In the upcoming fiscal year, the government has allocated INR 437 crore instead of the INR 2000 crore it had set aside the previous year to promote RuPay debit cards and low-value UPI transactions (up to INR 2,000). The central government has made low-value UPI and RuPay debit card payments free in an effort to promote digital payments. Nonetheless, a MDR or merchant discount rate of more than 1% is still applied to transactions over INR 2,000.
Since processing such transactions costs money, the program was launched in 2023 to encourage banks, other payment system operators, and app developers to do so. Processing a UPI P2M (Peer-to-Merchant) transaction usually costs stakeholders (payer’s bank, beneficiary’s bank, UPI app provider, and NPCI) close to 0.25% of the transaction value. The stakeholders must receive reimbursement through these incentives since they are unable to recoup the expenditures due to zero MDR.
In order to conduct digital transactions, retailers must pay banks or payment service providers a fee known as MDR. UPI incentives are a crucial source of income for smaller players to maintain themselves because the government removed MDR costs on UPI in 2019 in an effort to encourage digital payments.
System’s Expansion Makes Government to Lower Incentives
The government has been decreasing the incentives for the same as the system expands, following an initial increase of INR 2,484 crore. The initial allocation of INR 1,441 crore was eventually increased to INR 2,000 crore last year. Given that the updated figure was higher, the government might think about providing additional funding during the course that exceeds INR 437 crore. Many have encouraged the government to reconsider the zero MDR rule in light of UPI’s current mainstreaming. The total value of UPI transactions in December 2024 was INR 23.24 lakh crore, compared to INR 707.93 crore in December 2016 and INR 4.16 lakh crore in December 2020.
UPI was used for 16,730.01 million transactions as of December 2024, up from 2,234.16 million in December 2020. In seven countries—the United Arab Emirates, Singapore, Bhutan, Nepal, Sri Lanka, France, and Mauritius—the payment method is now operational.
The Goal is to Promote More Balanced Economy
The goal of this action was to promote a more balanced environment and avoid market dominance. At first, December 31, 2024, was the deadline for compliance. However, the NPCI extended this deadline by two years, mandating adherence by December 31, 2026, in recognition of the possible disruption to the quickly expanding digital payments sector.
Major players that now control sizable market shares, such as PhonePe and Google Pay, will have more time to broaden the UPI market thanks to this extension.
The Union Budget 2025, set to be announced on February 1, will be key in shaping India’s economic future. It is expected to focus on boosting growth, creating jobs, and improving infrastructure. The government may introduce changes in taxation and policies that will affect sectors like healthcare, education, and business. While addressing the current economic challenges, the budget will aim to build a stable and sustainable future. In this article, we will look at what industry experts are expecting from Budget 2025 and how it could impact businesses and the economy.
Transforming Healthcare with Proactive Health Plans and Digital Infrastructure
Sushant Roy, Co-Founder, COO, and CBO, Alyve Health, emphasised that with the approach of Union Budget 2025, it is crucial to highlight the transformative role of comprehensive health plans in promoting proactive healthcare. He noted that these plans are reshaping healthcare behaviour by encouraging regular check-ups, personalised assessments, and sustainable habit-building activities.
To accelerate this shift, he recommend the government focus on:
Strengthening Digital Health Infrastructure: Ensuring access to personalised health plans and data-driven insights for better adherence and outcomes.
Standardising Annual Health Assessments: Promoting early detection and preventive care as a national priority.
Expanding Access to Underserved Regions: Leveraging technology to bridge healthcare disparities.
Improving Access to Immediate Expert Consultation and Health Education: Empowering individuals with timely advice and the knowledge needed to make informed health decisions.
Focus on Nurturing India’s Startup Ecosystem
Priyanka Salot, Co-Founder, The Sleep Company, expressed hope for continued focus on nurturing India’s dynamic startup ecosystem. She said, “Ahead of the Union Budget, we are hopeful to see continued focus on nurturing India’s dynamic startup ecosystem, which has emerged as a highly innovative and driving force for economic growth. With the growth of D2C brands and e-commerce, startups are transforming industries, and we expect the government to further strengthen policies that support their growth.”
Access to capital at the right time remains one of the critical factors for startups as they prepare for their next phase of growth or eye public listing. The abolishment of Angel Tax as announced in the Interim Budget was a critical step in the direction of easing financing woes by startups. We look forward to more initiatives such as this to ease investment regulations, which will spur the growth of startups.
Salot added that incentivising domestic production would boost manufacturing capabilities. “Incentivising domestic production will further enhance manufacturing capabilities and ease the growth journey of startups. This will also align with the government’s vision to transform India into a global manufacturing hub. We are also keen to collaborate with the policymakers and trade bodies to foster innovation in the ecosystem, and national networking platforms will be instrumental in shaping a tech-driven future.”
She also mentioned that The Sleep Company is looking for international trade support. “As we aspire to take The Sleep Company beyond national boundaries, making it a legacy brand in the Comfort-tech industry, we are looking for enhanced support on seamless export policies and international trade support. We hope to see stronger regulations to safeguard startups from corporate fraud, ensuring a secure and trustworthy ecosystem.”
Finally, she shared her views on evolving consumer behaviour, saying, “Lastly, talking from a consumer lens, the buying behaviour and journey of people have evolved over the years, with digital payments taking centre stage. Robust digital payment systems will support streamlining online purchases, thereby enhancing business operations and ensuring customer convenience.”
Strengthening the MSME Sector and Supporting Innovation
Tarun Joshi, Founder and CEO of Join Ventures and IGP.com, mentioned, “The Union Budget 2024’s allocation of over INR 22,000 crore to the Ministry of Micro, Small, and Medium Enterprises (MSME) reaffirms the government’s focus on strengthening this vital sector, often referred to as the backbone of India’s economy. As new-age D2C brands continue to reshape the consumer economy, there’s an increasing need for measures like local manufacturing incentives and smoother processes for GST input credit refunds.”
He emphasised the importance of investing in advanced technologies. “To help Indian businesses compete globally, it’s essential to invest in advanced technologies like Artificial Intelligence (AI) and Machine Learning (ML). We’re hopeful that the upcoming budget will address these priorities, aligning with India’s aspirations to emerge as a global economic leader.”
Ratish Pandey, Business Coach and Founder, Ethique Advisory, highlighted the factors contributing to the current economic slowdown and emphasised the importance of supporting the SME/MSME sector, which is vital for India’s economy. He shared his key expectations for the upcoming budget:
Increased Access to Credit Support: Improving access to affordable and timely credit will be crucial for the growth and survival of SMEs in a volatile economy.
Focus on Skill Development: Continued emphasis on skill development programs will enhance productivity and competitiveness for SMEs, the largest employment generator.
Support for MSME Manufacturing: Tax breaks and subsidies on capital expenditures will encourage investment and improve efficiency in the manufacturing sector.
Structural Support for Exporters: Policy frameworks and incentives are needed to boost the export sector, especially amid a depreciating INR.
GST Streamlining: Simplifying GST compliance and reducing operational bottlenecks will enable SMEs to operate more smoothly and contribute to the economy.
Support for Technology and Innovation
Pankaj Panjwani, CEO and Founder of KeenSemi (KeenHeads) emphasised that as India approaches Union Budget 2025, the semiconductor and technology sectors are at a critical juncture. To propel India towards becoming a global semiconductor hub, it is essential for the budget to introduce comprehensive measures that strengthen the entire value chain—from design and R&D to manufacturing and talent development.
India’s National Supercomputing Mission (NSM) requires additional impetus, including increased funding for the homegrown development of high-performance computing semiconductor chip architecture, design, and ecosystem. In 2015, INR 4,500 crore was allocated to NSM for seven years. This year’s budget is expected to allocate over INR 5,000 crore for the next five years to drive HPC and GPU development in India.
Panjwani highlighted, “Schemes such as the Design-Linked Incentive (DLI) must be made more attractive by integrating larger imperatives for startups and companies developing designs tailored to indigenous needs and customers.
Enhanced incentives for domestic chip production, along with robust support for advanced research in AI, IoT, microcontrollers, and high-performance computing, will be crucial for achieving this vision.
Investments in digital infrastructure, particularly in the expansion of 5G networks and the establishment of robust data centers, are vital to meet the growing demand for connected devices and services. Additionally, fostering industry-academia collaborations can help bridge the skills gap and ensure a workforce proficient in cutting-edge technologies.
We remain optimistic that the forthcoming budget will establish a strong foundation for sustainable growth, innovation, and self-reliance in India’s semiconductor and technology landscape.”
Innovation, Sustainability, and Growth for India’s Ecosystem
Amar Nagaram, Founder and CEO of VIRGIO, shared that as the Union Budget FY25-26 approaches, they are eager to see a focus on innovation, sustainability, and inclusive growth, which are essential for shaping the future of India’s entrepreneurial ecosystem. “We remain optimistic that the government will continue fostering an environment where businesses like ours can significantly contribute to the nation’s economic and environmental goals.”
Nagaram said, “For D2C startups, we hope for initiatives that enhance access to affordable logistics, robust digital infrastructure, and streamlined cross-border trade, enabling international scalability. Expanding tax incentives, simplifying compliance frameworks, and introducing funding schemes to drive innovation in technology and sustainability would be invaluable. Targeted measures to improve credit accessibility, encourage digitization, and reduce the overall cost of operations would be transformative. Encouraging collaborations between MSMEs and larger corporations can further catalyze long-term economic growth.
On the sustainability front, we look forward to policies that incentivize the adoption of green technologies, promote renewable energy investments, and support circular economy initiatives. Such measures will not only help industries align with India’s ambitious climate goals but also ensure a future that is environmentally conscious and economically resilient.”
Vishal Jain, Co-Founder and CEO of Roadcast, highlighted the important role that Micro, Small, and Medium Enterprises (MSMEs) play in India’s economic landscape, driving employment, innovation, and GDP growth. He noted that the Ministry of Micro, Small & Medium Enterprises is key in their development and regulation, implementing policies and programs to foster expansion. In the 2024/25 budget, the Indian government announced a billion expenditure plan focused on job creation.
India’s startup ecosystem has witnessed remarkable growth, positioning itself as a global hub for innovation and entrepreneurship. As of 2025, India ranks as the world’s third-largest startup ecosystem, following the United States and China. This rapid expansion is fueled by technological advancements, supportive government policies, and a growing pool of skilled professionals.
“With the Union Budget 2025 approaching, industry stakeholders have outlined key expectations to further strengthen the sector with Expansion of the Production-Linked Incentive (PLI) Scheme, Tax incentives for Research and Development (R&D), Strengthening of Credit Guarantee Schemes, Simplification of the regulatory framework, Enhanced support for digital infrastructure, Greater focus on skill development,” Jain added.
Karan Sehdev, Founder of Merch Matters, mentioned that as of July 2024, India’s MSME sector employed approximately 20.39 crore individuals. He stated that in the upcoming 2025 budget, the sector seeks simplified tax compliance, particularly in GST, to alleviate administrative burdens and enhance cash flow. Sehdev emphasised addressing the estimated $300 billion credit gap, with expectations for improved access to financing through enhanced funding programs or interest subsidies.
He also anticipated government incentives for digital technologies and automation to boost efficiency and global competitiveness. Lastly, Sehdev highlighted that infrastructure development and streamlined supply are vital for cost reduction and productivity enhancement, enabling businesses like Merch Matters to achieve multiple milestones and contribute to India’s economic growth.
Driving Growth and Innovation in Retail and D2C Sectors
Saurabh Agrawal, Co-Founder and CEO of Harfun pointed out that the Indian retail and D2C sectors are at a pivotal moment, driven by rapid digital transformation and evolving consumer preferences. “As we approach Union Budget 2025, the apparel and retail sectors call for essential measures to drive growth and innovation within the system.”
He further mentioned the need for enhanced support for digital infrastructure and financing options. “As a growing brand, we believe that policies aimed at enhancing the ease of doing business, including a simplified and uniform GST rate structure to enhance affordability and reduce compliance burdens along with encouraging innovation through tax benefits or grants can have a significant impact.”
Agrawal also called for expanded support for domestic manufacturing. “Expanding the Production-Linked Incentives (PLI) scheme will bolster domestic manufacturing in line with the ‘Make in India’ initiative, while rationalizing customs duties is necessary to create a level playing field for local products against imports.”
Supporting Indian Students in Global Education
Waseem Javed, Founder and CEO, of EduVib mentioned that the Union Budget 2025 presents an opportunity to acknowledge the growing aspirations of Indian students aiming to pursue education abroad.
“With over 13.35 lakh Indian students studying overseas in 2024, the importance of creating a supportive and streamlined ecosystem for international education is evident. A focus on simplifying processes and making financial support more accessible could greatly benefit students and their families, enabling Indian talent to excel on a global platform. As a study-abroad consultancy, we remain dedicated to empowering students through technology, personalized guidance, and robust global partnerships. Initiatives that foster international education opportunities will further strengthen India’s role in global education mobility, creating pathways for students to achieve their academic and career goals,” said Javed.
Energising the F&B Industry for Entrepreneurial Growth
Rahul Seth, Co-founder, Burger Singh, shared that the upcoming Union Budget presents a wonderful opportunity to energize the F&B industry, which is a vital contributor to the country’s economy.
“With the right policy measures, including simplified GST regulations and incentives for first-time franchisees, the government can empower businesses to innovate and expand into untapped markets like Tier 2 and Tier 3 cities. These steps would not only boost entrepreneurial growth but also create jobs and enhance accessibility to quality QSR options across the country. We are optimistic that this Budget will provide the momentum the F&B sector needs to achieve greater heights and drive economic progress.”
Growth in India’s Drone Industry
Satyabrata Satpathy, CEO and Co-Founder, BonV Aero, expressed optimism about the government’s focus on innovation and technological advancements as the Union Budget approaches. “The global drone market, valued at over USD 30 billion in 2023, is growing rapidly, and India’s drone industry, projected to reach USD 5 billion by 2025, stands at a pivotal point. To scale up indigenous capabilities, we urge increased allocation under the PLI scheme for drones, with up to INR 1,000 crore and an extension to all drone manufacturing startups. Taxation reforms on ESOPs taxed at realisation rather than an allotment, would help startups attract and retain talent.”
“We also propose a dedicated budget for specialised drone parks to address infrastructure gaps and lower entry barriers for startups. These measures will boost innovation, create jobs, and establish India as a global leader in drone technology. At BonV Aero, we are committed to driving this transformation,” added Satpathy.
Supporting Entrepreneurs and Women Founders for Inclusive Growth
Dr. Malini Saba, Businesswoman, Philanthropist, Environmentalist, Psychologist, Global Advocate for Women and Girls, and Founder of the Anannke Foundation, expressed that the Union Budget for 2025-2026 has a significant opportunity to drive inclusive growth. She highlighted the importance of simplifying tax laws and making financial resources more accessible, especially for women entrepreneurs, who currently make up only 14% of startups in India.
Dr. Saba emphasised, “There’s also a pressing need to invest more in both physical and mental health services, especially for women and children in underprivileged areas. Public healthcare spending in India is shockingly low, at just 1.5% of GDP, according to the World Bank. This requires urgent attention. Additionally, improving financial literacy and encouraging long-term savings plans like PPF, EPF, and NPS could significantly boost financial inclusion. Women, in particular, hold only 26% of India’s wealth, according to Credit Suisse, highlighting the importance of this issue.”
Janet Rajan, Founder and Principal Coach of Growth Collective mentioned that, having started her entrepreneurial journey in recent years, she has experienced firsthand the challenges entrepreneurs face, particularly in navigating regulations, funding, and market access. She believes that Budget 2025 presents a unique opportunity to ease these burdens. Simplifying regulatory processes, lowering GST rates for early-stage startups, expanding tax holidays, and providing easier access to credit through government-backed funds would be game-changers.
For first-time founders, she thinks initiatives like affordable coworking spaces, skill development programmes, and mentorship networks could be transformative. Women entrepreneurs, especially in Tier 2 and 3 cities, need targeted support through seed funding grants, simplified collateral-free loan schemes, and gender-focused incubators. Access to new-age technology and AI/ML platforms can unlock untapped potential.
With the Union Budget 2025-26 approaching, businesses and industries are eagerly anticipating key policy changes. The real estate sector is hoping for tax benefits, lower interest rates, and incentives to boost housing affordability. The hospitality industry seeks government support to promote tourism, improve infrastructure, and reduce operational costs. Renewable energy leaders are looking for increased investment in green technology, subsidies for sustainable projects, and better waste management policies. Similarly, startups and MSMEs are expecting simplified tax regulations and easier access to funding.
Now, let’s explore what industry experts have to share about their expectations from this year’s budget.
Strategic Infrastructure Investments and Real Estate Growth
Pradeep Misra, Chairman and Managing Director, REPL (Rudrabhishek Enterprises Ltd.) said, “In successive budgets, we have seen the emphasis on infrastructure which is most certainly going to continue in this year’s Union Budget also. With the GDP growth rate witnessing a slowdown in the current financial year, enhanced budgetary allocations for infrastructure are crucial. This will not only stimulate growth across industrial segments but also create substantial direct employment opportunities.
The investment in traditional infrastructure segments like roads and highways, railways, energy, and tourism will naturally attract increased allocations. However, the new segments must also get adequate support in the union budget. Increasing the requirement for data centers and renewable energy should be another area where adequate attention can be given to the budget. The scope of railways ‘Kavach Scheme’ must further be expanded to cover a greater length of rail tracks. It is equally important both from the point of view of passenger safety as well as its economic impact.”
Misra suggests that for the real estate and housing sector, Affordable Housing must continue to be the focus in a suitable manner for the next phase of PMAY. The increasing urbanisation demands that housing needs to be addressed for overall growth. The government should look to incentivize the REIT & SM-REIT investments to create the next leap of growth in the real estate segment which has been continuously struggling to recover. This new investment class has immense potential to attract investors, developers, and retail participants. These combined with emphasis on smart industrial cities, industrial corridors, and TOD can immensely catalyse the development of urban centers and catchment areas.
“There will be a challenge to create a balance between the requirement of increasing infrastructure spending and controlling the overall fiscal deficit. The Union Budget must also come up with innovative policy measures that strengthen PPP and give greater confidence to private investments in the infrastructure sector. A long-standing expectation of ‘single window clearance’ could be one of them,” Misra added.
Avinash Rao, Founder, Alt DRX highlights that, according to recent statistics, new house sales have decreased for the first time in 2024 owing to an increase in house prices, high interest rates for borrowing, and general conservative sentiment which has cropped up due to the 4 years of constant high growth. For the growth to continue and real estate to achieve the $1 trillion by 2030, there needs to be a government-led push and this budget is the appropriate time for decisions to push this industry forward to grow.
Rao’s key expectations from Budget 2025-26:
Developer Led: The high cost of material and construction can not be reduced or moderated immediately, but adjustments to input tax credit will reduce the cost burden on developers and subsequently pass it on to the home buyers. Change of policies to attract domestic and international real estate funds will provide a big push for developers to raise capital and complete their projects on time.
Home Buyer Led: Changes in current tax exemptions on house loans will help reduce the cost burden on home buyers and bring relief. Subsidies on affordable housing will bring demand to a category that has not grown and caters to the larger Indian population.
Sebi Joseph, President of Otis India, underscores the remarkable growth of India’s real estate sector, fueled by transformative government initiatives such as the Pradhan Mantri Awas Yojana and the Smart Cities Mission, making India one of the world’s most dynamic real estate markets globally.
Looking ahead to the Union Budget 2025-26, he anticipates the government will continue driving this progress with progressive measures aimed at enhancing the real estate and infrastructure sectors, with a particular emphasis on localisation and sustainability.
“A budget that introduces strategic steps such as targeted investments, substantial tax reliefs, enhanced funding mechanisms, and robust infrastructure initiatives – and that pushes for sustainable developments would provide the much-needed impetus to developers for building homes across all segments, including luxury housing and affordable housing, thus ensuring a balanced growth trajectory and contributing to achieving the vision of a ‘Viksit Bharat’ by 2047, transforming India into a global leader in infrastructure and responsible urbanisation.
For the elevator and escalator industry, such a focus would present great avenues for growth in 2025 and beyond. With a surge in infrastructure projects, including smart cities, metro systems, and high-rise buildings, the vertical transportation industry is poised to be the backbone of India’s growing urban landscape. Furthermore, we are also contributing to the localisation of production and creating a self-reliant supply chain within the country,” said Joseph.
Hospitality Industry Growth and Innovation in 2025
Sandeep Singh, Founder of Rubystone Hospitality emphasises that in 2025, the hospitality industry is expected to develop significantly due to rising travel demand, new technology, and a renewed emphasis on the visitor experience. The hospitality sector is anticipated to make a substantial economic contribution as the world economy stabilizes and travel restrictions loosen.
Government budgets are likely to prioritise the hospitality industry, funding workforce development, sustainable tourism projects, and infrastructure improvements. To satisfy changing visitor expectations, they must adapt their strategy to these changes by making investments in digital transformation, green technologies, and individualized services. Enhancing operational efficiency, using AI-driven solutions, and upholding strict safety and hygienic standards are also anticipated to be prioritized in budget allocations.”
In Singh’s opinion, the tourism industry will probably rebound to pre-pandemic levels as global spending increases, offering enormous development potential. But there are difficulties such as inflation, growing operating expenses, and competitive challenges will call for creative company concepts and careful financial planning. To guarantee a flourishing hospitality environment, governments and stakeholders must work together.
In 2025, they can play a key role in attaining sustainable development and economic resilience by utilizing financial support and encouraging innovation. The hospitality industry has the chance to rethink its mission and position itself as a key component of the world economy’s recovery this year.
Budget 2025: Focus on Sustainability, Local Manufacturing, and Startup Support
Rahul Nainani, CEO and Co-Founder, ReCircle, highlights, “As we look toward Budget 2025, we anticipate strong policy support and strategic incentives to accelerate India’s transition to a greener, more sustainable future. With a focus on green energy, infrastructure, and circular economy models—especially in waste management—we hope to see increased investment in plastic recycling projects. This will help reduce environmental impact, create new business opportunities, and drive the adoption of green technologies.
Initiatives like Swachh Bharat Abhiyan, Extended Producer Responsibility (EPR), and sustainability commitments have already propelled the sector forward. The plastic waste industry, which plays a crucial role in India’s GDP and supports the nation’s $5 trillion growth trajectory, stands to benefit from tax reforms, lower GST rates on recycled products, and machinery subsidies, particularly for MSMEs.
Continued emphasis on infrastructure development, digitization, and EPR compliance will drive long-term growth and innovation. We are eager to see the government’s ongoing commitment to sustainability and are excited to contribute to this transformative journey.”
Vinay Thadani, CEO & Director, Grew Energy (Solar) Private Limited, shares his insights, “The Indian domestic manufacturing industry is poised to play a crucial role in the country’s economic landscape, particularly as India seeks to reduce its dependence on imports from foreign markets. This strategic shift was bolstered by the Indian government’s implementation of a variety of incentives aimed at supporting domestic manufacturing. These measures include a combination of tariffs designed to protect local manufacturers and non-tariff barriers that aim to create a more favourable environment for Indian businesses.
In the past year, numerous companies have commissioned and announced the establishment of large-scale solar manufacturing facilities throughout the country. This surge in activity is a direct response to the government’s initiatives, which include supportive regulatory frameworks designed to attract investment and facilitate growth in the solar sector.”
“Looking ahead, to position India as a global hub for solar manufacturing, we anticipate that the government will emphasize the importance of research and development (R&D) by offering full-time grants to companies that dedicate themselves to the creation of efficient and innovative solar technologies. Engaging in deep-scale research and fostering innovation will be essential for India to gain a competitive edge over China, enabling it to provide high-efficiency solar solutions to domestic as well as global markets,” Thadani added
Satyam Vyas, Founder, Arthan and Climate Asia highlights key challenges, “There are several pressing challenges startups face in India’s social impact sector. These include a burdensome tax compliance system that requires over 1,200 annual filings, resulting in valuable resources being diverted from business growth. Additionally, many startups experience significant cash flow issues due to delays of over six months in receiving GST refunds.
Furthermore, the taxation of Employee Stock Ownership Plans (ESOPs) at vesting can impose financial burdens on employees. The current three-year tax holiday, often failing to accommodate the longer growth cycles of many startups, is a significant issue that needs to be urgently addressed.”
Vyas’s proposals are not just suggestions, but urgent calls for action. He advocates for the implementation of a centralized digital platform for streamlined tax compliance, aligning ESOP taxation with liquidity events, and extending the tax holiday for DPIIT-registered startups from three to five years.
He also recommends establishing a 30-day deadline for GST refunds with penalties for delays, offering government tax advisory services to support startups, increasing R&D deductions to 200% for high-impact sectors, providing up to 10% tax rebates for sustainable startups, and lowering TDS rates to enhance cash flow for new ventures. These measures, if implemented promptly, could significantly alleviate the challenges faced by startups in India’s social impact sector.
Nitin Konde
