Union Budget 2025: Boosting Startups and Investment-Friendly Policies

The Union Budget 2025 introduces key initiatives to strengthen India’s startup ecosystem and attract foreign investments. These measures aim to encourage entrepreneurship, enhance global competitiveness, and foster economic growth.

Key Announcements​

1. Extension of Startup Tax Benefits Until 2030​

• The eligibility period for tax benefits has been extended by five years.
• Now, startups incorporated before April 1, 2030, will qualify for tax exemptions.
• This provides long-term stability and encourages more entrepreneurs to enter the market.

2. Presumptive Taxation for Non-Resident Investors in Electronics Manufacturing​

• A new presumptive taxation regime has been introduced for non-resident investors providing services to electronic manufacturing units.
• Safe harbor provisions will apply to non-residents storing components for supply to specific electronics manufacturers.
• These measures increase tax clarity and attract foreign investment in the Make in India initiative.

3. Expansion of Investment Benefits for IFSC Entities​

• To boost activity in India’s International Financial Services Centre (IFSC), the government announced tax benefitsfor:
  • Ship leasing units
  • Insurance offices
  • Treasury centers of global companies
• The deadline to claim tax benefits for businesses in IFSC has been extended to March 31, 2030.

4. Sovereign Wealth & Pension Fund Investment Extension​

• Investment deadlines for sovereign wealth and pension funds have been extended by five years, up to March 31, 2030.
• This aims to attract long-term capital in India’s infrastructure sector.

5. Expansion of Tonnage Tax Scheme to Inland Vessels​

• Currently, the tonnage tax scheme is applicable only to seagoing ships.
• This benefit is now extended to inland vessels under the Indian Vessels Act, 2021, encouraging growth in inland water transport.

Impact of These Reforms​

1. Strengthening the Startup Ecosystem​

• Tax certainty until 2030 will provide a stable regulatory environment.
• Increased funding opportunities will encourage more entrepreneurs to launch ventures.

2. Attracting Foreign Investment​

• Safe harbor and presumptive taxation measures will boost investor confidence.
• IFSC incentives make India a more competitive global financial hub.

3. Infrastructure Growth and Employment Creation​

• The extension of sovereign fund investments ensures continued funding for critical projects.
• Expansion of inland shipping under the tonnage tax scheme will promote regional connectivity and trade.

Conclusion​

The Union Budget 2025 takes a bold step in supporting startups, foreign investments, and infrastructure development. With extended tax benefits, new investor-friendly policies, and long-term funding support, India is on track to becoming a global leader in entrepreneurship and financial services. These policies not only boost economic growth but also create job opportunities and sustainable business environments.