The 2025 Union Budget focuses on helping India’s startups and small businesses grow. Key steps like a ₹10,000 crore Fund for Startups and easier taxes are designed to support innovation and job creation. This article explains how these budget measures will boost startups and MSMEs in India.
1. New Fund of Funds (FoF) for Startups
The Finance Minister, Nirmala Sitharaman, has announced an additional ₹10,000 crore for the Fund of Funds (FoF) to further promote startups in India. This fund is designed to provide financial support to emerging startups at different stages of their growth, from seed to expansion, and aims to reduce dependence on foreign capital. The FoF scheme, first introduced in 2016, has helped nurture a thriving startup ecosystem in India, contributing to over 1.5 lakh recognized startups under the Department for Promotion of Industry and Internal Trade (DPIIT).
2. Encouraging Domestic Investment
With the renewed FoF, the government aims not only to support startups but also to attract domestic capital. Sitharaman highlighted that this initiative will boost homegrown venture capital funds, making India more competitive in the global startup ecosystem. The initiative aligns with the Startup India action plan launched in 2016 and supports the country’s ongoing efforts to create a hub for innovation and entrepreneurship.
3. Focus on MSME Growth and Job Creation
In addition to supporting startups, the government has set its sights on MSMEs, recognizing their importance in driving economic growth and job creation. The budget proposes increased investment and turnover limits for MSMEs, helping them scale up and expand their reach. This will benefit over 5.7 crore MSMEs in India, including more than 1 crore registered businesses. By providing more opportunities for growth, the government is aiming to create more jobs and strengthen the economic fabric of India.
4. Special Schemes for Women, SC/ST Entrepreneurs
The government has also introduced specific initiatives aimed at supporting underrepresented groups in the business world. A new ₹10,000 crore scheme for women, SC, and ST entrepreneurs will encourage the growth of MSMEs within these communities. Additionally, the Fund of Funds will support first-time entrepreneurs from these groups, creating more inclusive opportunities in the startup ecosystem.
5. Infrastructure and Technology Support for MSMEs
As part of its broader plan, the government has also announced initiatives to improve infrastructure and technological capabilities for MSMEs. This includes support for digital transformation, which will help these businesses operate more efficiently and reach new markets. The government’s push to enhance infrastructure and ease of doing business will empower MSMEs to thrive in an increasingly competitive global market.
The Union Budget 2025 reflects the government’s continued commitment to fostering a vibrant and innovative startup ecosystem and supporting the growth of MSMEs in India. Through initiatives like the Fund of Funds, increased support for underrepresented entrepreneurs, and expanded infrastructure, the government is creating an environment that encourages innovation, job creation, and sustainable growth. These measures aim to strengthen India’s position as a global leader in innovation and entrepreneurship.
