Room to push tax threshold higher: What Indian startup ecosystem said about Budget 2025
On Budget day, YourStory hosted a LinkedIn Live, where the Indian startup founders and investors shared their views on the first full Budget of the Modi 3.0 government.
Union Budget 2025 received mixed reactions from the Indian startup ecosystem stakeholders, as Finance Minister Nirmala Sitharaman announced many measures to boost the Indian economy.
The Finance Minister emphasised that Budget 2025 is centred on accelerating growth, promoting inclusive development, and empowering India’s middle class.
On the Budget day, YourStory hosted a LinkedIn Live, where industry experts, including Vani Kola of Kaalari Capital; Kunal Khattar of AvantEdge, CashRich’s Sougata Basu; Archana Jahagirdar, Founder and Managing Partner of Rukam Capital, and Siddharth Pai, Managing Partner of 3one4 Capital, shared their views on the first full Budget of the Modi 3.0 government.
A win for the startup ecosystem
Archana Jahagirdar of Rukam Capital welcomed the government’s focus on deepening the pool of risk capital for the Indian startup ecosystem. As a member of the National Startup Advisory Council, she highlighted the significance of fund allocations to support high-conviction, moonshot startups.
She said, “The government's focus on risk capital can catalyse broader investor engagement, essential for long-term growth.”
Sharing how the tax slabs could be improved further to accommodate the aspirations of Gen Z and millennial consumers, Jahagirdar added, "While the zero tax on Rs 12 lakh income is a welcome move, there’s room to push the threshold higher."
Parity in taxation for Indian AIFs
3one4 Capital Managing Partner Siddharth Pai raised concerns about the unequal treatment of Indian Alternative Investment Funds (AIFs) compared to Foreign Portfolio Investors (FPIs). He emphasised the importance of creating tax certainty for Indian AIFs, much like the benefits granted to FPIs in 2014.
Pai said the lack of clarity has discouraged foreign investment in Indian AIFs, making it harder for Indian fund managers to compete globally. "This change could level the playing field, not just in terms of domicile, but across all investment factors.”
He also highlighted the need for larger domestic funding, particularly as global capital flows are drying up due to rising US treasury yields and shifting geopolitical dynamics. He said, “Deep-tech initiatives still lack budgetary support, despite the Rs 1 lakh crore promise made in the previous budget.”
Strengthening India’s EV battery ecosystem
Kunal Khattar, Founder of AvantEdge, emphasised the potential of the Battery-as-a-Service (BaaS) model in lowering costs and enhancing India's battery manufacturing capabilities.
The BaaS model, he explained, allows consumers to purchase vehicles without paying upfront for the battery, thus reducing the initial cost.
He also welcomed the relaxation of import duties on cobalt power and waste, scrap of lithium-ion batteries, lead, zinc and 12 other critical minerals, calling them crucial for strengthening domestic battery manufacturing.
He further stressed the importance of extending battery lifespans, allowing them to be repurposed for second-life applications and energy storage solutions. "This can help reduce costs over time while supporting sustainability."
AI, infrastructure, and women entrepreneurs
Vani Kola highlighted the growing importance of AI as a foundational technology. "AI is not just a tool, but an enabler of deep tech and other innovations."
She emphasised the need for initiatives to encourage women entrepreneurs, advocating for more seed funds, and increased female representation at policy-making levels. “More women’s voices at the table can drive greater innovation,” she said.
Employment and taxation challenges
Sougata Basu, Founder of CashRich, raised concerns about employment generation and the stability of India’s tax policies. He warned that frequent changes in taxation rules could push businesses to relocate to tax-friendly regions like Dubai or Singapore. "If we keep changing the rules, businesses will move, and the jobs will be created elsewhere,” he cautioned.
Basu also expressed his concerns about AI’s potential to reduce job opportunities in sectors like KPOs(Knowledge Process Outsourcing) and coding, suggesting that many service sector jobs could face a decline in the coming years. "AI may not generate as many new jobs in India as anticipated," he noted.
Despite acknowledging the overall positive direction of the Budget, Basu remained cautious about its broader implications. "The Budget is promising, but we cannot make a final judgment until we get the full details next week. What we have now feels more like marketing—let’s see if it translates into tangible results," he said.
Edited by Suman Singh