expand internationally.

Sources said the delegation comprised a diverse mix of founders, investors, academics and sector leaders. Among those who attended the meeting were Rohan Shridhar, Co-founder and COO, Teal India; Ravichandran V, Chairperson and Trustee, Evidyaloka; Aman Gupta, Co-founder, BoAt; Sneh Vaswani of Miko; Prerna Kalra of Daalchini Technologies Private Limited; Prof. Ashutosh Sarkar from IIM Kozhikode; L. Arumugam, Co-founder, Translation Endeavors, who also serves as Chair of IC at ADB Ventures, Member of the Board at IIMA Ventures and Member of IC at Ascent Capital; Bhuman Dani of 100percent Nourishment Private Limited; and Shashank Umakant Bijapur of Draftspotting Technologies Private Limited, amongst many others.

According to sources, the Finance Ministry is assessing inputs from the start-up community along with submissions from other sectors as part of its ongoing pre-budget consultations. The recommendations will feed into broader considerations for the upcoming Union Budget, which is expected to focus on growth, technological competitiveness and entrepreneurship-driven job creation.

To be seen is how much of this actually transpires in the upcoming union budget in 2026.