Budget 2026 Builds Capital Rails for Scale, Hardware and Digital Infrastructure

Budget 2026-27 signals a calibrated pivot in India’s startup and MSME policy, moving from ecosystem creation to scale enablement.

The headline announcement is a ₹10,000-crore MSME Growth Fund, aimed at providing growth-stage capital to enterprises that have moved beyond seed and early-stage funding but struggle to access large institutional finance. The fund is expected to operate through a fund-of-funds structure and co-invest with private venture and growth equity players.

For startups, especially in manufacturing, deeptech and B2B sectors, the fund addresses a long-standing financing gap between venture capital and commercial bank lending.

The government has also announced India Semiconductor Mission 2.0, expanding the scope of earlier semiconductor programmes. The new phase focuses not only on fabrication but also on design, packaging, testing and the domestic supplier ecosystem.

Alongside this, the outlay for the Electronics Components Manufacturing Scheme has been increased to ₹40,000 crore, targeting higher domestic value addition in components such as PCBs, camera modules, display assemblies and power electronics.

In a significant boost for digital infrastructure, the Budget introduces tax holidays for cloud and data-centre companies, recognising data infrastructure as a core pillar of the digital economy. This is expected to accelerate investments in hyperscale data centres, edge facilities and cloud services.

The government has also proposed compliance simplification measures, including automated lower or nil TDS certificates for eligible taxpayers, reducing working-capital blockage for small businesses and startups.

The combined message from these measures is that Budget 2026 is less about creating new startup programmes and more about building financial and physical rails for scaling.

Hardware startups, semiconductor design firms, electronics manufacturers, SaaS infrastructure players and growth-stage MSMEs stand to be the principal beneficiaries.