With the Union Budget 2026 set for February 1, India’s venture capital (VC) ecosystem stands at a pivotal juncture. After years of rapid expansion, VC funding momentum moderated in 2025, with Indian tech startups raising $11 Bn during the year and VC investments per capita touching $7.5, according to Inc42’s Annual Indian Startup Trends Report. Overall, with a total of 126 unicorns, 147 soonicorns, 60+ minicorns, 70K+ tech startups launched to date and 57 new-age tech startups listed – India’s startup ecosystem is definitely structurally strong. However, there is enough data to showcase that the era of abundant, easy capital is giving way to a more disciplined, performance-driven startup funding environment in India moving forth. Against this backdrop, India’s VC community is urging the government to shift its focus in Union Budget 2026 from conventional tax-based incentives for startups and announcement of future funding allocation to deeper reforms that can unlock scale-oriented growth. Areas such as blended capital structures, access to flexible credit, deeptech R&D funding, and efficient grant execution have emerged as top priorities. In the view of investors Inc42 spoke with, this year’s budget could prove to be a pivotal moment that could define India’s innovation ecosystem further… Read MoreInc42 Media
