After the funding winter, India’s startup ecosystem has settled into what investors increasingly describe as a “new normal”. In 2025, private funding stabilised but still remained restrained, with startups raising about $11 Bn across 936 deals, an 8% decline year-on-year and a fraction of the capital deployed during the peak years of 2021 and 2022. As startups operate in a more disciplined funding environment – shaped by tighter capital, slower scale-up cycles, and rising public market scrutiny – policy clarity has become increasingly consequential. Taxation and regulatory certainty now play a larger role in shaping fundraising outcomes, employee compensation structures, and the viability of research-led businesses than they did during the capital-abundant years. It is against this backdrop that the startup ecosystem is looking at the upcoming Union Budget 2026-27, which finance minister Nirmala Sitharaman will present on February 1 (Sunday). Rather than sweeping incentives, founders and investors want the finance minister to address unresolved issues around angel tax and provide relief on long-standing demands for a relook at ESOP structure, areas that can influence the ecosystem’s next phase of growth. Angel Tax: The Lingering Impact Of A Rolled-Back Law The Centre abolished the controversial angel tax provisions for startups… Read MoreInc42 Media
