As India prepares for the Union Budget 2025, anticipation is building among businesses, startups, MSMEs, and individuals alike. The budget, set to be presented by Finance Minister Nirmala Sitharaman on February 1, 2025, is seen as a crucial opportunity to address key economic challenges and stimulate long-term growth. Stakeholders across industries are eagerly awaiting reforms that could drive digital transformation, promote sustainability, simplify tax systems, and enhance infrastructure.
This year’s budget is expected to be a balancing act, one that aligns with Prime Minister Narendra Modi’s vision of a self-reliant and robust economy. Key sectors ranging from startups, fintech, and digital transformation to green technologies and MSMEs are hoping for targeted measures that would help accelerate India’s economic recovery, strengthen its position as a global business hub, and support inclusive growth.
Digital Transformation and Startup Growth
For businesses at the cutting edge of India’s digital transformation, the 2025 budget is seen as a chance to further stimulate innovation. Ramesh Bafna, CFO of Zepto, emphasized that the startup sector, particularly those with international links, is looking for measures that would ease the process of consolidation and funding in India. “We expect the upcoming budget to introduce crucial measures to further uplift the startup segment in India, particularly by allowing tax neutrality on the migration of shareholding from overseas to India,” Bafna noted. Such reforms would, according to Bafna, enable startups to consolidate operations locally, boosting investment and economic growth.
Startups in the digital and tech sectors also have high hopes for more support for emerging technologies like AI, IoT, and SaaS. Sandeep Gupta, Founder & CEO of Droom, expressed his expectations for a push towards indigenous capabilities in AI and data science, especially in sectors such as automotive. “We hope this year’s budget will focus on supporting the digital transformation of the automotive sector, especially by incentivizing eco-friendly vehicles and simplifying GST structures,” Gupta explained.
With technology being central to India’s growth story, the government’s focus on improving digital infrastructure—like high-speed internet and expanding data centers—remains a top priority for tech companies. Khadim Batti, CEO of Whatfix, reiterated that the SaaS industry is eyeing a favorable budget that would encourage investment in the digital economy. “We expect policies that would enhance research and development funding, create an enabling environment for startups, and simplify foreign investment rules,” Batti said.
Reforms for MSMEs and the Lending Sector
For India’s vast network of MSMEs, the budget is seen as a pivotal moment to address lingering challenges like access to credit, liquidity, and regulatory complexity. Arun Kumar Nayyar, CEO of NeoGrowth Credit, highlighted that MSMEs need improved credit access and digital infrastructure to remain competitive. “The government must also focus on skilling programs and regulatory reforms to ensure MSMEs can drive long-term growth,” Nayyar said.
Echoing similar sentiments, Yashoraj Tyagi, CEO of CASHe, emphasized that the digital lending ecosystem needs more robust consumer protection and regulatory frameworks. “Digital lending has seen a rise in fraud and cyber scams, and the upcoming budget could offer much-needed regulatory clarity to strengthen this sector,” he added. Several stakeholders also called for a dedicated India Fintech Credit Fund (IFCF), which could provide affordable financing for smaller fintech companies, driving financial inclusion.
Focus on Sustainability and Green Technologies
As India aims to position itself as a global leader in sustainability, the 2025 budget is expected to support sectors that are focused on environmental goals. Sandiip Bhammer, Managing Partner at Green Frontier Capital, stressed the importance of scaling production-linked incentives (PLIs) for electric vehicle (EV) manufacturing and offering tax incentives for research in climate-tech solutions. “This budget offers a unique opportunity for India to take the lead in green technologies and electric mobility,” he said.
India’s green-tech industry has witnessed significant growth in recent years, and stakeholders believe that targeted policies and financial incentives are crucial to accelerate this transformation. For instance, Bammer called for greater incentives for renewable energy adoption, tax benefits for R&D in green technologies, and a roadmap for fostering private capital investments in sustainability.
Streamlining the Tax System
One of the most anticipated reforms ahead of the 2025 Budget is the simplification of India’s complex tax system. The middle class, in particular, is hoping for higher income tax exemptions and relief from burdensome compliance. “The current tax system includes a myriad of exemptions and deductions, which poses significant challenges for taxpayers. We hope to see reforms that make tax filing simpler and more transparent,” said Shefali Mundra, a tax expert with ClearTax.
Startups and the corporate sector are also calling for simplifications in the taxation of employee stock options (ESOPs) and long-term capital gains (LTCG). Anirudh A Damani, Managing Partner at Artha Venture Fund, highlighted that the removal of the “angel tax” could encourage early-stage investments and streamline the entrepreneurial ecosystem. “We need to see the budget introduce reforms that support young businesses, especially in terms of funding and taxation,” Damani remarked.
Infrastructure and Regional Growth
Beyond digital and financial reforms, infrastructure development remains a central theme. Utham Gowda, Founder & CEO of Captain Fresh, highlighted that India’s seafood export sector would benefit from targeted investments in technology integration, infrastructure, and trade agreements. “We hope the government will prioritize policies that foster collaboration between tech startups and the marine sector to meet global market demands,” Gowda said.
The growing importance of Tier II and Tier III cities in India’s economic growth was also emphasized by stakeholders like Neeraj Tyagi of We Founder Circle. “The government should streamline fundraising for startups in smaller cities and offer incentives for local incubators. By supporting regional startups, we can help drive innovation across sectors like fintech, healthcare, and clean energy,” Tyagi explained.
The Road Ahead
With less than a week before the Union Budget is presented, the economic community remains hopeful that Budget 2025 will meet these varied expectations. Industry leaders are looking for a budget that encourages innovation, supports the growth of MSMEs, boosts infrastructure, and strengthens India’s position as a global technology and sustainability hub.
For startups, MSMEs, and large enterprises alike, the Union Budget is not just a fiscal policy document, but a roadmap to shaping India’s economic future. Whether through tax reforms, infrastructure investments, or digital transformation incentives, the upcoming budget has the potential to chart a course for a more self-reliant and globally competitive India.
