Budget 2025 To Boost Startups & Msmes With Expanded Financial Support

(MENAFN- KNN India) New Delhi, Jan 22 (KNN) India's upcoming Union Budget for 2025-26 is set to strengthen financial support for startups and small businesses, which form a crucial backbone of the national economy contributing approximately one-third of the country's economic output.

According to a recent Mint report, the government plans to tackle key financial challenges faced by these sectors, particularly in areas of working capital accessibility, trade finance, and growth funding under favorable terms.

The government's initiative is expected to expand support through existing frameworks overseen by the Department for Promotion of Industry and Internal Trade (DPIIT) and the Ministry of Micro, Small, and Medium Enterprises (MSME).

This development comes at a critical time when the MSME sector, which accounts for over 29 percent of India's GDP and provides employment to more than 247 million people, has been grappling with rising capital costs following the Reserve Bank of India's Monetary Policy Committee's 250 basis points rate increase since May 2022.

The DPIIT's Fund of Funds for Startups, established in 2016, has demonstrated significant impact by supporting 1,120 startups with funding of Rs 19,992 crore, as reported by the Small Industries Development Bank of India (Sidbi).

The scheme, which currently operates with a budget allocation of Rs 1,200 crore in the present fiscal year, channels capital to startups through Sebi-registered alternative investment funds using equity and equity-linked instruments.

In a potential policy innovation, the Centre is reportedly considering allowing startups to leverage their intangible assets, including patents, trademarks, and copyrights, as collateral for financing.
This move could open new avenues for startup funding and address the sector's persistent demand for more accessible and affordable credit options.

(KNN Bureau)

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