Finance Minister Nirmala Sitharaman’s Union Budget 2025 has spread considerable optimism across India including corporates and startups. The agenda that has gained wide acceptance and appreciation relates to steps for boosting innovation, easing tax burdens, and augmenting global competitiveness. From tax relief for the middle class to historic reforms in foreign direct investment (FDI), the Budget is now being treated as an economic booster and business enlarger.
Tax Relief and Consumption Boost
The most talked-about announcements would include exemption from income tax for individuals earning up to ₹12 lakh per year. This is expected to put more money in the hands of the middle class, which should drive consumption and stimulate demand across sectors such as retail, automobiles, and consumer durables. “This will energize consumption and growth at a critical time for the Indian economy,” gushed Radhika Gupta, MD, and CEO of Edelweiss Mutual Funds.
Startups, Corporates, and Innovation at Centre Stage in Union Budget 2025
A ₹10,000 crore Fund of Funds for Startups is also provided, which would provide a fillip to innovation in fintech, health tech, and clean energy. “The fund will go a long way in helping seed-stage startups overcome the funding chasm to be able to take on private capital,” said Chirag Shah of BlackSoil.
Further, the government has enhanced the tax benefits period for startups by five years. So, entities formed before April 1, 2030, are eligible for these benefits. The extension will make India’s ecosystem of startups an even stronger venture for entrepreneurship and job creation.
100% FDI in Insurance: A Revitalizing Decision
This will be another bold step from the government, by increasing FDI limits for the insurance sector to 100% from the existing 74% percent. In its words of excitement, the “transformative reform” – an innovation of competitiveness and much greater penetration that drives insurance through, said Max Life Insurance’s MD & CEO, Prashant Tripathy. A similar opinion was there by Bimapay Finsure’s Hanut Mehta on long-run positives for Indian financial and health sectors.
Emphasis on Ease of Doing Business
The Budget also addressed key concerns of the corporate sector, such as an inverted duty structure and capital goods imports. Anish Shah, MD and CEO of Mahindra & Mahindra appreciated the government’s focus on easing business operations and said that these measures would have long-term positive impacts on business.
On the other hand, the introduction of a three-year block for international transaction transfer pricing and expanded safe harbor rules should help in lowering litigation and providing tax certainty, making India an attractive hub for global business.
The Budget put forth targeted incentives for sectors that had potential, such as electronics manufacturing, inland vessels, and renewable energy. The deadline to invest from sovereign and pension funds has been extended until 2030; one may expect major capital inflows into infrastructure projects.
A Vision for the Future
The Budget 2025 shows the government’s commitment to creating growth, innovation, and ease of doing business, despite an estimated loss of ₹1 lakh crore in revenue. The roadmap for a $5 trillion economy will increasingly depend on key reforms in the economic trajectory of the country.
Also, see: Union Budget 2025: Is India’s Middle Class Under Pressure Due to Tax Terrorism?