India's start-up ecosystem has urged the central government to introduce a stronger, more supportive fiscal and regulatory framework in the upcoming Union Budget 2026, according to sources. During a recent pre-budget consultation with FM Nirmala Sitharaman and senior officials, representatives from across the entrepreneurial landscape reportedly pushed for a wide range of reforms aimed at improving access to capital, easing credit constraints and accelerating innovation.
Sources said the delegation, comprising founders, investors, academics and sector leaders, emphasised that the current macroeconomic environment continues to exert pressure on growth-stage companies, making both direct and indirect support essential. With funding cycles slowing and risk capital becoming more selective, start-ups have called for a sharper policy focus on entrepreneurship-driven job creation and technological competitiveness.
A major demand put forward was a significant expansion of the Fund of Funds corpus. According to sources, industry representatives argued that additional allocations are urgently needed as early-stage ventures struggle to secure equity funding. They highlighted that the Fund of Funds has played a catalytic role by channeling investments through venture capital firms, particularly benefiting technology-led businesses in high-growth segments.
The sector also renewed its call for streamlined credit access. Founders reportedly told the Finance Ministry that despite multiple schemes launched over the years, banking norms remain restrictive for start-ups lacking collateral or long credit histories. To address this, the community sought deeper administrative reforms enabling banks and financial institutions to offer larger term loans especially to first-time entrepreneurs and women-led companies, who continue to face structural barriers in securing credit.
Taxation was another prominent theme during the discussions. Sources said start-ups requested targeted tax breaks for early-stage companies, noting that this would ease working capital pressure during their formative years. Several founders also recommended greater flexibility in tax compliance and relief on angel and early-stage investments, which they believe could improve survival rates in the first three years, widely regarded as the most vulnerable period for new ventures.
The delegation further highlighted the need to strengthen India's intellectual property protection framework. According to sources, start-ups expressed concerns over delayed patent approvals, high litigation costs and limited enforcement capacity, which often deter innovation-focused companies. They urged the government to establish faster processing timelines, improve dispute resolution mechanisms and offer stronger safeguards for homegrown technologies, especially in globally competitive sectors.
Beyond immediate financial incentives, industry representatives advocated for higher public investment in research and development (R&D) across emerging domains such as artificial intelligence, deep-tech, sustainability technologies and frontier innovation. Sources added that global competitors benefit from substantial government-led R&D support, and a similar thrust in India could help domestic companies scale internationally.
According to sources, the Finance Ministry is currently evaluating submissions from the start-up community along with recommendations from other sectors as part of its pre-budget exercise. These inputs are expected to shape the contours of the Union Budget 2026, which is anticipated to prioritise growth, innovation, digital competitiveness and employment generation.
How many of these proposals will ultimately find a place in the Union Budget 2026 remains to be seen, but the expectations from India's start-up ecosystem are clear and ambitious.
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