Startups Demand Tax Relief, Easier Credit Ahead of Union Budget 2026

Industry leaders said that while several government schemes are already in place, gaps remain in implementation, particularly in funding access, taxation and regulatory compliance, which continue to challenge young startups.

Bharath Krishna Rao, CEO and Co-founder of electric mobility startup Emobi, stressed the need for targeted subsidies and support linked to actual vehicle sales.

"Extending subsidies and providing targeted support to startups based on actual 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".

He further added, "Although central government schemes such as CGTMSE, MUDRA and PMEGP are intended to improve access to credit, their effectiveness remains limited due to continued collateral requirements imposed by banks and NBFCs. Despite government-backed guarantees, only a small number of proposals are approved, restricting the flow of institutional finance to startups".

He called for clearer and more uniform guidelines to ensure lending institutions fully recognise and implement government-backed guarantee mechanisms.

Startups working in social and impact-driven sectors are also expecting focused support.

Abhinav Rao Kuchipudi, Founder and CEO of ParentVerse, said early-stage startups are looking for enhanced incentives, simplified compliance structures and better access to funding and grants.

He said, "We look forward to enhanced incentives for early-stage startups, simplified compliance structures, and better access to funding and grants for impact-driven ventures. Tax benefits for startups investing in family-focused innovation, women-led enterprises, and tech-enabled education would further accelerate growth".

Kuchipudi also urged the government to place greater emphasis on early childhood development, mental health and digital-first parenting solutions in the upcoming budget.

He said increased allocations to child well-being, parental education, and mental health awareness would help build a resilient future generation.

From the employment and HR space, Devashish Sharma, Co-founder and CEO of Taggd, said the Union Budget 2026 offers an opportunity to strengthen labour reforms, workforce readiness and employer confidence.

He said, "The Union Budget 2026 presents a lucrative opportunity to strengthen the trifecta of labour reforms, workforce readiness, and employer confidence. The implemented labour reforms have started to simplify compliance and improve worker protection. However, the substantial impact will depend on whether organisations feel secure enough to hire and invest in skilling and reskilling. The upcoming budget can build on this progress by increasing employer-led training and supporting technology adoption without disrupting the workforce".

Meanwhile, Avinash Deshmukh, COO of the health and wellness startup iThrive, said complex compliance and fragmented access to funding are major hurdles for startups.

He stated, "What is really holding startups back today is not their intent or innovation-it is survival within a complex compliance and funding environment. Access to credit remains fragmented and difficult, especially for those in early-stage businesses doing meaningful work. Without uncomplicated, more predictable mechanisms for financial support, many up-and-coming startups cannot survive.

Another important reform is to raise the GST registration threshold from Rs 20 lakh to a minimum of Rs 1 crore. With inflation and operational realities, Rs 20 lakh is no longer a meaningful benchmark".

Overall, startups hope the Union Budget 2026 will address these concerns and create a more supportive ecosystem for innovation, job creation, and sustainable growth.

- ANI