Finance Minister Nirmala Sitharaman’s Union Budget 2026 has unveiled a comprehensive package for India’s startup ecosystem, headlined by a Rs 10,000 crore SME Growth Fund and multiple initiatives targeting technology and innovation.
Key Takeaways
- Rs 10,000 crore SME Growth Fund announced
- Fund of Funds receives Rs 10,000 crore top-up
- Tax holiday until 2047 for cloud services
- IndiaAI Mission gets Rs 10,300 crore allocation
- Startup recognition period extended to 15 years for deep-tech
Major Funding Initiatives
SME Growth Fund
The new Rs 10,000 crore SME Growth Fund aims to provide equity support to high-growth small and medium enterprises. This addresses a critical funding gap in the Indian startup ecosystem between angel/seed funding and institutional VC rounds.
Fund of Funds Top-Up
The existing Fund of Funds for Startups receives an additional Rs 10,000 crore allocation, significantly expanding the capital available for venture capital funds investing in Indian startups.
Self-Reliant India Fund
A Rs 2,000 crore Self-Reliant India Fund will support micro-enterprises and small businesses, recognizing their importance to economic growth and employment.
Technology-Specific Measures
Cloud Services Tax Holiday
Foreign companies providing cloud services using Indian data centers will receive tax holidays extending until 2047. This aims to make India a global cloud computing hub and encourage data localization.
IndiaAI Mission
The budget allocates Rs 10,300 crore to the IndiaAI Mission, which will provide subsidized compute access to startups. The mission will establish 38,000 GPUs for AI development.
Recognition and Support
Startup recognition period extended from 10 to 15 years for deep-tech companies, allowing them more time to access government benefits while developing complex technologies.
Related: IndiaAI Mission: 38,000 GPUs to Power Indian Startups