Budget 2026-27: Why India's startups are not celebrating
The new Union Budget brought some fresh funding—₹10,000 crore for SMEs, ₹2,000 crore for micro businesses, and ₹900 crore for Startup India Fund of Funds 2.0.
There's also an expanded push for electronics and semiconductor manufacturing.
But despite these moves, the vibe among startups is pretty lukewarm.
ESOP deferral is a small band-aid
Startups were hoping for real tax breaks on ESOPs (stock options), clearer rules on overseas listings ("reverse flipping"), and fixes to old angel tax issues—but none of that happened.
The ESOP deferral only helps a small group, and taxes still hit at sale.
Plus, a recent court ruling makes foreign investment tougher, and regulatory uncertainty has also affected companies with Chinese backers or those looking to return capital.
While early-stage funding gets a boost, bigger pain points like growth credit and longer tax holidays were left out—making it harder for startups to scale up or go public in India.