India should prioritise startups in the forthcoming Budget and has government should start by easing the tax norms on employee stock option plans (ESOPs), said Dr Ajai Chowdhry, Founder of HCL and Chairman of the Mission Governing Board of the National Quantum Mission of India on January 16, 2025, the National Startup Day.

“The removal of the angel tax was a welcome move by the Government and was celebrated by the startup community. However there is more that needs to be addressed. One example is the present tax system, which hinders the use of ESOPs, which are crucial for startups to recruit and retain talent. Employees are still obligated to pay taxes when they exercise their options. It would be more equitable to tax ESOPs only when the shares are sold, in line with the employee’s financial means to pay the tax,” said Chowdhry, pushing for a Product Nation with strategic autonomy.

India has the third largest startup ecosystem in the world, and they also figure as an important part of India’s National Quantum Mission, particularly in the quantum communication vertical where 4-5 Indian startups are already selling commercial quantum communication products to defence and other sectors. In light of this, Chowdhry had encouraged grants worth ₹10-25 crore to tech startups rather than the usual ₹10-50 lakh grants.

Funding boost for startups in Maharashtra

In 2024, the Union Budget had allocated ₹10,000 crore to the Fund of Funds for Startups (FFS) managed by the Small Industries Development Bank of India (SIDBI). On Thursday, the Maharashtra government partnered with the SIDBI for an allocation of ₹200 crore to startups, with ₹30 crores earmarked for each regional division.

Chief Minister Devendra Fadnavis also announced the release of a new draft for the startup policy to replace the 2018 version. The draft policy also talks of an Innovation City, based on the GIFT city model, that focuses on startup growth. has been prepared and made available to entrepreneurs for suggestions. This draft is set to become a modern and pioneering policy for the country. Furthermore, announced the establishment of an innovation city in Maharashtra.