SUMMARY

The government must acknowledge the strategic significance of emerging technologies such as AI, Web3, and blockchain and cultivate an environment that promotes their development.

As an entrepreneur with a strong commitment to India’s growth narrative and the crypto domain, significant announcements from the Union Budget 2025-26 are seen as not merely encouraging but revolutionary, particularly those aligning with the vision of “Make for India, Make for the World.” The budget’s emphasis on innovation, technology, and startups indicates a solid understanding of the importance these sectors have in propelling India towards a $10 trillion economy.

The standout aspect of this year’s budget is the increase in the income tax exemption limit to INR 12 Lakh, a measure that will greatly benefit the middle class and increase disposable income. Furthermore, the focus on four main groups—women, the economically disadvantaged, youth, and farmers—is commendable. India’s growth narrative will only be complete when every segment of society reaps the benefits, and this budget takes significant steps to achieve that.

Another notable announcement is the establishment of a committee to enhance the ease of doing business, aiming to simplify regulations, boost efficiency, and attract investments. This initiative is welcomed by entrepreneurs, as a simplified regulatory environment could alleviate the compliance burden and cultivate a more supportive atmosphere for innovation and progress.

Startups Driving Economic Transformation

The introduction of a new Fund of Funds for Startups, which includes an additional INR 10,000 Crore contribution, represents a notable advancement in nurturing entrepreneurship within India. Having navigated the complexities of raising capital for CoinDCX, there is a deep appreciation for how essential access to funding is for transforming ideas into tangible outcomes. An excellent business idea remains merely an idea without the necessary financial backing to realise it.

Currently, India boasts over 150,000 startups, collectively amassing $155 billion in funding by 2024—a remarkable increase from just $2 billion in 2016. This new fund is expected to support additional businesses on their path to success, reinforcing India’s status as a global centre for innovation and entrepreneurship. Furthermore, the fact that 48% of startups originate from Tier II and III cities showcases the democratization of entrepreneurship in India.

Policy initiatives, such as the elimination of the angel tax in the previous budget and the introduction of the Fund of Funds for Startups (FFS) scheme in 2016, have been crucial in this expansion. The new fund is set to empower the next wave of entrepreneurs to aspire bigger, develop solutions for India’s distinctive challenges, and thrive on the international stage.

Laying The Foundation For The AI Future

The budget’s focus on artificial intelligence (AI) signals another positive development. The announcement of three Centres of Excellence for AI in education, with an allocation of INR 500 Crore, illustrates a recognition of AI’s potential for transformation. AI is not merely a trendy term; it is a vital facilitator of India’s digital future. By investing in AI research and education, a groundwork is being laid for a workforce capable of employing this technology to address real-world challenges, from healthcare to agriculture.

The Elephant In The Room: Crypto At The Budget

Regrettably, there was no support extended to the crypto industry in the recent budget. The sector had anticipated changes, particularly regarding the establishment of parity between tax-compliant Virtual Asset Service Providers (VASPs) and non-compliant offshore exchanges. Despite offering substantial justifications concerning the uncertainties in Section 194S, the government overlooked the issues surrounding the migration of Indian wealth offshore, leading to a considerable loss in tax revenue.

As a compliant entity, there is disappointment over the failure to acknowledge these challenges. The existing tax structure—1% TDS, 30% tax on crypto gains, and no allowance for offsetting losses—continues to hinder growth and drives users towards unregulated platforms. This undermines investor protection and results in a loss of tax revenue for the government.

A reduction in TDS to 0.01% and the provision to offset losses would have a transformative effect on the industry. While the necessity for caution is understood, the current lack of regulatory clarity is impeding an entire sector that could otherwise make significant contributions to India’s digital economy.

Moreover, there are certain provisions in the budget aimed at enhancing individual tax compliance for VDA investors; however, this might lead to increased compliance burdens for already compliant domestic exchanges. These measures do not meet the significant changes the sector urgently requires.

Countries globally are adopting Web3 and blockchain with thoughtful regulations, and India risks lagging behind without timely and decisive measures. The absence of communication in this year’s budget is disheartening, but it also underscores the pressing need for dialogue and collaboration between the government and the industry.

The Way Forward

India’s goal of achieving a $30 trillion economy by 2047 is dependent on its capacity to harness technology and innovation effectively. While Budget 2025 does include some positive advancements, there is still a considerable amount of work ahead. The government must acknowledge the strategic relevance of emerging technologies like AI, Web3, and blockchain and foster a supportive environment for their advancement.

As an industry, there is a commitment to constructively engage with policymakers to tackle these challenges. The potential of Web3 and blockchain to foster innovation, enhance financial inclusion, and stimulate economic growth is too significant to be disregarded.

There is a hope that the government will soon implement meaningful actions towards a progressive regulatory framework that unlocks this potential and positions India as a leader in the global digital economy.

In alignment with the vision of the Prime Minister, promoting “Make for India, Make for the World,” this perspective should be expanded to include every aspect of the innovation ecosystem, particularly embracing the transformative realms of Web3 and blockchain.