The 2026 Budget Wishlist: Startups Call for Policy Shifts to Fuel Innovation and Investment

Startups Demand Capital Access, IP Reform, and Tax Relief, Ahead of Union Budget 2026

India’s start-up ecosystem has urged the central government to come up with a robust, more supportive fiscal and regulatory framework in the upcoming Union Budget 2026, says sources. During a recent pre-budget discussion with FM Nirmala Sitharaman and senior officials, representatives from across the entrepreneurial landscape reportedly requested a number of reforms to improve access to capital, easing credit constraints, and also accelerating innovation.

According to the sources, the delegation, consisting of 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. Due to slower funding cycles and risk capital becoming more selective, startups have called for a deeper policy focus on entrepreneurship-driven employment opportunities and technological competitiveness.

A major demand put forward was a significant expansion of the Fund of Funds corpus. Sources also confirmed that the industry representatives argued that additional allocations are urgently needed as early-stage ventures struggle to secure equity funding. They underscored that the Fund of Funds have played a catalytic role by channeling investments through venture capital firms, primarily benefitting technology-led businesses in high-growth segments.

The sector also renewed its call for streamlined access to credit. Founders reportedly told the Finance Ministry that despite multiple schemes have been introduced over the years, banking norms remain restrictive for start-ups lacking collateral or long credit histories. To overcome this barrier, the community sought deeper administrative reforms enabling banks and financial institutions to offer larger term loans, especially to first-time entrepreneurs and women-driven companies, who continue to face structural barriers to securing credit.

Taxation was another key discussion theme. Sources said start-ups also sought targeted tax breaks for early-stage companies, noting that this would eliminate working capital pressure during their formative years. Many founders also recommended greater flexibility in tax compliance  and relief on angel and early-stage investments, which they feel could enhance survival rates in the first three years, widely regarded as the most vulnerable period for new ventures.

The delegation also highlighted the need to strengthen India’s intellectual property protection framework. Start-ups also expressed their dissatisfaction over prolonged time consumption for patent approvals, high litigation costs, and limited enforcement capacity, which often deter innovation-focused companies. They urged the government to establish faster and expedited processing timelines, improve disputes resolution mechanisms, and offer robust protection for homegrown technologies, especially in globally competitive sectors.

Beyond immediate financial incentives, industry representatives also advocated for higher public investment in research and development (R&D) across domains with high growth potential, such as Artificial Intelligence (AI), Deep-tech, Sustainability technologies, frontier innovation, etc. Sources added that global competitors benefit from substantial government-led R&D support, and a familiar thrust in India could help homegrown companies scale internationally.

The Finance Ministry is currently evaluating submissions from the startup community along with recommendations from other sectors as part of its pre-budget exercise. Such inputs can play a crucial role in shaping the contours of the Union Budget 2026, which is expected to prioritise growth, innovation, digital competitiveness, and employment opportunities generation.

Let’s see how many of these proposals will find a place in the Union Budget 2026. The expectations from India’s start-up ecosystem are clear and ambitious.