This Union Budget 2025 by Finance Minister Nirmala Sitharaman marks a landmark moment for India's startup ecosystem and its aspirations to lead the global technological frontier. The budget has aptly grasped the urgency to nurture innovation and entrepreneurship, especially in new-age sectors such as deeptech and artificial intelligence (AI).
Major announcements include an additional Rs 10,000 crore infusion into the Fund of Funds Scheme, a strategic plan meant to infuse much-needed capital into startups through SEBI registered Alternative Investment Funds.The mechanism has already attracted commitments of over Rs 91,000 crore and has been a good guarantee that all sorts of startups-whether it be fintech, health tech, clean energy, or the critical ones: AI and deeptech-keep getting their vital venture funding. The widened horizon of FFS, this time with fresh commitment, means there is strong intent to help innovative ideas bring Indian economy out of the stagnation.
The allocation of Rs 20,000 crore specifically for R&D in the area of deeptech can be considered to be another bold step. Generally, deeptech includes new-age areas, such as artificial intelligence, quantum computing, and biotechnology apart from advanced manufacturing. Deeptech has usually faced funding crises because of high research complexity involved and longer periods of gestation. The government is, therefore, establishing a Fund of Funds dedicated to deeptech startups, addressing the inherent challenges of these high-risk, high-reward ventures, placing India in league with global leaders like the United States and Europe, where funding in these domains has witnessed substantial growth. This strategic infusion of capital is poised to propel India into the realm of next-generation technologies, reinforcing the nation's global competitive advantage.
In addition to these funding initiatives, the budget has also brought several measures that are aimed at relieving the operational burdens on the startups. The tax benefits for new companies would be extended for five more years, which will encourage early-stage innovation. Moreover, the credit guarantee for the startups is set to double from Rs 10 crore to Rs 20 crore with a reduced guarantee fee that will effectively reduce the financial barriers for emerging businesses. These are especially important in allowing startups to scale operations without the drag of high capital costs.
Education has also received special attention under the budget as it has allotted Rs 500 crore for setting up three Centres of Excellence in AI. The integration of AI into the education framework will foster a pool of talent ready with the right skills to power future technological innovations.
These initiatives put India at the forefront of emerging technologies, setting the stage for a thriving innovation ecosystem. Deepened focus on AI, deeptech, and startup empowerment through the 2025 Union Budget sets the stage for an India-led technological revolution in the offing.
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