Budget 2026: Indian VCs Want Action Rather Than Promises |
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 — either by accelerating the country’s long-term startup and deeptech ambitions or leaving critical structural gaps unresolved.
Must Recognise India’s Funding Needs
Ankur Bansal, managing director, BlackSoil believes that the upcoming budget, which is slated to be announced on Sunday (February 1), must recognise that India’s funding needs have evolved beyond a pure equity-led model. What the ecosystem now needs is policy support for blended capital where venture debt and alternative credit work alongside equity investments.
“The focus should be on execution over announcements, with frameworks that enable cash-flow-aligned, sector-specific credit and stronger risk-sharing, so MSMEs and growth-stage startups can access flexible, non-dilutive capital that supports sustainable scale,” he added.
Further, VCs also flagged the recent slowdown in foreign capital inflows as........