Overview of AIFs in India

Alternative Investment Funds, often abbreviated as AIFs, have become a buzzword among sophisticated investors, especially High Net Worth Individuals (HNIs). 

As of February 2026, there are 1,768 registered AIFs in India¹. This domain has witnessed remarkable growth, underscored by an almost 110% surge in commitments which escalated to Rs. 13.49 trillion in the fiscal year 2024-25 from Rs. 6.41 trillion in 2021-22.². This growth translated to a substantial Rs. 7.07 trillion jump within three years. AIFs have shown superior IRRs (Internal Rate of Returns) compared to traditional Asset Management Companies (AMCs). This higher performance has led to a higher valuation premium for AIFs over traditional AMCs.

The total assets under management (AUM) of AIFs have grown at a CAGR (Compound Annual Growth Rate) of 28% between June FY19 and June FY24s³. 75% of AIFs have successfully generated positive alpha, compared to a lower alpha generation in equity AMCs, where 51% of large-cap funds and 26% of mid-cap funds were unable to deliver alpha over the past year⁴.

Equity AIFs have outperformed the BSE Sensex TRI index PME+ for five consecutive years. 80% of registered AIFs fall under Category I & II (venture capital, private equity, debt funds). ~₹4.4Tn invested, with ~70% allocated to unlisted securities. 44% of new schemes (2022–2024) were launched by first-time fund managers, highlighting strong market confidence.⁵.

The breakdown of the alternatives market is dominated by Private Equity (PE) and Real Assets, which are USD 250 billion and USD 125 billion, respectively. Private Credit, a growing segment, stands at USD 25 billion in the Indian market. AIFs are projected to represent 15% of the total AUM in India’s wealth management industry by 2027.  

In light of the burgeoning AIF industry, its regulatory authority, the Securities and Exchange Board of India (SEBI), hasn’t remained a silent observer. SEBI has proactively been fortifying protocols to guarantee investor safety, heighten transparency, and ensure fair practices within the AIF guidelines. 

So, the question arises, what exactly are AIFs? And how do they function within the Indian regulatory landscape?

What are Alternative Investment Funds (AIFs)?

Meaning and Definition

An Alternative Investment Fund (AIF) is a privately pooled and managed investment vehicle established in India structured as a trust, company, Limited Liability Partnership (LLP), or body corporate that gathers funds from sophisticated Indian or foreign investors for investment according to a defined investment policy for their benefit. These funds are explicitly regulated by the Securities and Exchange Board of India (SEBI) under the SEBI (Alternative Investment Funds) Regulations, 2012, and focus on non-traditional, less liquid assets such as private equity, venture capital, and real estate. Unlike mutual funds, AIFs are characterized by higher minimum investment requirements, longer lock-in periods, and a focus on specialized investment strategies.

AIFs are becoming a favoured choice for discerning investors, including High Net Worth Individuals (HNIs), Institutional Buyers and Family Offices. With their promise of high returns across diverse asset classes, AIFs are attractive for those aiming to diversify and enhance their portfolios. While these funds often involve complex strategies and higher risk, they provide unique opportunities for capital appreciation and exposure to non-traditional asset classes.

Some key terms used in AIFs

1. Carry – Carry or carried interest in AIF is akin to performance fees which is paid to the investment manager as a share of the AIF’s profits which the investment manager is entitled to if they exceed a specific threshold return. Carry is typically in the range of 15-20% of the profits earned by the AIF in excess of the specified threshold.
2. Hurdle / Preferred rate of return – Minimum percentage of returns that an investor earns before the Investment Manager can catch-up and charge carry to investor.
3. Catch-up – Catch-up allows the investment manager to earn the hurdle rate of return on its investment in the AIF but only after the investors have received their investment along with the hurdle rate of return on such investment.
4. Distribution waterfall – Provides for an order of specified priority in which the distributions are made by AIF which includes the capital contributions, fees, hurdle, catch up (if any), carry, etc.
5. Closing – Closing is the date fixed by the Investment Manager as a cut-off date to obtain capital commitment from investors.

Important Characteristics of AIFs

To better understand how AIFs differ from traditional investments, consider these core features:

• Lower Liquidity: AIFs often have lower liquidity compared to traditional securities, which can make it challenging to access or sell investments quickly.
• Higher Risk Profile: These funds are specifically designed for investors seeking higher returns, though this potential comes with increased risk.
• Unique Fee Structures: While AIFs generally have higher management fees and minimum investment requirements than traditional mutual funds or ETFs, they often benefit from lower transaction costs.
• Complex Valuation: Due to the unique nature of alternative assets and less standardized reporting, valuing these investments can be a complex process.
• Diverse Asset Classes: AIFs provide broad diversification by investing in various assets, including private equity, real estate, commodities, and infrastructure.
• Distinct Risk-Return Profiles: These funds exhibit different risk and return characteristics than traditional stocks or bonds, offering the potential for enhanced returns alongside elevated risk.
• Regulatory Framework: Every AIF operates within a specific regulatory framework, and its legal structure may vary depending on local regulations and jurisdiction.

Regulatory Framework for AIF in India

In India, AIFs operate under the purview of the Securities and Exchange Board of India (SEBI). 

Since their establishment in the late 1980s, Venture Capital Funds (VCFs) have been a significant focus for the government to bolster the growth of specific sectors and early-stage companies. However, the desired outcomes in supporting emerging sectors and startups were not realized, largely due to regulatory uncertainties. Recognizing this challenge, in 2012, the Securities and Exchange Board of India unveiled the SEBI (Alternative Investment Funds) Regulations. This was done to categorize AIFs as a unique asset class, similar to Private Equities (PEs) and VCFs.

Any entity wishing to function as an AIF must seek registration with SEBI. While there are various legal structures under which an AIF can be established – such as a trust, a company, an LLP, or a body corporate – trusts are the most commonly chosen form in India.

A typical AIF structure looks like the following –

The entities are:

• Settlor – Person who settles the trust with a nominal initial settlement 
• Trustee – Person in charge of the overall administration and management of the Trust. In practice, this responsibility is then outsourced to the investment manager.
• Contributor – Investor to the Trust (AIF) and makes a capital commitment to the AIF
• Sponsor – Face of the AIF i.e. Person who sets up the AIF 
• Investment Manager – Brain of the AIF i.e. Person who is appointed to manage the investments 
• Custodian – Safeguards the securities and assets of the AIF and facilitates settlement of transactions.
• Merchant Banker – Assists with due diligence certification for PPM.
• Registrar and Transfer Agent (RTA) – Maintains investor records, processes capital calls and distributions, and handles investor communications and reporting.

It’s noteworthy that the roles of the Sponsor and Investment Manager can be unified, with one entity performing both functions.

3 Categories of AIFs in India

Under the SEBI AIF Regulations, AIFs are classified into 3 distinct categories namely Category 1, Category 2 and Category 3 AIFs. Each category serves a unique purpose and is characterized by specific investment conditions and varying degrees of regulatory oversight. Below is an overview of the categories, highlighting their primary purpose and key conditions:

 Table 1: Categories of AIFs

Apart from the categories mentioned above, any of the three categories of AIFs can be classified as a large-value fund (LVFs), provided that each investor is an “accredited investor” as per the AIF Regulations and invests a minimum of INR 70 crores in the AIF. LVFs have certain investment and compliance related exemptions.

Category I AIFs : Nurturing Growth and Social Impact

Category I Alternative Investment Funds (AIFs) are investment vehicles designed to promote economic development, entrepreneurship, innovation, and social impact. These funds channel capital into sectors that are considered socially or economically desirable by regulators and the government, and therefore often receive policy support, incentives, or concessions.

Regulated by Securities and Exchange Board of India (SEBI), Category I AIFs primarily focus on long-term value creation rather than short-term liquidity.

Investment Focus of Category I AIFs

Category I AIFs invest in areas that contribute directly to nation-building and economic expansion, including:

• Startups and early-stage ventures
• Venture capital and angel-backed businesses
• Social ventures with measurable impact
• Small and Medium Enterprises (SMEs)
• Infrastructure projects
• Special situation and stressed asset opportunities

These investments are typically unlisted, early-stage, or financially complex, which increases both risk and return potential.

Fund Structure & Tenure of Category I AIFs

• Fund Type: Strictly close-ended
• Unit Listing: Optional, permitted only after final fund closure
• Minimum Tenure:
  • 3 years
  • Extendable by up to 2 additional years with approval of two-thirds of investors (by value)

This structure aligns investor capital with long-term developmental outcomes.

Leverage, Borrowing & Risk Profile of Category I AIFs

• Leverage for Investments: Not permitted
• Temporary Borrowing:
  • Allowed only for operational needs
  • Limited to 10% of the investable corpus
  • Maximum duration: 30 days

Key Risk Characteristics:

• High growth potential
• Low liquidity
• Elevated risk due to early-stage, distressed, or impact-oriented investments

Taxation of Category I AIFs

Category I AIFs enjoy pass-through tax status:

• Income (excluding business income) is taxed directly in the hands of investors
• Taxation applies as per the investor’s applicable income tax slab
• The fund itself does not bear tax at the entity level for pass-through income

Sponsor Commitment Requirements

To ensure alignment of interest between fund managers and investors:

• Minimum Sponsor Contribution:
  • 2.5% of the fund corpus or ₹5 crore (whichever is lower)
• Angel Funds:
  • 2.5% of corpus or ₹50 lakh (whichever is lower)

Custodianship Requirement

• Mandatory custodian appointment only if:
  • Fund corpus exceeds ₹500 crore
• Below this threshold, custodianship remains optional

Sub-Categories of Category I AIFs

1. Venture Capital Funds (VCFs)

Venture Capital Funds invest in early-stage and high-growth unlisted companies with scalable business models. These funds play a vital role in:

• Promoting innovation and entrepreneurship
• Supporting companies until IPO, acquisition, or strategic exit
• Generating long-term capital appreciation

VCFs carry higher risk, but also the potential for outsized returns.

2. Angel Funds

Angel Funds are a specialized sub-category of Venture Capital Funds focused on seed-stage and early-stage startups.

Key Characteristics:

• Capital pooled from individual or institutional angel investors
• Minimum investment per investor: ₹25 lakh
• Provide not only funding but also:
  • Mentorship
  • Industry expertise
  • Strategic networking

Angel Funds act as the first institutional capital for many startups. Angel Funds also hold a distinct categorization under the AIF Regulations. These funds are a sub-category of Category I AIFs – VCFs, primarily designed to acknowledge and support the unique role of angel investors in the startup ecosystem. The key characteristics of Angel funds are summarised below:

Table 2: Angel Funds

3. Special Situation Funds (SSFs)

Special Situation Funds invest in financially distressed assets, including:

• Stressed loans acquired under Reserve Bank of India (RBI) Master Directions
• Security Receipts issued by RBI-registered Asset Reconstruction Companies (ARCs)
• Companies undergoing insolvency under the Insolvency and Bankruptcy Code (IBC)

Additional Conditions:

• 6-month lock-in on acquired security receipts
• Investments often linked to resolution plans or restructuring outcomes

These funds aim to unlock value from distressed but viable businesses.

4. Social Venture Funds

Social Venture Funds pursue a dual mandate:

• Financial returns
• Measurable social or environmental impact

They invest in organizations addressing challenges such as:

• Education
• Healthcare
• Sustainable development
• Livelihood generation
• Environmental conservation

These funds demonstrate that profitability and social good can coexist.

Category II: Private Equity & Debt Funds (Residual)

Category II Alternative Investment Funds (AIFs) represent the most widely used AIF category and include all funds that do not fall under Category I or Category III. These funds are designed to provide investors with structured exposure to private markets while operating under defined regulatory constraints. Category II AIFs are funds that neither qualify for incentives under Category I nor engage in leverage or complex trading strategies like Category III. They are not permitted to use leverage for investment purposes, except for temporary borrowing strictly to meet day-to-day operational requirements. These funds typically invest in unlisted entities, real estate, or distressed assets and are structured as close-ended vehicles with a defined tenure.

Investment Focus of Category II AIFs

Category II AIFs primarily invest in:

• Private Equity (PE)
• Debt Instruments of Unlisted Companies
• Real Estate Assets
• Distressed or Stressed Assets

This investment approach offers diversification through unlisted private markets and is generally associated with moderate-to-high risk and stable long-term return potential.

Fund Structure and Tenure of Category II AIFs

• Structure: Strictly close-ended
• Minimum Tenure: 3 years
• Extension: Up to 2 additional years with approval
• Listing: Optional

The close-ended nature aligns with the long-term investment horizon required for private market value creation.

Leverage and Borrowing:

• Investment Leverage: Prohibited
• Permitted Borrowing: Allowed only for temporary operational requirements

This restriction ensures lower systemic risk and preserves the long-term investment focus of the fund.

Taxation of Category II AIFs

• Tax Status: Pass-through
• Capital Gains Taxation (at investor level):
  • Long-Term Capital Gains (LTCG): 12.5%
  • Short-Term Capital Gains (STCG): 20%

The pass-through mechanism ensures that income is taxed directly in the hands of investors rather than at the fund level.

Sponsor Commitment

• Minimum Contribution: 2.5% of the total fund corpus or ₹5 Crore, whichever is lower

This requirement ensures sponsor alignment with investor interests.

Custodianship

• Mandatory: Only if the fund corpus exceeds ₹500 Crore

Custodianship provides an additional layer of asset safety and oversight for large funds.

Key Sub-Types of Category II AIFs

1. Private Equity Funds (PEFs)

Private Equity Funds form a major component of Category II AIFs. These funds invest in mature, unlisted companies with the objective of growth, expansion, acquisitions, or restructuring. Investments are typically made by acquiring controlling or significant minority stakes. Fund managers actively engage with portfolio company management to enhance operational efficiency and value creation.

• Typical Lock-in Period: 4 to 7 years
• Investment Horizon: Long-term, reflecting private company growth cycles

2. Debt Funds

Debt Funds under Category II focus on investing in debt instruments issued by unlisted companies. These may include structured debt, mezzanine financing, or convertible debt. Such funds provide alternative financing solutions for companies that may not rely solely on traditional bank funding.

• Use of Capital: Expansion, working capital, or project-specific needs
• Return Profile: Interest income and potential capital appreciation

3. Fund of Funds (FoFs)

Fund of Funds under the AIF framework invest in other AIFs instead of directly investing in companies or assets. This structure enables diversification across multiple strategies and fund managers through a single investment.

• Key Advantage: Broader exposure to alternative investment strategies
• Investor Benefit: Reduced individual due diligence effort

Category III AIFs: Complex Strategies and Short-Term Returns

Category III AIFs are designed to capitalize on short-term and medium-term market opportunities through active trading strategies. Unlike Category I and II AIFs, these funds are permitted to use leverage and sophisticated financial instruments. Their goal is not merely to outperform a benchmark but to achieve positive returns in both rising and falling markets.

Investment Focus of Category III AIFs

Category III AIFs primarily invest in:

• Hedge Funds
• PIPE Funds (Private Investment in Public Equity)
• Derivative-based trading strategies

These funds actively trade across asset classes and market segments to exploit inefficiencies and price movements.

Trading Strategies and Risk Profile of Category III AIFs

Category III AIFs employ diverse and complex trading strategies, including but not limited to:

• Long-short equity
• Market-neutral strategies
• Arbitrage strategies
• Global macro strategies
• Event-driven strategies

They frequently use leverage (borrowed capital to amplify returns) and derivatives such as futures, options, and swaps for both hedging and speculative purposes. Due to these characteristics, Category III AIFs exhibit high volatility and complex valuation methodologies, making them suitable only for sophisticated investors with higher risk tolerance.

Fund Structure and Tenure of Category III AIFs

• Structure: Flexible – Open-ended or Close-ended
• Minimum Tenure: No fixed minimum tenure for open-ended schemes

This flexibility allows fund managers to dynamically adjust portfolios based on market conditions.

Leverage and Borrowing

• Leverage: Permitted
• Purpose: Active trading and hedging
• Conditions: Subject to regulatory limits and mandatory disclosures

The ability to employ leverage differentiates Category III AIFs from other AIF categories.

Taxation of Category III AIFs

• Tax Treatment: Fund-level taxation (No pass-through status)
• Tax Rate: Maximum Marginal Rate (approximately 42.7%)
• Impact: Tax is paid by the fund before distributions are made to investors

Sponsor Commitment

• Minimum Requirement: 5% of the total corpus or ₹10 Crore, whichever is lower

This higher sponsor contribution reflects the elevated risk and complexity of Category III AIFs.

Custodianship

• Requirement: Mandatory for all Category III AIFs
• Applicability: Irrespective of the fund corpus size

Custodianship ensures enhanced transparency, asset safety, and regulatory oversight.

Hedge Funds within Category III AIFs

Hedge Funds are the most prominent segment of Category III AIFs. They operate with flexible investment mandates and typically charge higher fees due to their active management style and use of advanced financial instruments. Their primary objective is to generate alpha, or market-beating returns, irrespective of overall market direction.

Key Investment Team of AIFs

The key investment team of the Investment Manager of all AIFs have to comply with certain qualification conditions which are specified below:

Table 3: Criteria for Key Investment Team

The experience and education qualification criteria may be satisfied by the same person.

Taxation of Alternative Investment Funds (AIFs)

The taxation of Alternative Investment Funds (AIFs) in India depends on whether the fund enjoys pass-through status or is taxed at the fund level:

Category I and II AIFs: Pass-Through Status

Category I and II AIFs are granted pass-through status from an income-tax perspective, whereby any income earned by these AIFs (other than profits or gains from business) is not taxed at the AIF level, but directly taxed as income at the hands of the investors as if these investors had directly received this income from the investments.

Unabsorbed losses (other than business losses) of the AIF may be allocated to the investors for them to set off against their respective individual incomes, subject to such investors having held the units in the AIF for at least 12 months. 

Further, the distributions from Category I and II AIFs are subject to a withholding tax of 10% in the case of resident investors, and at the rates in force in the case of non-resident investors (after giving due consideration to any benefit available to them under the applicable tax treaty).

The Finance Act, 2025 has introduced a clarificatory amendment to the definition of ‘capital asset’ by expressly including investments made by Category I and II AIFs. This amendment resolves the long-standing ambiguity regarding the characterization of income clarifying that gains from investments made by Category I and II AIF shall be taxable under the head ‘Capital Gains’.

• Income Taxed at Investor Level: Capital gains, dividends, and interest income are passed through and taxed in the investor’s hands.
• Exception: Business Income: Any income classified as “profits and gains from business or profession” is taxed at the AIF level (at corporate rates for companies/LLPs or the Maximum Marginal Rate (MMR) for trusts).
• Unabsorbed Losses: Business losses are retained by the AIF and can be carried forward at the fund level.
• Withholding Tax (TDS): AIFs typically deduct 10% TDS on passed-through income for resident investors, while in case of non-resident investors, it is as per DTAA.

Category III AIFs : Non-Pass-Through Status

Category III AIFs have not been granted statutory pass-through status. Typically, they are set up as “determinate and irrevocable trusts.” This means the trusts have identifiable beneficiaries, and their respective beneficial interests can be determined at any given time. In such trusts, the trustee can discharge the tax obligation for the income of the trust on behalf of its beneficiaries (i.e., the investors) in a representative capacity. This is similar to the tax liability an investor would face if they had received the income directly. However, there’s an exception: trusts with any business income must pay tax at the MMR i.e., 39% where the trust pays tax under the new regime. As per income-tax law, tax authorities can recover tax either from the trustee or directly from the beneficiaries. Given this flexibility, a trustee might opt to pay the entire tax amount at the AIF level. Moreover, the law permits the trustee (acting as a representative assessee) to recover from investors any taxes it has paid on their behalf.

• Fund Pays Tax: All income (capital gains, interest, dividends, business income) earned by a Category III AIF is taxed at the fund level.
• Tax Rate: Often, particularly if structured as a trust, this income is taxed at the Maximum Marginal Rate (MMR) (depending on the nature of income).
• Distributions to Investor: Since tax is already paid at the fund level, distributions received by investors from Category III AIFs are generally tax-exempt in their hands. The tax can be collected from the trustee or, in certain circumstances, directly from the investor.

We have not covered tax implications for investment managers and sponsor entities above.

Key Documents

Private Placement Memorandum (PPM):

The PPM provides comprehensive details about the AIF. Contents include information about the manager, key investment team, targeted investors, proposed fees and expenses, scheme tenure, redemption conditions or limits, investment strategy, risk factors and management, conflict of interest procedures, disciplinary history, service terms and conditions by the manager, affiliations with intermediaries, winding up procedures, and any other relevant details helping investors make informed decisions about investing in an AIF scheme.

SEBI has introduced mandatory templates for PPMs (for and) which provides for two parts: 

• Part A – section for minimum disclosures
• Part B – supplementary section to allow full flexibility to the AIF in order to provide any additional information, which it may deem fit. 

There are two templates – one for Category I and II AIFs and the other for Category III AIFs. 

Angel Funds, LVFs and AIFs in which each investor commits to a minimum capital contribution of INR 70 crores are exempted from following the aforementioned template.

Indenture of Trust / Trust Deed:

This document is an agreement between the settlor and the trustee. It involves the settlor transferring an initial settlement (can be nominal) to the trustee to create the fund’s assets. The Indenture details the roles and responsibilities of the trustee. 

Investment Management Agreement:

This agreement is entered between the trustee and the investment manager. Here, the trustee designates the investment manager and transfers most of its management powers regarding the fund to them. However, certain powers retained by the trustee are outlined in the Indenture of Trust.

Contribution Agreement:

This agreement is between the contributor (investor), the trustee, and the investment manager. It mentions the terms of an investor’s participation in the fund, covering areas like beneficial interest computation, distribution mechanism, expense list to be borne by the fund, and the investment committee’s powers. SEBI mandates that the Contribution Agreement’s terms should align with the PPM and shouldn’t exceed its provisions.

Investment Process for AIFs (India)

• Check eligibility first. Investors must meet the minimum investment requirement of ₹1 crore and be prepared for a long-term commitment of 3–7 years, as AIFs are largely illiquid.

• Choose the right AIF category.
  Category I focuses on start-ups, venture capital, and infrastructure.
  Category II covers private equity, private credit, and real assets.
  Category III uses complex strategies, including leverage, suited for higher-risk appetites.

• Evaluate the fund manager. Review the manager’s track record, sector expertise, risk management approach, and alignment of interests. Historical performance helps with assessment but is not a guarantee of future returns.
• Complete KYC and banking setup. Investors must submit PAN, identity and address proofs. NRIs additionally require passport details and an operational NRE or NRO account with an Indian bank.
• Study the PPM carefully. The Private Placement Memorandum outlines strategy, fees, risks, governance standards, and exit timelines—making it a critical due-diligence document.
• Sign agreements and invest. Execute the contribution agreement and transfer capital to the designated AIF account as per the drawdown schedule.

Tenure and Listing of Alternative Investment Funds / Schemes

Understanding the tenure and liquidity aspects of AIFs is crucial for investors, as it dictates the duration of their capital commitment and the ease with which they can exit an investment.

Fund Tenure and Structure

The tenure of an Alternative Investment Fund, or its individual schemes, varies based on its category:

• Category I and Category II AIFs: These funds are typically structured as close-ended schemes. This means they have a predetermined lifespan.
  
  • Minimum Tenure: The regulations stipulate a minimum tenure of three years from the date of final closing of the scheme.
  • Extension: The tenure can be extended, generally by a maximum of two years, provided there is investor consent (usually requiring approval from a specified percentage, often two-thirds, of unit holders by value). This extension allows the fund manager more time to achieve investment objectives or liquidate assets optimally.
• Category III AIFs: Unlike Categories I and II, Category III AIFs offer more flexibility in their structure. They can be either open-ended or close-ended.
  
  • Open-ended Category III AIFs allow investors to enter and exit at various points, subject to the fund’s terms and conditions (e.g., specific redemption windows, lock-in periods).
  • Close-ended Category III AIFs operate similarly to Category I and II in terms of fixed tenure, often with a minimum of three years if structured as such. The choice between open-ended and close-ended depends on the fund’s investment strategy and the nature of its underlying assets.

Listing of AIF Units on Stock Exchanges

While AIFs are primarily private investment vehicles, SEBI regulations permit the optional listing of AIF units on recognized stock exchanges. This provision aims to offer a potential avenue for liquidity to investors.

• Optional Listing: Fund managers may choose to list the units of their AIF schemes on an exchange, but it is not mandatory. This decision is often influenced by investor demand and the fund’s strategy.
• Minimum Tradable Lot: For any listed AIF units, the minimum tradable lot is stipulated at ₹1 crore (Rupees One Crore). This ensures that trading remains restricted to sophisticated investors, aligning with the nature of AIFs.
• Reality of Limited Liquidity: Despite the option for listing, it’s crucial for investors to understand the reality of limited liquidity for AIF units on stock exchanges.
  • Thin Trading Volumes: AIF units, even when listed, often experience thin trading volumes compared to mainstream equities or mutual funds. This is due to the nature of their underlying illiquid assets, the limited number of eligible sophisticated buyers and sellers, and the long-term investment horizon of many AIF investors.
  • Investor Base: The investor base for AIFs primarily consists of HNIs and institutional investors, who typically have a longer investment horizon and are not engaged in frequent trading. This further contributes to lower trading activity.
  • Impact on Exit: Consequently, while listing provides a theoretical exit route, actually selling units at a fair price and in a timely manner can be challenging. Investors should primarily view AIFs as long-term, illiquid investments and not rely on exchange listing for immediate or easy exit liquidity.

How to get registered with SEBI?

To register an AIF with SEBI, the fund needs to make an application to SEBI on its online portal. 

The trust deed i.e. incorporation document of the fund where it is set up as a trust, needs to be registered with the local authorities. Further, the PAN needs to be obtained before making the application to SEBI.

The application to SEBI has the following key documents to be submitted:

• Application form in Form A 
• Private Placement Memorandum (PPM)
• Trust Deed
• Declarations and KYC documents of the entities involved i.e. investment manager, sponsor, trustee (if the AIF is structured as a trust), and the AIF itself

Further, before submitting the application to SEBI, the AIF must engage a merchant banker who performs due diligence on the PPM and subsequently provides a certification that needs to be filed with SEBI. However, there’s an exemption for LVFs and Angel Funds for this requirement. 

Once the application is submitted, SEBI will evaluate the application. Generally, the entire AIF setup and registration process, including SEBI’s assessment, spans around four to six months.

Broadly, the process flow looks as follows:

AIF Process Flow

Who Can Invest in an AIF?

• Beyond HNIs/UHNIs, explicitly state eligibility for Resident Indians, NRIs, and foreign nationals. Include precise minimum investment limits (Rs. 1 crore for investors, Rs. 25 lakh for employees/directors) and the maximum investor cap (1,000, except Angel Funds at 49).  
• AIFs are “Not for Retail Investors” due to their inherent high risk, substantial costs, and lock-in period constraints.

Alternative Investment Funds (AIFs) are designed for high-net-worth individuals (HNWI), institutional investors, and sophisticated investors. These investors typically include:

• High-net-worth individuals (HNWI)
• Corporate bodies
• Foreign investors (including NRIs and foreign nationals)
• Venture capital funds, private equity firms, and insurance companies

For a broader audience of investors looking to diversify their portfolios, it is important to understand that AIFs generally require a minimum investment of ₹1 crore (approximately $135,000), a barrier to entry for retail investors. Moreover, certain funds like Category III AIFs, which invest in more volatile assets like hedge funds, require highly experienced investors to take calculated risks.

Factors to Consider Before Investing in AIFs

Investing in Alternative Investment Funds (AIFs) requires careful consideration due to their unique nature. Before investing, assess these critical factors:

• Risk Appetite and Tolerance: AIFs generally carry higher risk due to illiquid assets, early-stage investments, or complex strategies. Ensure your comfort with potential capital loss and volatility aligns with the AIF’s profile.
• Investment Horizon: AIFs typically involve long lock-in periods (often 3-7+ years). Confirm your financial goals allow for this extended capital commitment.
• Minimum Investment Requirement: Most AIFs mandate a minimum investment of ₹1 crore (or ₹25 lakh for Angel Funds). Ensure you meet this substantial entry barrier comfortably.
• Fund Manager’s Expertise: The fund’s success hinges on the manager’s experience, track record, and specialized knowledge. Thoroughly research their performance, strategy, and team.
• Liquidity Constraints: AIFs invest in illiquid assets. Even if listed, the ₹1 crore minimum tradable lot and thin trading volumes mean liquidity is severely limited. Do not rely on quick exits.
• Regulatory and Tax Implications: Understand the specific SEBI regulations and the tax treatment (pass-through for Cat I & II, non-pass-through/MMR for Cat III) to gauge post-tax returns and compliance.

Taxation of AIFs in India

Taxation plays a significant role in the decision-making process for potential investors in AIFs. Understanding the structure of taxation on both the fund and the investor level is crucial:

1. Tax Structure for AIFs
   • Category I & II AIFs are generally exempt from tax at the fund level. However, taxes are levied at the investor level when returns are distributed.
   • Category III AIFs face higher tax rates due to the speculative nature of the investments. These funds are taxed at the fund level before returns are distributed.
2. Taxation on Investors
   • Investors in AIFs are subject to tax based on the type of income they receive.
   • Income from AIFs may be classified as capital gains, dividends, or interest income, and the tax rate will depend on the holding period (short-term or long-term).
   • Long-term capital gains (LTCG) from investments held for over three years are taxed at a reduced rate of 10% without indexation.

Benefits of Investing in AIFs in India

AIFs offer several attractive benefits for high-net-worth individuals and institutional investors looking to diversify their portfolios. The key benefits include:

1. High Return Potential
   With their focus on private equity, venture capital, and infrastructure, AIFs present higher growth potential than traditional investment vehicles like mutual funds.
2. Diversification
   AIFs allow investors to diversify their portfolios beyond equity markets and debt instruments into alternative asset classes such as real estate, commodities, and startup investments.
3. Professional Fund Management
   AIFs are managed by seasoned professionals who have a deep understanding of the market and provide strategic oversight of the investments, leading to better risk management and potentially higher returns.
4. Lower Correlation with Stock Markets
   AIFs are often less correlated with equity market movements, providing a hedge against market volatility.

Final Thoughts

With their ability to diversify investment portfolios and provide potential high returns, AIFs undeniably present an attractive avenue for investment in today’s dynamic market scenario.The regulatory framework, set by SEBI, ensures transparency, credibility, and alignment with global best practices, further instilling confidence among stakeholders. However, AIFs can be tricky to understand because of the different types, how they are taxed, and the many documents involved. It’s like trying to put together a puzzle with lots of pieces.

India’s AIF industry continues its strong upward trajectory, driven by rising domestic capital, technology adoption, and regulatory maturity. As of September 2025, total AIF commitments crossed ₹15 lakh crore (USD ~180 billion), reflecting robust year-on-year growth of around 18–20%. Fund managers are increasingly leveraging advanced analytics, AI-led risk monitoring, and automated compliance systems, with adoption expanding steadily through 2025. Private credit has solidified its position as a core strategy, contributing roughly 15% of total AIF commitments, supported by tighter bank lending and demand for structured yield products. The investor mix is now firmly dominated by HNWIs and family offices, which account for nearly 80–90% of total inflows; HNI investments alone reached approximately ₹5.38 lakh crore by March 2025, growing over 30% year-on-year. On the regulatory front, SEBI continues to strengthen disclosure, valuation, and governance norms while simplifying accreditation frameworks, reinforcing AIFs as a cornerstone of sophisticated portfolio construction in India.

For both potential AIF managers and investors, understanding this intricate ecosystem is crucial. It is recommended to talk to experts who know the details. They can guide you through the process, help you understand the rules, and make sure you’re making the best decisions. As the world of AIFs keeps changing, staying informed and getting the right advice will be key to success.

Need Expert Guidance in Setting up AIF?

At Treelife, we specialize in helping investors and fund managers navigate the complexities of the AIF landscape. Whether it’s SEBI registration, fund structuring, or regulatory compliance, our team of experts is here to guide you through every step of the process.

Reach out to us today and ensure your AIF investment strategies are aligned with the latest regulations and market trends.

Contact Us: support@treelife.in
Call Us: +91 99301 56000

References: 

1. [1]  SEBI Website https://www.sebi.gov.in/ ︎
2. [2]  According to the ‘Data relating to activities of Alternative Investment Funds (AIFs)’ by SEBI ︎
3. [3]  https://aifpms.com/blog/growth-of-aif-pms-investments-in-india/ ︎
4. [4]  India goes Alternatives report by Avendus published in December 2024 ︎
5. [5]  Crisil intelligence and oister global report on AIFs published in January 2025 ︎

The landscape for Indian startups has fundamentally shifted. A growing number of founders are making a deliberate choice to re-domicile their businesses from offshore jurisdictions like Delaware, Singapore, or Mauritius back to India. This strategic move, known as a “reverse flip” or re-domiciliation, is no longer niche its becoming mainstream.

But what’s driving this trend? And more importantly, is it right for your company?

Understanding the Reverse Flip

At its core, a reverse flip is a straightforward concept: migrating your offshore holding company structure so that an Indian entity becomes the consolidated parent of your group. What sounds simple in theory, however, involves navigating complex legal, tax, regulatory, and operational dimensions.

For many founders, this process unlocks significant strategic advantages that were previously unavailable to them.

The Five Key Reasons Founders Are Coming Back

IPO Readiness

SEBI doesn’t negotiate on this point: if you want to list on the NSE, BSE, or GIFT City exchanges, your listing entity must be Indian-incorporated. For any founder with IPO ambitions within the next three to five years, a reverse flip isn’t optional it’s essential.

Access to Indian Institutional Capital

The domestic investment landscape has matured dramatically. Large family offices, alternative investment funds (AIFs), and strategic investors now deploy substantial capital into Indian startups. Many of these investors have FEMA-linked mandates that restrict or prohibit direct investment into foreign entities. By flipping to India, you’re removing a structural barrier to accessing this growing pool of capital.

Eliminating POEM Risk

One of the most underestimated tax risks for Indian-operated companies with foreign holding structures is POEM (Place of Effective Management) exposure. If your entire management team, operations, and decision-making centers are in India, the Indian tax authority can argue that your offshore entity itself is an Indian tax resident potentially subjecting it to Indian taxation on global income at rates exceeding 40%. A reverse flip eliminates this uncertainty permanently.

Government Incentives and Scheme Eligibility

PLI scheme eligibility. DPIIT startup benefits including the 80-IAC three-year profit deduction. Government procurement preferences. These aren’t marginal advantages; they can materially impact your unit economics and growth trajectory. Offshore-incorporated entities are excluded from all of them.

Operational Simplification and Cost Savings

Maintaining dual-entity structures across two jurisdictions requires parallel audits, transfer pricing studies, FEMA compliance filings, and coordinated governance. The annual cost of this dual-jurisdiction burden typically ranges from ₹30 to 60 lakhs per year. A single-jurisdiction Indian structure reduces this to ₹10 to 25 lakhs annual savings that recover the entire cost of the flip within two to three years.

Before You Commit: The Readiness Assessment

Not every company should flip immediately. A few critical questions should guide your decision:

Is 90 percent or more of your revenue, operations, or customer base already in India? If yes, you’re a strong candidate. If your business is genuinely global or primarily offshore-focused, the economics shift.

Are you planning an India IPO in the next three to five years? This is a binary yes-or-no question with clear implications.

Do you hold material intellectual property, contracts, or international business operations offshore? Complexity here doesn’t kill the flip, but it does require careful planning. You may want to consider IP migration or partial flip strategies first.

Do key investors have FEMA restrictions or RBI approval requirements? This is often the longest-lead-time item in a flip. Mapping it early is critical.

Is your ESOP pool primarily held by Indian resident employees? Post-flip ESOP plans are cleaner for Indian residents. Foreign ESOP holders require additional FEMA structuring.

The Three Legal Routes: Which One Fits Your Situation?

The tax code and corporate law provide three distinct pathways to execute a reverse flip, each with different timelines, costs, and implications.

Route One: Cross-Border Merger (NCLT)

This is the legally cleanest route. Your offshore entity merges into your Indian subsidiary through a National Company Law Tribunal (NCLT) scheme, and the merged entity survives as your new Indian holding company.

The timeline is the longest, typically nine to eighteen months because NCLT approval is required. But the benefits are substantial: Section 47 tax neutrality is often available, the offshore entity is fully eliminated, and the structure is IPO-ready from day one.

This route is ideal if you have a clean cap table and aligned investors. It’s the preferred path for companies seriously tracking toward an IPO.

Route Two: Share Swap / Share Exchange

Here, offshore shareholders exchange their shares for shares in a new Indian holding company. The offshore entity may be retained as a subsidiary or wound down over time.

The legal basis is found in FEMA regulations and the Income Tax Act. Section 47(viab) can provide tax neutrality if structuring conditions are met, though arm’s-length valuation is required.

The timeline is considerably faster four to nine months because NCLT isn’t involved. This makes it attractive for companies with tight funding timelines or complex cap tables where NCLT consensus is harder to achieve.

Route Three: Liquidation Plus Asset Transfer

The fastest route, typically three to six months. The offshore entity is liquidated, its assets and IP are distributed to the Indian company, and the offshore entity is wound up.

This works best for early-stage companies with simple structures, few active investors, and limited offshore assets. The tradeoff: potential capital gains tax on asset transfers, and valuation of IP becomes critical. It’s the most tax-exposed route but operationally the simplest.

The Tax Landscape: What Every Founder Must Know

A reverse flip triggers multiple tax checkpoints. Understanding them upfront prevents surprises.

Capital gains on the share swap or merger: Depending on the route chosen and how it’s structured, this could be entirely tax-neutral (Section 47 treatment) or trigger capital gains tax. Proper structuring and advance tax opinions are essential.

ESOP perquisite tax for employees: ESOPs held by employees are subject to perquisite tax upon exercise, typically at slab rates up to 30%. However, employees of registered DPIIT startups can defer this tax to the earlier of five years from exercise, exit, or sale of securities. This is a powerful but often-overlooked benefit.

Indirect transfer tax exposure: Non-resident shareholders may face Indian indirect transfer tax under Section 9 if the flip results in a change of control over an Indian asset. DTAA (Bilateral Tax Treaty) protections may apply, but this requires early assessment.

IP transfer and royalty implications: If intellectual property is migrating from offshore to India, transfer pricing arm’s-length valuation is mandatory, and withholding tax may apply.

POEM-based taxation: This is perhaps the single biggest tax risk in the pre-flip state. If your offshore holding company has established a place of effective management in India which it likely has if all operations and management are Indianit’s already a taxable resident of India. A flip eliminates this exposure.

The Execution Timeline: What to Expect

A reverse flip is not a three-week process. Depending on the route, expect a total timeline of three to eighteen months from start to finish.

The process breaks into six overlapping phases:

Phase One: Diagnostic and Structuring (4-8 weeks) – Cap table audit, POEM risk assessment, tax exposure mapping, and route selection.

Phase Two: Board and Investor Approvals (6-10 weeks) – Board resolutions, investor consent letters, SHA review, and waiver of rights from minority shareholders.

Phase Three: Regulatory Filings (8-16 weeks) – NCLT petitions (if merger), RBI and FEMA filings, MCA filings, and tax authority notifications.

Phase Four: Execution and Asset Migration (4-8 weeks) – Share issuance and cancellation, contract novation, IP transfer, and banking restructuring.

Phase Five: ESOP Restructuring (4-6 weeks) – New Indian ESOP plan adoption, employee communications, and option conversion or buyout mechanics.

Phase Six: Post-Flip Compliance (4-8 weeks) – DPIIT registration (do this within the first 30 days), updated statutory registers, first-year audit, and offshore entity wind-down.

The Cost Reality

Professional fees for a complete reverse flip typically range from ₹25 to 95 lakhs, depending on complexity.

Legal fees (NCLT and documentation) run ₹15 to 60 lakhs. This varies significantly based on cap table complexity and whether NCLT is required.

Tax advisory and transfer pricing studies cost ₹8 to 25 lakhs. This scales with the value of IP being transferred and the number of tax jurisdictions involved.

Regulatory and FEMA filings add ₹3 to 10 lakhs, driven primarily by the number of offshore investors and jurisdictions.

These are significant costs, but remember: dual-jurisdiction compliance costs typically recover this entire investment within two to three years.

The Risks You Need to Manage

A reverse flip introduces several material risks that require proactive mitigation.

NCLT and regulatory timeline overruns are the highest-probability risk. Build a four-month buffer into your planning. Maintain bridge financing capacity. Communicate transparently with investors about timeline variability.

Investor consent bottlenecks can be the critical path item. Map all consent rights and investor veto provisions at the start. Engage your top investors at least 90 days before your target flip date. Provide them with a clear, written information memorandum outlining the rationale, tax implications, and timeline.

Unexpected tax liabilities can emerge from careful examination of capital gains treatment or Section 56(2)(x) gift tax on asset transfers. Commission a comprehensive tax opinion from a Big Four firm or specialist early. If stakes are high, consider requesting an advance ruling from the tax authority.

ESOP valuation disputes can create employee dissatisfaction. Engage a registered valuer for the conversion. Conduct transparent employee Q&A sessions. Provide written FAQs. Consider offering independent employee counsel during the process.

Contract continuity risks with customers and vendors require proactive legal review of change-of-control clauses and novation mechanics. Provide customers and vendors with 90 days notice and clear communication about the structural change.

Investor Communication: Your Longest Lead-Time Item

The biggest operational risk in a reverse flip is often not legal or tax, its investor alignment.

Begin investor outreach at least 90 days before your target flip date. Surprises generate resistance. Early engagement builds consensus.

Provide investors with a written information memorandum that covers the strategic rationale for the flip, the specific legal route you’ve chosen, the detailed tax analysis for their specific share class (different shareholders have different tax exposures), and the expected timeline with buffers.

Address FEMA and repatriation concerns head-on. Many offshore investors worry about their ability to get money out of India post-flip. Provide them with a clear FEMA compliance roadmap and RBI approval timeline upfront. This preempts the biggest objection before it hardens.

Segment your investor base. Angels, VCs, strategic investors, and ESOP holders all have different concerns and information needs. Tailor your communication accordingly rather than sending a single all-hands memo.

Identify potential dissenters early and engage directly. If your structure requires NCLT approval, understand the fair exit mechanisms available to minority shareholders who object.

Document everything. Board resolutions, consents, waivers, shareholder communication keep detailed records. This documentation is critical for RBI filings, NCLT proceedings, and future due diligence.

What Success Looks Like

When a reverse flip is executed well, the benefits compound quickly.

You gain immediate eligibility for government schemes like PLI and DPIIT startup registration. The 80-IAC three-year profit deduction can be worth multiples of the flip’s cost.

You unlock access to domestic institutional capital that was previously unavailable or reluctant to invest. This often results in higher valuation multiples from Indian AIFs compared to foreign-focused structures.

You eliminate POEM tax risk permanently, providing both certainty and long-term tax efficiency.

You simplify operations, reduce annual compliance costs, and accelerate your readiness for IPO-track activities like financial restatement and governance upgrades.

Most importantly, you position your company as an Indian-owned and Indian-headquartered signal that increasingly matters to customers, regulators, and capital providers.

The Bottom Line

A reverse flip is not right for every company. But for founders with substantial Indian operations, strong domestic market positioning, and medium-term growth ambitions, it’s increasingly a strategic necessity rather than an optional step.

The window to execute a flip is often narrow. Timing matters you want to flip before you become too large or too complex, but after you’ve achieved enough scale that the cost is justified.

If you’re considering a reverse flip, the time to assess feasibility is now. The longer you wait, the more complex your cap table becomes, the more difficult investor alignment grows, and the larger your tax exposure potentially becomes.

The best flips happen quietly, well-planned and well-executed, with full investor buy-in and clear strategic purpose. That takes time to set up correctly.

Overview: Why Budget 2026 Is a Structural Inflection Point

Union Budget 2026–27 signals a decisive strategic pivot: India is moving from being a consumer and services executor of global digital technologies to becoming a producer, owner, and exporter of AI-driven digital infrastructure.

Three structural themes dominate the budget’s technology agenda:

1. Data centres elevated as Strategic National Infrastructure (not merely IT “support” assets).
2. Artificial Intelligence operationalised as governance and productivity utility (“AI as infrastructure,” not lab experimentation).
3. Long-horizon fiscal certainty anchored to 2047 designed to unlock hyperscale capital and irreversible infrastructure commitments. This is linked to Viksit Bharat @ 2027 vision of Govt. of India.

The macro logic

India currently generates ~20% of the world’s data, yet ~95% of Indian-origin data is processed or stored overseas creating security, competitiveness, latency, and economic leakage risks.
Budget 2026–27 directly targets this mismatch through tax architecture, compliance simplification, and infrastructure constraints (power, water, materials) that govern real-world feasibility.

Key numbers at a glance

• Data centre capacity: 1.5 GW installed (2025); expected to exceed ~1.7 GW by end-2026.
• India’s DC capacity footprint is concentrated across 7 major clusters: Mumbai, Chennai, Hyderabad, NCR, Bengaluru, Pune, Noida.
• Global cloud infrastructure concentration: ~63% controlled by AWS, Microsoft Azure, and Google Cloud.
• Hyperscaler announced investments in India: >$30 billion over 14 years.
• Data centre resource constraints: power is ~50% of operating cost; water consumption 150+ billion litres in 2025, projected to rise to ~358 billion litres within five years.
• Tax + compliance era shift: Income Tax Act, 2025 effective April 1, 2026, with simplification and automation.

What this means for stakeholders

• Founders: compute economics and infrastructure risk improve over time; AI-native businesses operate on nationally prioritised infrastructure (not rented policy space).
• Investors: the budget creates a long-duration compounding window, but returns will be shaped as much by power/water/material constraints as by tax incentives.
• Businesses and GCCs: India is positioned to move from execution hubs to ownership centres for mission-critical platforms, enabled by stable transfer pricing and simplified compliance.

1. Macroeconomic Baseline: The Digital State of the Nation (2025–26)

Budget 2026–27 builds on a digital economy that already has scale but is constrained by physical and regulatory dependencies.

1.1 Data centre baseline and geographic clustering

As of Q3 2025, India’s data centre capacity reached 1.5 GW, distributed primarily across seven urban clusters: Mumbai, Chennai, Hyderabad, NCR, Bengaluru, Pune, GIFT City and Noida.

Interpretation:

• Capacity clustering is a strategic advantage for connectivity and enterprise proximity, but also concentrates grid and water stress.
• Next-phase growth (toward 8–10 GW potential by 2030 referenced in the material) will likely depend on extending infrastructure corridors beyond current cluster saturation and enabling tier-1 periphery buildouts.

1.2 Sector market dynamics and scaling projections

The attached  Report provides a concise sector table with market sizes, projections, and growth drivers.

Table 1: India Technology Segment Outlook

Implications for strategy:

• AI’s projected expansion is not purely a software story; it is a compute, storage, networking, and energy story.
• Cybersecurity growth is tied to enforcement readiness and DPDP-era accountability (see Section 7).
• Data centre services growth is structurally linked to tax certainty, safe harbour predictability, and physical constraints.

1.3 India’s AI talent base: scale and pressure points

India is cited as having the second-highest AI talent base globally, with 420,000+ employees in AI-specific job functions, expected to grow at ~15% CAGR till 2027, with demand rising to ~1.25 million professionals.

What this signals for businesses:

• Talent availability is a competitive edge, but the constraint shifts to “where the models run” (compute access), “how they are governed” (risk/accountability), and “how quickly deployments scale” (public utility and enterprise integration).

Founder lens (practical):

• If your product requires GPU/accelerator-intensive workloads, you should treat infrastructure access and energy resilience as core components of product viability not procurement afterthoughts.

2. Data Centres as Strategic National Infrastructure

Budget 2026–27 reframes data centres from support facilities into the foundational layer for digital architecture across sectors.

2.1 Strategic infrastructure status: why it changes the investment equation

The report explicitly positions technology infrastructure data centres, cloud platforms, cybersecurity, and digital public infrastructure on the same footing as roads, power, and logistics.

This implies:

• Longer policy horizons and lower midstream regulatory surprise
• Governance-first design expectations, including security-by-default
• A clearer path for long-duration infrastructure capital

2.2 The sovereignty gap: “India produces data, others process value”

The documents highlight a structural mismatch:

• India generates ~20% of the world’s data
• Yet ~95% of Indian-origin data is stored/processed overseas

Why it matters beyond compliance:

• Security and resilience: externalised processing increases systemic dependency risk
• Economic capture: compute and storage value accrues outside India
• Startup economics: higher latency and higher costs reduce domestic innovation efficiency

2.3 Capacity trajectory: from 1.5 GW to a multi-GW decade

Capacity snapshot:

• 1.5 GW installed (2025)
• Expected to cross ~1.7 GW by end-2026

The  Report references a policy-driven expectation of capacity expansion citing a shift from ~1 GW baseline in the projection logic toward ~10 GW potential under investment attraction expectations.

3. The 21-Year Tax Holiday Till 2047: Mechanism, Conditions, and Strategic Intent

The budget’s headline move is a 21-year tax holiday until March 31, 2047 for foreign companies providing global cloud services via India-based data centres.

3.1 What was announced

• Tax holiday applies whether the foreign firm:
  • builds its own India footprint (as part of the structure), or
  • procures services from an Indian data centre operator
• Mandatory routing of Indian customer services via local reseller entities.

3.2 Operating framework and eligibility conditions

The  Report adds structure to eligibility, including:

• Use of “Specified Data Centers” in India, set up under an approved government scheme and notified by MeitY
• The DC must be owned and operated by an Indian company
• Indian customer services must be routed via an Indian reseller entity, taxed at 25.7% corporate tax
• Foreign entity remains asset-light and does not own/operate physical infrastructure

Table 2: 2047 Tax Holiday Qualification Checklist

3.3 Investment scale expectations referenced

Reports state an expectation to attract >$70 billion in cumulative investments over 5–7 years, potentially expanding capacity toward ~10 GW (from the baseline cited in the projection logic).

Investor interpretation:

• This is designed to compress the risk premium historically applied to India compute investments.
• However, capital deployment will still be bounded by power availability, water intensity, and supply chain constraints.

4. Safe Harbour and Transfer Pricing Predictability: De-risking Scale

Budget 2026–27 introduces a 15% cost-based safe harbour margin for Indian data centre entities providing services to related foreign companies.

4.1 The 15% data centre safe harbour

Key impact:

• Eliminates transfer pricing uncertainty
• Levels playing field between foreign-owned and Indian-promoted operators
• Encourages faster capacity expansion and pricing competitiveness

4.2 IT services safe harbour modernization and scale expansion

• IT-enabled services grouped under “Information Technology Services”
• Uniform safe harbour margin: 15.5%
• Eligibility threshold raised: ₹300 crore → ₹2,000 crore
• Automated approvals and faster APAs, with APA process concluded within two years

Table 3: Safe Harbour Reform Summary

5. Hyperscalers and India’s Emerging Role as a Global Compute Base

5.1 Global cloud concentration and India relevance

AWS, Azure, and Google Cloud control ~63% of global cloud infrastructure.
Combined announced investments in India exceeding $30 billion over 14 years.

5.2 What changes post-budget

Post-budget India becomes viable for:

• AI training
• Inference
• Cross-border workloads
• Disaster recovery zones

Strategic shift: India moves from “regional node” to “global compute base.”

5.3 Takeaway for Founders

A large share of startup unit economics especially in AI-native businesses depends on compute price stability, predictable data localisation, and scalable infrastructure access.

Budget-induced implications:

• Compute cost curve: medium-term improvement as capacity expands and policy risk declines.
• Market access: globally competitive backend capability enables Indian companies to build for cross-border compute use-cases.

5.4 Takeaway for Investors

The structural opportunity is not only in DC real estate, but in:

• power/cooling innovation
• grid storage and renewable PPAs
• optical networking and transceivers
• cybersecurity governance tools
• semiconductor equipment/materials

6. AI: From Innovation Narrative to Governance Utility

Budget 2026–27 reframes AI as a general-purpose governance and productivity engine a “utility layer,” not a lab experiment.

6.1 “Social AI” and flagship implementation: Bharat-VISTAAR

Bharat-VISTAAR is presented as a multilingual AI integrating AgriStack with ICAR data for farmer advisories.

Why this is strategically meaningful:

• It signals AI deployment at population scale
• It implies that success metrics are operational: accuracy, latency, governance, and trust, not novelty

6.2 AI as a governance engine: applied deployments

The AI-driven use-cases including:

• worker-job matching
• container risk scanning at ports
• assistive devices under Divyang Sahara Yojana
• phased expansion of non-intrusive scanning using advanced AI technology across major ports, targeting 100% container scanning to improve risk assessment and reduce dwell time.

6.3 AI market expansion and compute dependency

AI market scaling cited in the sector outlook table $13.05B (2025) to $325.3B (by 2033) with ~38–39% CAGR implies enormous compute scaling, tightening the coupling between AI growth and data centre buildout, power availability, and cooling innovation.

7. Cybersecurity: From Compliance to Decision-Grade Governance

Budget 2026–27 embeds cybersecurity into digital governance, shifting from compliance checklists to continuous, decision-grade visibility and accountability.

7.1 Structural shift in operating model

• periodic audits → continuous visibility
• checklists → impact/exposure insight
• compliance → accountability
• cybersecurity becomes board-level decision input

7.2 Market growth and enforcement readiness

Growth projected as below:

• cybersecurity product market projected to reach $6B by 2026 (from $4.46B baseline)
• Data Protection Board allocation increased fivefold to ₹10 crore, signalling movement from legislation toward enforcement and adjudication
• AI-driven cyberattacks cited as rising, with projected global losses of $18.6B by end-2025 (threat context)

Table 4: Cybersecurity Shift Governance Implications

8. Infrastructure Nexus: Energy, Water, Cooling, Materials, and Real Estate

The budget recognizes that compute sovereignty cannot be achieved through tax provisions alone; it must be executed through the physical layer.

8.1 Power: the dominant operating constraint

• Power accounts for ~50% of data centre operating cost
• Data centres may consume ~2% of total electricity supply
• Data centres are expected to consume ~3% of India’s national power supply by 2030, up from less than 1% currently.

8.2 Nuclear + renewables + storage: policy measures cited

Key measures described include:

• customs duty exemption for nuclear power equipment till 2035
• solar allocation increased 32% to ₹30,539 crore
• duty exemptions on capital goods for BESS cell manufacturing, plus ₹10,000 crore allocation strengthening container manufacturing, supporting modular BESS and edge DC solutions

Investor implication:
The investable universe expands from DC shells into integrated energy + compute platforms: PPAs, grid storage, modular edge units, and cooling innovation.

8.3 Water and cooling: the hidden bottleneck

• Data centres consumed 150+ billion litres of water in 2025
• Projected to reach 358 billion litres within five years

• cooling can account for nearly 40% of total energy use
• a 1 MW data centre consumes roughly 26 million liters of water annually

8.4 Materials and real estate: secondary constraints that become primary at scale

Table 5: Materials and Real Estate Demand Linked to DC Expansion

9. Semiconductors & ISM 2.0: Owning the Physical AI Stack

Budget 2026–27 strengthens the thesis that AI sovereignty is not only about models; it is about compute, storage, and hardware control.

9.1 ISM 2.0 direction of travel

ISM 2.0 is positioned as moving beyond assembly toward:

• equipment manufacturing
• materials
• full-stack Indian IP

9.2 Outlay and strategic intent

The Electronic Component Scheme outlay is cited as increased to ₹40,000 crore.

Investor lens:
The opportunity is not limited to fabs; it includes equipment, materials, and supply chain resilience layers that reduce exposure to global disruptions.

10. IT & GCC Ecosystem: Moving Up the Value Chain

Budget 2026–27 includes reforms that encourage India’s IT sector and GCC ecosystem to evolve from execution to ownership design, build, run, and govern mission-critical platforms globally.

10.1 IT service classification and safe harbour coherence

The data states:

• all IT-enabled services grouped under “Information Technology Services”
• common safe harbour: 15.5%
• threshold raised: ₹300 crore to ₹2,000 crore
• automated approvals + faster APAs

10.2 GCC implication

GCCs increasingly become:

• product and platform ownership centres
• deep-tech and R&D nodes
• operational governance hubs for global infrastructure

Business takeaway:
For multinationals, India’s positioning becomes less “cost centre” and more “operational command centre,” supported by regulatory simplification and tax predictability.

11. Talent Mobility & Global Expertise: Attracting Specialists and Cleaning Legacy Compliance

Budget 2026–27 introduces targeted measures to attract global expertise and remove friction for returning Indians and non-resident professionals.

11.1 Global Talent Exemption (5-year overseas income exemption)

Non-resident professionals relocating to India under government-notified schemes receive:

• five-year tax exemption on income earned outside India
• eligibility condition: must have been non-resident for five consecutive tax years preceding arrival

11.2 FAST-DS 2026 (Foreign Asset Disclosure Scheme)

The  Report describes:

• a six-month window allowing voluntary disclosure of previously unreported foreign assets
• thresholds referenced: up to ₹1 crore or ₹5 crore (category dependent)
• payment: 30% tax + 30% additional tax (in lieu of penalty), with immunity from criminal prosecution

This is positioned as a mechanism to clean up legacy compliance issues tied to foreign bank accounts, RSUs, ETFs, and other overseas holdings.

12. Startups, MSMEs, and the “Champion” Manufacturing Pivot

Budget 2026–27 signals a deliberate shift toward manufacturing-led entrepreneurship and scalable, compliance-forward MSMEs.

12.1 Capital allocation and intent

The  Report references:

• approximately ₹32,000 crore allocated for the startup and small business sector

12.2 The ₹10,000 crore SME Growth Fund (equity-first intervention)

This fund is presented as a move from credit-heavy interventions to equity and structured support:

• objective: identify and nurture “future champions” capable of global competition
• nature of capital: longer-tenure funding, flexible repayment, plus mentoring and governance advisory
• “champion status”: preferential access linked to compliance standards and growth potential

12.3 Funding pipeline via SIDBI-anchored routes

The  Report lists three primary entry routes:

1. SIDBI-anchored VC funds
2. sector-focused venture funds (manufacturing, agribusiness, clean technology)
3. structured debt or quasi-equity for asset-heavy MSMEs with predictable cash flows

12.4 Startup tax holiday extension (Section 80-IAC)

The report notes:

• Section 80-IAC tax holiday (100% deduction for 3 years) extended to entities incorporated until March 31, 2030

This functions as a financial cushion during formative years, but it is most valuable when paired with improved compute access, governance readiness, and scalable infrastructure.

13. Comparative Analysis: India as an Emerging Regional Powerhouse (vs Malaysia, Vietnam, Japan)

13.1 Cost and yield dynamics

India’s development costs for data centres are stated as:

• 40–50% lower per MW compared with the US
• up to 60% cheaper than Japan
  Power costs are cited as 30–40% cheaper than mature markets due to high renewable components.

13.2 Incentives, stability, and renewable headroom

The report provides comparative indicators, including:

• India’s primary incentive: 21-year tax holiday
• renewable headroom advantage: “substantial headroom” referenced
• competitor markets facing tighter renewable output growth vs demand
   

Table 6: Regional Competitive Snapshot 

14. “What India Is Set to Witness”: Five Major Transformations

This hereby frames the budget as catalysing a “re-contracting” between the state and the technology ecosystem.

14.1 The “Orange Economy” (AVGC) as a strategic employment engine

The report cites:

• 15,000 secondary school labs and 500 college creator labs
• industry projected to require ~2 million professionals by 2030

Business opportunity implication:
This creates structured pipeline conditions for:

• creative tech tooling
• immersive storytelling platforms
• gaming and real-time engines
• creator economy infrastructure

14.2 Transition from assembling to owning the stack

ISM 2.0 plus the 2047 horizon signals India is building for the next quarter century moving from service destination to “intelligence engine room” framing.

14.3 Integrated energy–digital infrastructure

Future infrastructure will integrate:

• dedicated power corridors
• BESS systems
• modular containerised facilities
  enabling rapid “edge” DC deployment closer to point-of-use.

14.4 Precision logistics and AI-managed trade

AI-powered scanning expansion targets full container scanning across major ports, with implications for logistics costs, risk, dwell times, and export competitiveness for “Champion MSMEs.”

14.5 GIFT City as a global financial hub

The report cites:

• tax holiday extension for IFSC units to 20 consecutive years
• positioning GIFT City as an alternative to Singapore and Hong Kong for aircraft leasing, treasury centres, and international banking units.

15. Investor Lens: Where Capital Will Flow (2026–2047)

The data sources provide a clear investor framing of high-conviction themes.

15.1 High-conviction themes (as stated)

• hyperscale and edge data centres
• power and cooling innovation
• AI infrastructure platforms
• cybersecurity governance tools
• semiconductor equipment and materials
• GCC-led deep-tech R&D
   

15.2 Why the opportunity is durable

• 2047 fiscal horizon
• multi-party policy continuity positioning
• infrastructure-led strategy (not incentive-only)

15.3 Risk pricing: what investors must model explicitly

The data sources collectively signal that investors must price “infrastructure externalities,” not just tax benefits.

Key risk variables:

• grid availability and reliability
• energy cost volatility and PPA structure
• water access and cooling tech maturity
• materials supply (copper, optical)
• compliance enforcement trajectory (DPDP + cybersecurity governance)
• execution capability for MeitY-notified “specified DC” frameworks

16. Final Synthesis: India’s New Digital Contract (Founders • Businesses • Investors)

Budget 2026–27 functions as a declaration of intent and a scaffolding for execution:

• Data is a strategic asset
• AI is national infrastructure
• Cloud is sovereign capability
• Technology is no longer optional policy it is the growth substrate

Action implications by stakeholder

For founders

Prioritise opportunities where budget architecture reduces structural friction:

• AI-native products that benefit from domestic compute expansion
• governance-first solutions (cybersecurity, DPDP-ready architectures)
• power/cooling/water efficiency tooling for DC ecosystems
• B2G and infrastructure-aligned platforms that ride population-scale utility deployments

Founder operating principle: build on nationally prioritised infrastructure with security and governance baked in not bolted on later.

For business owners and GCC leaders

Use the tax and compliance simplification to accelerate structural upgrades:

• adopt continuous risk governance models for cybersecurity
• redesign data architectures for sovereignty and resilience
• treat AI governance and security as board-level capability
• leverage safe harbour certainty to expand global delivery ownership

For investors

The compounding window is real, but returns will favour players that integrate policy advantage with physical execution:

• DC + energy-integrated platforms
• sustainable cooling and water resilience stacks
• semiconductor equipment/material ecosystems
• governance-grade cybersecurity and compliance tooling
• long-duration infra capital aligned to 2047 certainty

References:

• https://www.pwc.in/budget/union-budget-2026.html
• https://www.financialexpress.com/money/your-income-tax-this-year-will-still-be-assessed-under-old-rules-despite-new-law-coming-from-april-1-4131064/
• https://www.marknteladvisors.com/research-library/india-data-center-market.html
• https://www.businesstoday.in/technology/news/story/economic-survey-2026-projects-indias-data-centre-boom-to-8-gw-by-2030-513504-2026-01-29
• https://www.ipsr.org/blog/indian-it-industry-heads-to-350-billion-by-2025-nasscom
• https://www.einpresswire.com/article/889295838/india-data-center-market-size-to-hit-usd-21-03-bn-by-2031-growth-concentrated-in-mumbai-noida-chennai-and-bengaluru
• https://economictimes.indiatimes.com/news/india/digital-infra-emerges-as-indias-defining-opportunity/articleshow/128082630.cms
• https://www.fortunebusinessinsights.com/india-artificial-intelligence-market-113969
• https://www.grandviewresearch.com/horizon/outlook/artificial-intelligence-market/india
• https://economictimes.indiatimes.com/tech/technology/cybersecurity-product-companies-revenue-to-reach-6-billion-by-2026-dsci/articleshow/125761300.cms
• https://www.ibef.org/news/india-s-it-spending-to-hit-us-176-billion-in-2026-on-data-centre-ai-boom-gartner
• https://www.aninews.in/news/business/as-ai-reshapes-indian-business-iim-raipur-launches-ai-integrated-advanced-general-management-programme20260209111834
• https://www.resiindia.org/post/billions-in-investments-emerging-projects-and-policy-pathways-for-economic-growth-in-india-s-data
• https://www.india-briefing.com/news/india-union-budget-2026-cloud-data-centers-tax-incentives-42311.html/
• https://www.thehindu.com/business/budget/budget-2026-government-to-provide-tax-holiday-for-foreign-companies-offering-cloud-services-using-india-datacentres/article70577258.ece
• https://economictimes.indiatimes.com/tech/technology/foreign-cloud-companies-will-get-20-year-tax-rebate-but-conditions-apply/articleshow/127918162.cms

Section 1: Macroeconomic Overview

India enters FY 2025–26 with a strong and unusually balanced macroeconomic position. Real GDP growth is estimated at ~7.4%, with real GVA growth at ~7.3%, reaffirming India’s position as the fastest-growing major economy. Growth is broad-based, supported simultaneously by consumption recovery, sustained investment, and improving financial stability.

• Private consumption (PFCE) grew ~7%, accounting for ~61.5% of GDP
• Gross Fixed Capital Formation (investment) grew ~7.8%, with investment intensity around 30% of GDP
• Headline inflation moderated sharply, with average CPI at ~1.7% (Apr–Dec 2025)
• Banking sector health strengthened, with GNPA declining to ~2.2% (Sept 2025)

This combination of growth, low inflation, and financial system resilience creates a more predictable operating environment for businesses and investors.

Section 2: India’s Economy

At the national level, India’s economic scale has itself become a structural advantage. The domestic market is now deep enough to support large, scalable businesses without over-dependence on exports or global capital cycles. The Economic Survey characterises FY26 growth as being driven by a “double engine” of consumption and investment, rather than short-term policy stimulus.

• India remains the fastest-growing large economy for the fourth consecutive year
• Financial participation continues to widen, with 12+ crore unique investors
• Household savings are gradually shifting from traditional bank fixed deposits toward mutual funds and SIP-led investments, improving risk capital availability for businesses
• Demat accounts exceed 21 crore, reflecting deepening capital markets and household formalisation
  

Section 3: India on the Global Stage

India’s global economic position continues to strengthen, particularly through services, remittances, and capital inflows. While global trade remains fragmented, India’s services-led model provides relative insulation from external shocks.

Section 4: GSDP Composition

India’s growth composition remains structurally diversified, with services continuing to lead while manufacturing shows clear signs of revival. This diversification reduces vulnerability to sector-specific or cyclical shocks.

• Services GVA grew ~9%+ in FY26, remaining the primary growth driver
• Manufacturing GVA accelerated, growing ~7.7% in Q1 and ~9.1% in Q2 FY26
• Agriculture provided stability supported by normal monsoons and steady output
  

Section 5: Fiscal Health

India’s fiscal strategy reflects a deliberate shift toward asset creation and long-term productivity enhancement. Public finances are increasingly geared toward capital expenditure rather than consumption-led spending, while medium-term debt sustainability indicators have improved.

• Effective capital expenditure increased from ~2.7% of GDP (pre-pandemic) to ~4%
• Central government capex expanded nearly 4× since FY18
• Combined government debt-to-GDP has declined by ~7 percentage points since 2020
• State-level fiscal deficits remain broadly stable in the post-pandemic period
  

Section 6: FDI Inflows

India continues to attract sustained foreign capital, with inflows increasingly directed toward services, manufacturing, and technology-led sectors.

• Total FDI inflows (FY25 provisional): ~USD 81.0 billion, ~14% YoY growth
• Manufacturing FDI: ~USD 19.0 billion, ~18% YoY growth
• Key recipient sectors include services, software & hardware, trading, and manufacturing

Section 7: Startup Capital of India

India’s startup ecosystem has transitioned from rapid expansion to a phase of consolidation and maturity.

• 200,000+ DPIIT-recognised startups (as of Dec 2025)
• ~125 unicorns across fintech, SaaS, consumer internet, and deep tech
• Increased focus on unit economics, governance, and sustainable growth
  

Section 8: Domestic Investment Momentum

Domestic investment remains a central pillar of India’s medium-term growth trajectory, supported by policy-led manufacturing and infrastructure creation.

• Investment (GFCF) growth: ~7.8% in FY26
• Investment intensity sustained at ~30% of GDP
• PLI schemes (14 sectors) have delivered:

• India Semiconductor Mission: 10 approved projects with ~₹1.6 lakh crore committed investment
  

Section 9: Export Performance & Infrastructure Edge

India’s export resilience is increasingly driven by services and supported by large-scale infrastructure upgrades that reduce logistics and transaction costs.

• Total exports (FY25): ~USD 825 billion, a record high
• Services exports: ~USD 387.6 billion
• Non-petroleum exports: ~USD 374.3 billion
• Infrastructure expansion highlights:
  • High-speed corridors: ~550 km (2014) → ~5,300+ km (2025)
  • Airports: 74 (2014) → 164 (2025)
    

Section 10: What This Means for Businesses & Investors

India’s FY 2025–26 economic environment offers a rare combination of growth visibility, financial stability, and execution capacity. Strong domestic demand, improving credit conditions, and sustained public and private investment create a favourable backdrop for scaling businesses and deploying long-term capital.

• Lower inflation and healthier banks improve operating and financing conditions
• Policy continuity supports manufacturing, infrastructure, and startups
• Export-oriented businesses benefit from services growth and logistics upgrades
• AI adoption is accelerating globally, and Indian enterprises are increasingly embedding AI into finance, compliance, operations, and decision-making rather than treating it as a pilot layer
• However, the Economic Survey’s probability matrix indicates that a global recession is a plausible worst-case scenario, with an estimated likelihood in the range of 15–20%, based on scenario-driven analysis.

References :-

• https://www.indiabudget.gov.in/economicsurvey/
• https://www.pib.gov.in/economicsurvey/2026/en/index.aspx?reg=3&lang=2
• https://www.thehindu.com/business/budget/highlights-of-economic-survey-2025-26/article70564629.ece
• https://www.indiatoday.in/business/story/economic-survey-2026-news-which-jobs-are-immune-to-artificial-intelligence-india-2859857-2026-01-29

About Treelife:

Treelife is one of India’s most trusted legal and financial consulting firms, we simplify complex legal and financial challenges faced by startups, investors, and global businesses, by offering a wide range of services, including Virtual CFO, Legal Support, Tax & Regulatory, and Global Expansion assistance.

We have our offices in 4 cities, Mumbai, Delhi, Bangalore and GIFT City (Gujarat). 

Our clients span diverse sectors such as technology, fintech, D2C, and foreign businesses. A few notable names include CleverTap, Rentomojo, Piper Serica, Snapwork, The Souled Store, and more.

Introduction: India’s Visionary IPO Story

The Lenskart IPO has marked a defining chapter in India’s startup and retail evolution. Valued at an ambitious ₹70,000 crore ($8 billion), this initial public offering wasn’t just a fundraising event it was a statement of confidence in India’s maturing consumer-tech ecosystem.

Lenskart, India’s largest organized eyewear retailer, raised approximately ₹7,278 crore, pricing shares at ₹402 apiece. The offering commanded an eye-popping valuation multiple 235x–285x its FY25 earnings sparking intense discussion over whether the company was “priced for perfection.” Yet, the overwhelming investor response proved otherwise.

Lenskart’s Journey from Startup to Market Leader

Founded as an online eyewear platform, Lenskart has transformed into an omnichannel powerhouse with over 2,800 stores across 14 countries. Its evolution represents a paradigm shift in Indian retail integrating technology, in-house manufacturing, and physical presence to solve long-standing inefficiencies in the eyewear market.

Key Milestones

The Pre-IPO Valuation Strategy: A Masterclass in Financial Positioning

Before its public debut, Lenskart executed a strategic three-phase valuation build-up that bridged its private-market credibility with public-market expectations.

1. Internal Baseline (July 2025)

Founder Peyush Bansal purchased 17 million shares at ₹52, establishing a conservative internal benchmark.

2. Anchor Investment by Radhakishan Damani

DMart founder Radhakishan Damani invested ₹90–₹100 crore pre-IPO a move that validated Lenskart’s valuation narrative and reassured investors.

3. Public Valuation Execution

IPO launched at ₹382–₹402 per share, almost 8x the founder’s purchase price, signaling strong growth conviction.

By securing a respected anchor investor before listing, Lenskart effectively de-risked valuation concerns and built market confidence ensuring a blockbuster IPO launch.

The Investment Thesis: Why Investors Paid a Premium

Vertical Integration Creates Superior Margins

Lenskart’s Manufacturer-to-Consumer (M2C) model eliminates middlemen, capturing value across manufacturing, distribution, and retail.

Core advantages:

• 70% in-house production at Bhiwadi & Gurugram facilities
• Gross margins near 70%
• Store payback period < 1 year (vs. 18–24 months industry norm)
• Advanced AI-driven virtual try-ons and precision assembly

This vertical control drives efficiency, ensuring faster scalability and consistent product quality key factors behind the company’s lofty valuation.

Dominant Market Position in a Growing Sector

India’s eyewear market, worth ₹74,000–₹78,800 crore, remains 77% unorganized. Lenskart’s structured approach gives it a first-mover advantage in formalizing the segment.

Market Snapshot

With an estimated 4–6% overall market share and dominance in organized retail, Lenskart’s expansion potential remains massive. Its international reach (669 stores) and ownership of brands like Owndays, John Jacobs, and Vincent Chase enhance its global identity.

Market Response: 28× Oversubscription Signals Investor Trust

The ₹7,278 crore IPO received an overwhelming response across all investor categories:

The grey market premium (GMP) indicated potential listing gains of 8–18%, reaffirming Lenskart’s credibility as a growth-driven consumer brand.

Post-IPO Strategy: What Lies Ahead for Lenskart

The ₹2,150 crore raised through fresh issue will fund expansion across three focus areas domestic growth, international scaling, and technology upgrades.

1. Deepening Domestic Reach

• Launch of 620+ new stores by FY29 (CoCo model)
• ₹272 crore allocated for setup; ₹591 crore for leases
• Target: Tier-2, Tier-3, and smaller cities with untapped eyewear demand

This expansion aims to bridge India’s accessibility gap while enhancing brand penetration.

2. Expanding Global Footprint

• Presence in 14 countries with 669 international outlets
• Strong foothold in Singapore, UAE, and Japan
• Objective: diversify revenues and validate scalability globally

3. Strengthening Technology & Supply Chain

• ₹213 crore allocated to AI, cloud infrastructure, and R&D
• Focus on smart inventory management, personalized virtual fittings, and enhanced logistics efficiency

This ensures Lenskart sustains its technological edge while driving profitability.

The Road Ahead: Balancing Growth and Public Market Expectations

Going public brings new responsibilities and scrutiny.

Key Challenges

• Profit Quality: FY25 profits included non-recurring accounting gains.
• Lease Liabilities: Over ₹1,700 crore in CoCo model commitments.
• Execution Risk: Adapting omnichannel expansion to Tier-3 and overseas markets.
• Competition: Intensifying rivalry from Titan Eye+ and D2C brands.

What Investors Expect

• Consistent quarterly earnings visibility
• Efficient cost management
• Sustained cash flow growth without compromising innovation

Delivering predictable results will determine whether Lenskart can justify its premium valuation long-term.

Conclusion: Setting a New Benchmark for Indian IPOs

The Lenskart IPO represents a maturing moment for India’s startup ecosystem proving that local consumer-tech companies can achieve scale, profitability, and investor confidence simultaneously.

From a ₹5 billion private valuation to a ₹70,000 crore public listing, Lenskart’s journey exemplifies:

• Strategic financial storytelling
• Superior operating efficiency
• Robust investor alignment

This success sets the tone for upcoming Indian startup IPOs, inspiring companies to build not just for valuation but for sustainable leadership.

References:

https://www.business-standard.com/markets/news/lenskart-ipo-details-valuation-analysis-124092000119_1.html

https://www.livemint.com/market/ipo/lenskart-ipo-radhakishan-damani-investment-details-11723602998250.html

https://economictimes.indiatimes.com/markets/ipos/fpos/lenskart-ipo-valuation-issue-size-anchor-investors/articleshow/113296817.cms

https://www.moneycontrol.com/news/business/ipo/lenskart-ipo-subscription-status-qib-hni-retail-investor-interest-12927831.html

https://www.financialexpress.com/market/ipo-news/lenskart-ipo-price-band-set-at-rs-382-402-per-share-details-here/3536457

https://www.bqprime.com/markets/lenskart-ipo-details-valuation-growth-outlook

https://www.forbesindia.com/article/startups/lenskarts-ipo-to-be-a-litmus-test-for-indian-consumertech-confidence/95181/1

https://www.moneycontrol.com/europe/?url=https://www.moneycontrol.com/company-article/lenskart/news/overview/

https://www.cnbctv18.com/market/lenskart-ipo-details-grey-market-premium-gmp-subscription-status-valuation-19530271.htm

Introduction: Why ONDC Matters?

The Open Network for Digital Commerce (ONDC) is India’s government-backed initiative designed to make online commerce as open and interoperable as UPI made digital payments. Instead of being locked into a single platform like Amazon or Flipkart, ONDC allows buyers and sellers to connect across multiple apps, ensuring wider choice for consumers and fairer access for startups, MSMEs, and kirana stores. Launched by the Department of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, India and Incorporated under the Companies Act on December 30, 2021, ONDC is supported by leading banks including State Bank of India, Axis Bank, Kotak Mahindra Bank, HDFC Bank, ICICI Bank, and Punjab National Bank.

In 2026, this matters more than ever. India’s e-commerce sector is on track to exceed USD 200 billion by 2030, yet traditional platforms have often favored large players with high commissions and restrictive policies. Through ONDC, the government aims to democratize digital trade, reduce monopolistic control, and empower small businesses to participate equally in this booming market. For startups, this means lower costs, greater reach, and a level playing field in India’s fast-growing digital economy.

What is ONDC?

The Open Network for Digital Commerce (ONDC) is a government-backed interoperable network for digital commerce that allows buyers and sellers to transact across multiple apps, much like how UPI transformed digital payments in India. Instead of being restricted to one platform, ONDC creates a common, open ecosystem where startups, small businesses, and consumers can interact without monopolistic barriers.

Key Facts About ONDC

• Launched: 2021 by the Department for Promotion of Industry and Internal Trade (DPIIT).
• Legal Structure: A non-profit Section 8 company.
• Purpose: To democratize e-commerce in India by ensuring fair competition, reducing dependence on large marketplaces, and enabling micro, small, and medium enterprises (MSMEs) to sell online.
• Vision: Create an inclusive, transparent, and interoperable digital marketplace where every seller—from a local kirana to a D2C startup—gets equal visibility.

The Problems ONDC Aims to Solve

• Market concentration: Large e-commerce platforms hold too much power, limiting competition.
• Discoverability issues: Small sellers struggle to be visible across multiple platforms.
• Lack of interoperability: Reputation and ratings are not portable between platforms.
• Fragmented experience: Both buyers and sellers face difficulty connecting seamlessly.

ONDC vs UPI: A Simple Analogy

• UPI made sending money across banks simple and universal.
• ONDC aims to do the same for online shopping by allowing interoperability across multiple buyer apps (e.g., Paytm, PhonePe) and seller apps (e.g., Digiit, GoFrugal).
• This means: a buyer on Paytm can purchase from a seller listed on another app without being restricted by platform boundaries.

ONDC vs Traditional E-Commerce

Why This Matters for India’s Digital Economy

• Reduces entry barriers for startups and MSMEs.
• Promotes fair pricing by lowering commission structures.
• Prevents market concentration in the hands of a few large players.
• Ensures consumers get wider choices across multiple apps.

In short, ONDC = open access, lower costs, and more opportunities a framework built to democratize digital commerce in India and fuel its projected $200+ billion e-commerce market by 2030

How Does ONDC Work? (Step-by-Step)

The Open Network for Digital Commerce (ONDC) is built to function like a digital marketplace infrastructure, connecting buyers, sellers, and logistics providers across multiple apps. Unlike traditional platforms where everything is locked within one ecosystem, ONDC ensures interoperability through the Beckn Protocol, an open-source framework designed for seamless discovery and transactions.

Step-by-Step Journey of an ONDC Transaction

1. Buyer App – Product Search
   
   • A customer opens a buyer app such as Paytm, PhonePe, or Magicpin.
   • They search for a product or service (e.g., groceries, clothing, restaurant orders).
   • The app sends this request into the ONDC network.
     
2. ONDC Network Gateway – Discovery Layer
   
   • The ONDC Gateway identifies all possible sellers across different seller apps.
   • This ensures buyers can view prices, delivery times, and availability from multiple providers instead of being restricted to one platform.
     
3. Seller App – Order Received
   • Local kirana stores, startups, D2C brands, or SMEs registered on seller apps (like Digiit or GoFrugal) receive the order notification.
   • Sellers update stock, pricing, and offers in real-time, making them visible to buyers instantly.
     
4. Logistics Provider – Fulfillment
   • Once an order is placed, logistics partners integrated with ONDC (Delhivery, Dunzo, Loadshare, etc.) handle pick-up and delivery.
   • This allows small retailers to access nationwide logistics without individual tie-ups.
     
5. Settlement – Digital Payments & Reconciliation
   • Payments are processed securely through the buyer app.
   • The ONDC settlement system ensures transparent reconciliation between the buyer, seller, and logistics partner.
     

Technology Backbone: Beckn Protocol

• Beckn Protocol is the open-source technology powering ONDC.
• It allows different apps to “talk” to each other, ensuring requests for discovery, ordering, payments, and delivery are standardized.
• Just like HTTP made websites interoperable, Beckn makes e-commerce interoperable.
  

Example Workflow Table

Why This Matters for Startups and SMEs

• Increased Visibility: Products can be discovered across multiple apps at once.
• Lower Dependence: No need to be tied to one marketplace’s rules.
• Shared Infrastructure: Logistics and payments are built-in, reducing costs.
• Scalability: A kirana in Jaipur can now sell to a customer in Delhi seamlessly.

In simple terms, ONDC works like the “UPI of commerce”—buyers and sellers use their preferred apps, but the network connects them all, ensuring open access, fair competition, and seamless delivery.

Benefits of ONDC for Startups & Small Businesses

The Open Network for Digital Commerce (ONDC) is designed to solve the biggest challenges faced by Indian startups, MSMEs, and kirana stores trying to sell online. By breaking platform monopolies and lowering entry barriers, ONDC empowers smaller players to compete fairly with large e-commerce giants.

Key Benefits of ONDC

1. Level Playing Field

• Traditional marketplaces often favor large sellers with deep discounts and exclusive tie-ups.
• ONDC ensures equal visibility for small shops, D2C brands, and kiranas, giving them a fair chance to compete.
• According to EY, this reduces dependency on dominant e-commerce platforms and prevents market concentration.
  

2. Lower Costs

• Existing platforms charge 15–30% commission on each order, which eats into margins of small sellers.
• ONDC reduces this to ~3–5%, making online selling financially viable for startups.
• Lower transaction costs mean businesses can offer better prices while still earning sustainable margins.
  

3. Wider Market Access

• Sellers on ONDC can reach customers pan-India, even without building their own app or paying for marketplace visibility.
• A kirana in Lucknow or a D2C brand in Jaipur can be discovered by a buyer in Bengaluru using apps like Paytm or PhonePe.
• This helps startups scale nationally without heavy marketing spends.
  

4. Integrated Logistics

• ONDC connects sellers with multiple third-party logistics providers (e.g., Dunzo, Delhivery, Loadshare).
• Startups no longer need separate logistics contracts.
• This reduces delivery time, improves reliability, and brings down costs.
  

5. Seamless Interoperability

• ONDC allows sellers to be visible across multiple buyer apps such as Paytm, PhonePe, Magicpin, and Mystore.
• This interoperability ensures customers can shop from any seller through their preferred app, boosting discoverability.
  

ONDC Growth Snapshot (2025)

Why ONDC is a Game-Changer for Indian E-Commerce

The Open Network for Digital Commerce (ONDC) is more than just another digital initiative—it is a structural reform for India’s e-commerce sector. By creating an open, interoperable, and government-backed network, ONDC addresses long-standing challenges such as platform monopolies, high costs for small sellers, and limited consumer choices.

Key Reasons ONDC Transforms Indian E-Commerce

1. Democratization of Digital Commerce

• ONDC levels the playing field by giving equal digital visibility to small kirana stores, MSMEs, D2C startups, and farmer producer organizations (FPOs).
• Sellers don’t need to rely on expensive advertising or exclusive tie-ups with dominant platforms.
• As AU Bank highlights, ONDC brings grassroots participation into mainstream digital trade, ensuring inclusivity.
  

2. Empowering Kiranas, MSMEs, and FPOs

• India has 13 million+ kirana stores, most of which remain offline.
• ONDC enables them to go digital with minimal onboarding costs, connecting them to nationwide demand.
• FPOs and small manufacturers can also directly reach urban consumers, bypassing multiple intermediaries.
  

3. Tackling Monopolistic Practices

• Large e-commerce platforms often control pricing, visibility, and logistics, creating entry barriers for new sellers.
• ONDC breaks these silos by allowing interoperability across multiple apps, making it harder for any one platform to dominate the market.
• Business Standard notes that this transparency discourages predatory pricing and ensures fair competition.
  

4. Expanding Consumer Choice & Competitive Pricing

• Consumers benefit from wider product discovery, since ONDC connects multiple sellers on a single search.
• Price transparency allows buyers to compare options across apps, ensuring competitive pricing (Paytm, EY).
• This not only reduces dependence on a few large platforms but also improves trust and affordability for end-users.

ONDC’s Game-Changing Impact at a Glance

ONDC is positioned as the “UPI moment for e-commerce”—breaking down barriers, fostering inclusivity, and ensuring that India’s projected $200B+ digital commerce market by 2030 is not controlled by a handful of players. For both startups and kiranas, it creates a sustainable path to growth, while consumers enjoy greater choice and better pricing.

How to Join ONDC as a Startup

For Indian startups, joining the Open Network for Digital Commerce (ONDC) is a straightforward process that opens doors to nationwide visibility, lower costs, and access to millions of digital buyers. Unlike traditional marketplaces, onboarding to ONDC does not require exclusive contracts or high platform fees.

Step-by-Step Process to Get Started

1. Choose a Seller App

• Startups can register with an ONDC-integrated Seller App such as GoFrugal, Digiit, Mystore, or eSamudaay.
• These apps act as the gateway for sellers to connect with the ONDC network.

2. Complete KYC & GST Registration

• Businesses need to provide Know Your Customer (KYC) details, PAN, Aadhaar (for proprietorships), and business documents.
• A valid GST registration is required for most product categories to comply with tax laws.

3. Upload Products & Business Details

• Add your product catalog, pricing, and delivery preferences directly on the seller app.
• Product listings are then made discoverable across multiple buyer apps on the ONDC network.

4. Go Live on ONDC Network

• Once verification is complete, your startup is “live” and visible to consumers on apps like Paytm, PhonePe, Magicpin, and Meesho.
• This allows you to instantly reach a pan-India customer base without building your own marketplace.

Pro Tip: Many startups choose to work with Technology Service Providers (TSPs), who offer API integration, catalog management, and logistics support—helping businesses onboard faster and scale efficiently.

ONDC Startup Onboarding Snapshot

Why Startups Should Join ONDC Now

• Faster market entry with minimal setup costs.
• Pan-India discoverability without high ad spends.
• Integrated logistics and payments built into the network.
• Scalable growth opportunity in India’s $200B+ e-commerce market by 2030.

For early-stage startups, ONDC is not just an alternative channel—it’s a gateway to compete with large players and build a sustainable digital presence.

How Consumers Use ONDC (Explained Simply)

The Open Network for Digital Commerce (ONDC) makes online shopping as easy and universal as UPI payments. Consumers don’t need to download a new app to use ONDC—instead, they can access it through familiar buyer apps like Paytm, PhonePe, Meesho, and Magicpin.

Step-by-Step Guide for Consumers

1. Download a Buyer App
   • Install any ONDC-enabled buyer app such as Paytm, PhonePe, Meesho, or Mystore.
   • No separate ONDC app is required—these apps integrate directly with the ONDC network.
     
2. Search for a Product or Service
   • Type in what you want to buy—groceries, clothing, electronics, or even food.
   • The ONDC gateway fetches results from multiple seller apps, showing you products from local kiranas, D2C startups, and big retailers all in one place.
     
3. Select Seller and Add to Cart
   • Compare prices, delivery timelines, and ratings across different sellers.
   • Choose the seller that best suits your needs and add items to your cart.
     
4. Checkout with Preferred Payment
   • Pay securely using UPI, debit/credit cards, net banking, or wallet options.
   • Payments are processed through the buyer app, making checkout familiar and seamless.
     
5. Choose Delivery Option
   • Select your delivery partner or opt for hyperlocal delivery (for food and groceries).
   • Logistics partners like Delhivery, Loadshare, and Dunzo ensure doorstep service.
     

Real-Life Example

Imagine craving biryani in Delhi:

• Open Paytm app → Search “Biryani.”
• ONDC fetches results from local restaurants nearby, not just Zomato or Swiggy listings.
• You compare prices, select your preferred restaurant, pay via UPI, and choose express delivery.
• Result: More choices, better prices, and faster delivery.
  

Why Consumers Prefer ONDC

Key Consumer Benefits

• Wider Choice: Access to both big brands and local sellers.
• Competitive Pricing: Compare offers across sellers in real time.
• Convenience: Use your existing apps without switching ecosystems.
• Trust & Security: Government-backed framework ensures safe payments and standardized processes.

In short, ONDC puts consumers at the center of digital commerce by offering choice, transparency, and convenience—all within apps they already use daily.

Challenges & Limitations

While the Open Network for Digital Commerce (ONDC) has made impressive progress onboarding over 3.5 lakh sellers and processing 1.2 crore+ monthly transactions as of January 2025, the network is still in its early growth phase. Startups and policymakers must be mindful of certain challenges and limitations that need to be addressed for ONDC to achieve its full potential.

Key Challenges Facing ONDC

1. Low Consumer Awareness Beyond Metros

• Adoption remains concentrated in metros like Delhi, Bengaluru, and Mumbai.
• In Tier 2 and Tier 3 cities, many consumers are still unaware that buyer apps like Paytm or PhonePe integrate ONDC.
• Expanding digital literacy and marketing campaigns will be critical to driving mass adoption.

2. Integration Complexity for Small Sellers

• Many kiranas and MSMEs face hurdles in digitizing product catalogs, managing GST compliance, and syncing inventory.
• Seller apps and Technology Service Providers (TSPs) are working to simplify onboarding, but the learning curve remains steep for first-time digital sellers.

3. Need for Strong Dispute Resolution & Trust-Building

• Unlike single-platform ecosystems (e.g., Amazon), ONDC transactions involve multiple stakeholders (buyer app, seller app, logistics provider).
• This raises questions such as: Who resolves complaints if an order is delayed or misdelivered?
• A robust grievance redressal framework and trust signals (ratings, verification badges) are essential for consumer confidence.

4. Logistics Standardization Still Evolving

• EY and Antler highlight that logistics integration remains fragmented.
• Smaller logistics providers may lack real-time tracking, leading to inconsistent service quality.
• Ensuring uniform service-level agreements (SLAs) across providers will be critical for reliability and scale.
  

Snapshot of ONDC’s Current Limitations

ONDC in Numbers

As of January 2025, ONDC has moved from pilot phase to large-scale adoption, showing measurable traction across India. These figures highlight how the Open Network for Digital Commerce is rapidly shaping India’s e-commerce ecosystem.

Key ONDC Metrics (2025)

These numbers show that ONDC is already creating critical mass, reducing costs for sellers, and opening up nationwide access to consumers.

Future Outlook

The next phase of ONDC’s growth focuses on scale, inclusivity, and innovation. Industry experts (EY, Antler, PIB) project that ONDC could fundamentally transform India’s digital commerce landscape by 2030.

Key Growth Drivers for the Future

1. Integration with Financial Services

• ONDC is expected to embed loans, insurance, and credit access for MSMEs directly within the network.
• This will enable small sellers to access working capital and protect against risks, boosting financial inclusion.

2. Expansion into Rural & Tier 3 Cities

• Current adoption is strong in metros and Tier 1 cities, but the next growth wave will come from rural India.
• ONDC’s open infrastructure lowers entry barriers, allowing local kiranas and FPOs in small towns to reach digital buyers nationwide.

3. AI-Driven Personalization

• Future ONDC integrations will use AI to match consumers with relevant sellers, ensuring better product discovery and customer experience.
• This personalization will help small sellers compete effectively with larger brands.

4. Government’s Long-Term Vision

• The Government of India aims for ONDC to account for 25% of all e-commerce transactions in India by 2030.
• This aligns with the country’s vision of making digital commerce as universal as UPI payments.

What This Means for Startups & Investors

• Startups: Lower costs, embedded financial services, and access to rural consumers = sustainable growth.
• Investors: Opportunity to back ONDC-focused SaaS tools, logistics, and fintech solutions.
• Consumers: Wider choice, competitive pricing, and trust in a government-backed network.

Conclusion

The Open Network for Digital Commerce (ONDC) is India’s bold step towards building an open, transparent, and inclusive e-commerce ecosystem. By lowering commissions to 3–5%, enabling 3.5 lakh+ sellers across 600+ cities, and providing nationwide access through apps like Paytm, PhonePe, and Meesho, ONDC empowers startups, kiranas, MSMEs, and consumers alike. Much like UPI transformed digital payments, ONDC is set to democratize digital trade, reduce monopolistic control, and drive India’s $200B+ e-commerce market potential by 2030. For entrepreneurs and small businesses, joining ONDC today means securing a fair, scalable, and future-ready presence in India’s digital economy.

Key components of the MII framework include a focus on improving the Ease of Doing Business (EoDB), liberalizing Foreign Direct Investment (FDI) policies, developing robust physical and digital infrastructure through programs like PM GatiShakti and the National Logistics Policy, and implementing targeted interventions such as the Production Linked Incentive (PLI) scheme across strategic sectors. The initiative is further supported by an interconnected ecosystem encompassing Skill India, Startup India, Digital India, taxation reforms (like the Goods and Services Tax – GST), and efforts towards harmonizing labor laws.

Over the past decade, MII has contributed to a significant rise in FDI inflows, notable improvements in India’s EoDB rankings, and substantial growth in specific manufacturing sectors, particularly electronics, defence, and pharmaceuticals, often catalyzed by the PLI scheme. However, challenges persist, including the unmet target of increasing manufacturing’s share in GDP to 25%, ensuring broad-based job creation commensurate with initial ambitions, bridging persistent skill gaps, and ensuring consistent implementation of reforms across states and sectors.

This report provides a comprehensive analysis of the Make in India initiative, detailing its origins, objectives, framework, focus sectors, and key schemes like PLI. It examines the procedures for investment, the legal and regulatory landscape, the role of supporting ecosystem initiatives, and assesses the overall impact through statistical data and sector-specific case studies. The report concludes with an outlook on the future trajectory of India’s manufacturing ambitions and potential considerations for stakeholders.

Introduction: The Genesis and Vision of Make in India

Context: India’s Economic Landscape Pre-2014

The launch of the Make in India initiative occurred during a period of considerable economic concern for India. After years of robust growth averaging around 7.7% between 2002 and 2011, India’s GNP growth rate had decelerated significantly, hovering around 5% in 2013 and 2014.¹ The optimism surrounding emerging markets had waned, and India found itself labelled as one of the ‘Fragile Five’ economies, perceived as vulnerable to global economic shocks.² This slowdown raised questions among global investors about India’s potential and prompted domestic concerns about sustaining the country’s development trajectory.³ The lagging manufacturing sector was identified as a key area needing revitalization to spur broader economic growth and create employment.⁴ India seemed poised on the brink of economic challenges, necessitating a significant policy push.³

The timing and stated goals of MII suggest it was not merely a promotional campaign but a strategic response aimed at addressing these perceived economic vulnerabilities. The ambitious targets set for manufacturing’s GDP contribution and job creation point towards an intention to engineer a structural shift in the economy, reducing over-reliance on the services sector and building greater industrial resilience.⁵

Launch and Core Objectives

Against this critical backdrop, the Make in India initiative was formally launched by Prime Minister Narendra Modi on September 25, 2014.¹ Its overarching vision was to transform India into a leading global destination for design and manufacturing.² The core objectives articulated were multi-fold:

• Facilitate Investment: Attract both domestic capital and Foreign Direct Investment (FDI) into the manufacturing sector.¹
• Foster Innovation: Encourage research, development, and the adoption of new technologies within Indian industries.²
• Build Best-in-Class Infrastructure: Develop modern physical and digital infrastructure to support manufacturing and logistics.²
• Create Employment: Generate substantial job opportunities, particularly in the manufacturing sector, with an initial target of creating 100 million additional manufacturing jobs by 2022.²
• Increase Manufacturing’s GDP Share: Raise the contribution of the manufacturing sector to India’s GDP to 25% by 2022 (a target later revised to 2025).⁵
• Enhance Skill Development: Upgrade the skills of the Indian workforce to meet the demands of modern manufacturing.¹¹
• Protect Intellectual Property: Strengthen the framework for protecting intellectual property rights.¹³

The ‘Make in India’ Philosophy

Beyond being an economic program or a marketing slogan (‘Goodbye red tape, hello red carpet’ ¹), Make in India was presented as representing a fundamental shift in the government’s approach towards industry.³ It signified a move away from a purely regulatory role towards becoming a facilitator and partner in economic development, embodying the principle of ‘Minimum Government, Maximum Governance’.³ This involved a comprehensive overhaul of outdated policies and processes.³ The emphasis on changing the governmental mindset suggests an official acknowledgment that previous administrative and policy environments were perceived as impediments to industrial growth, necessitating internal process re-engineering alongside external promotion efforts.³

MII was positioned as a pioneering ‘Vocal for Local’ initiative, aimed at showcasing India’s industrial potential globally while boosting domestic capabilities.² It served as a galvanizing call to action for India’s citizens, business leaders, and potential international partners.³ An underlying theme was the pursuit of quality and environmental consciousness, encapsulated in the slogan ‘Zero Defect, Zero Effect’, aiming for products manufactured without defects and without adverse environmental impact.²⁹

Decoding the Make in India Framework

The Make in India initiative is structured around four key pillars, designed to create a synergistic effect boosting entrepreneurship and manufacturing.¹³

The Four Pillars

1. New Processes: This pillar emphasizes ‘Ease of Doing Business’ (EoDB) as the paramount factor for promoting entrepreneurship.² The core idea is to simplify, de-license, and de-regulate industrial processes throughout the entire lifecycle of a business, from setup to operation and closure.¹² This involves streamlining approvals, reducing compliance burdens, and making the regulatory environment more predictable and investor-friendly.
2. New Infrastructure: Recognizing that modern, facilitating infrastructure is crucial for industrial growth, this pillar focuses on its development.¹² The government articulated its intent to develop dedicated Industrial Corridors and Smart Cities equipped with state-of-the-art technology, high-speed communication networks, and integrated logistics arrangements.¹² The plan also included strengthening existing infrastructure within industrial clusters.¹³ This pillar directly links to subsequent large-scale programs like PM GatiShakti and the National Logistics Policy.
3. New Sectors: The initiative initially identified 25 key sectors (later expanded to 27) spanning manufacturing, infrastructure, and service activities as focus areas.¹² Detailed information on opportunities, policies, and contacts within these sectors was disseminated through brochures and a dedicated web portal.³ Significantly, FDI was liberalized in several critical sectors, including Defence Production, Construction, and Railway infrastructure, signaling openness to foreign capital and technology.¹²
4. New Mindset: This pillar signifies a fundamental shift in the government’s interaction with industry.¹² Moving away from a purely regulatory stance, the government positioned itself as a facilitator and partner in the country’s economic development.³ This involved fostering a collaborative model, bringing together Union Ministries, State Governments, industry leaders, and knowledge partners to formulate action plans and drive the initiative.¹³

The explicit articulation of these four pillars demonstrates a structured, holistic approach. It recognizes that improvements in the regulatory environment (‘New Processes’), physical connectivity (‘New Infrastructure’), targeted sector promotion (‘New Sectors’), and government engagement (‘New Mindset’) are interconnected and mutually reinforcing elements necessary for boosting manufacturing.

Evolution: Make in India 1.0, 2.0, and Future Directions

The Make in India initiative has evolved since its inception:

• Make in India 1.0 (2014-2019): This initial phase focused largely on studying the landscape, pitching opportunities, and identifying critical bottlenecks within various sectors. The ‘Steering Committee for Advanced Local Value-add & Exports’ (SCALE) was formed under the Ministry of Commerce to pinpoint issues hindering manufacturing growth.¹⁴ Policy reforms aimed at building competitiveness were initiated.¹⁴
• Make in India 2.0 (2019-2024): This phase shifted towards concrete action and implementation of policies formulated earlier.¹⁴ Key actions included a significant reduction in corporate tax rates for new manufacturing units (to 15%) to enhance competitiveness, particularly within the Southeast Asian context.¹⁴ The initiative’s scope was formally expanded to cover 27 focus sectors.² Major schemes like the Production Linked Incentive (PLI) were introduced during this phase.¹⁶
• Make in India 3.0 (Proposed): While not formally launched, future directions point towards deepening the initiative’s impact.⁶ Proposed focus areas include aggressive export promotion strategies, strengthening India’s integration into global supply chains (addressing resilience highlighted by global disruptions), linking manufacturing growth with urban planning strategies, and developing mechanisms to enhance supply chain resilience against shocks like pandemics or geopolitical tensions.⁶

This evolution from planning (1.0) to implementation (2.0) and a proposed future focus on global integration and resilience (3.0) suggests an adaptive strategy. The initiative appears to be learning from initial outcomes and responding to changing global economic dynamics, moving beyond basic promotion to tackle more complex structural and international challenges.⁶

Governance Structure

The implementation of Make in India involves several key government bodies and agencies:

• Ministry of Commerce and Industry (MoCI): The nodal ministry overseeing the initiative.⁴
• Department for Promotion of Industry and Internal Trade (DPIIT): The core department within MoCI, responsible for coordinating action plans for the manufacturing sectors.¹¹ DPIIT formulates overall industrial policy, FDI policy, drives EoDB reforms, manages the Startup India initiative, and oversees Intellectual Property Rights administration.¹
• Department of Commerce (DoC): Coordinates action plans for the service sectors included under MII 2.0.²⁰
• Invest India: Established in 2009 as the National Investment Promotion and Facilitation Agency (NIPFA), a non-profit under DPIIT.³¹ It acts as the first point of contact for investors, providing end-to-end support throughout the investment lifecycle, including pre-investment advisory, facilitation (location assessment, incentive advice, government liaison, site visits, single-window support), and aftercare.¹ It plays a crucial role in bridging the gap between industry and government.³¹
• Empowered Group of Secretaries (EGoS) & Project Development Cells (PDCs): Constituted in 2020 to support, facilitate, and provide an investor-friendly ecosystem, particularly for fast-tracking significant investment proposals.¹¹

Focus Sectors: Opportunities Across the Board

Under Make in India 2.0, the government identified 27 specific sectors as priority areas for development, aiming to leverage India’s strengths and attract investment across a diverse range of industries.² These sectors are broadly categorized into manufacturing and services, with coordination handled by DPIIT and the Department of Commerce, respectively.²⁰

The inclusion of a significant number of service sectors within an initiative primarily aimed at boosting manufacturing underscores a broader economic development perspective. It acknowledges the critical interdependencies between goods production and supporting services like logistics, IT, finance, design, and R&D. A competitive manufacturing sector requires a robust service ecosystem, and conversely, a thriving service sector often supports and enables manufacturing growth. This integrated approach aims to strengthen the entire value chain, not just isolated factory operations.

Table 1: Make in India – 27 Focus Sectors

(Source: Derived from ⁴)

The Production Linked Incentive (PLI) Scheme: Catalyzing Growth

Rationale and Objectives

Introduced in March 2020 and expanded subsequently, the Production Linked Incentive (PLI) scheme has emerged as a central pillar of the government’s ‘Atmanirbhar Bharat’ (Self-Reliant India) vision and a key implementation tool for the Make in India initiative.² It represents a significant strategic shift from the broad promotional activities of MII 1.0 towards a more targeted, incentive-driven industrial policy focused on specific sectors deemed critical for national self-reliance and global competitiveness.³⁰

The PLI scheme aims to achieve several interconnected objectives:

• Make domestic manufacturing globally competitive.³⁰
• Attract large-scale investments, particularly in high-technology and strategic sectors.²
• Boost exports of high-value-added products.²
• Reduce dependence on imports for critical goods and components.⁸
• Generate significant employment opportunities.¹⁶
• Integrate Indian manufacturers into global supply chains.¹⁶
• Encourage adoption of cutting-edge technologies and achieve economies of scale.⁴⁷

Budget Outlay

The government committed a significant financial outlay of ₹1.97 lakh crore (approximately US$24-28 billion) for the PLI schemes across 14 sectors, typically spread over a five-to-six-year incentive period.² An additional allocation of ₹19,500 crore was made specifically for the High Efficiency Solar PV Modules PLI scheme in the 2022-23 budget.³⁰

The 14 PLI Sectors

The PLI scheme strategically targets 14 key sectors identified as critical for India’s industrial growth, technological advancement, and self-reliance.

Table 2: Production Linked Incentive (PLI) Scheme – 14 Target Sectors

(Source: Derived from ²)

Core Mechanism

The defining feature of the PLI scheme is its performance-linked incentive structure.⁴⁷ Eligible companies receive financial incentives calculated as a percentage (typically ranging from 4% to 6%, but varying significantly by sector, year, and product category) of their incremental sales or production value achieved over a pre-defined base year (commonly FY 2019-20).¹⁴ This incentive is provided for a specified duration, usually five consecutive years, subsequent to the base year.³⁰ In essence, the scheme functions as a direct payment or subsidy rewarding increased domestic manufacturing output.³⁰

General Eligibility Criteria

While specific criteria vary by sector, general eligibility requirements typically include:

• Company Registration: The applicant must be a company registered in India.³⁰
• Manufacturing Focus: The company must be involved in the manufacturing of goods covered under the specific target segments of the relevant PLI scheme.³⁰
• Incremental Investment Threshold: Applicants must meet minimum thresholds for new or incremental investment in eligible assets (like plant, machinery, equipment, R&D, technology transfer) over the base year. Expenditure on land and buildings is generally excluded.³⁰ Thresholds can differ for MSMEs versus larger companies (e.g., ₹10 crore vs ₹100 crore mentioned generally).⁶³
• Incremental Sales Threshold: Eligibility is often contingent on achieving minimum incremental sales of the manufactured goods over the base year.³⁰
• Domestic Value Addition (DVA): Some schemes mandate a minimum percentage of domestic value addition in the manufactured products to qualify for incentives, encouraging deeper localization. For example, the Auto PLI scheme requires a 50% DVA.⁵⁵ This requirement directly supports the MII objective of reducing import dependence by incentivizing local sourcing and component manufacturing, moving beyond simple assembly operations.³⁰
• Other Criteria: Specific schemes may have additional criteria related to global/domestic manufacturing revenue, net worth, or technical qualifications.⁵⁵

Deep Dive into Key PLI Sectors

• Large Scale Electronics Manufacturing (LSEM) / IT Hardware: This was among the first sectors targeted.

• Target Segments: Include mobile phones (especially those with invoice value >₹15,000), specified electronic components (SMT, semiconductors, PCBs, sensors etc.), and under PLI 2.0 for IT Hardware: laptops, tablets, all-in-one PCs, servers, and ultra-small form factor devices.⁶²
• Incentives: For mobile phones, incentives typically started at 6% in the first year, decreasing to 4% by the fifth year, applied to incremental sales over the base year (FY 2019-20).⁶² IT Hardware PLI 2.0 offers incentives over six years.⁸¹
• Eligibility: Involves meeting thresholds for incremental investment and sales, varying by category (global, hybrid, domestic) and year.⁶²
• Impact: This scheme is credited with transforming India from a net importer to a net exporter of mobile phones.¹⁶ Domestic production surged from 5.8 crore units in FY15 to 33 crore units in FY24, while imports plummeted and exports reached nearly 5 crore units.¹⁴ FDI in the sector saw a ~254% increase post-PLI inception.⁴⁷ Major global players like Apple, Samsung, and contract manufacturers like Foxconn and Pegatron have significantly expanded their Indian operations under this scheme.¹⁴
• Automotive & Auto Components:

• Outlay & Focus: Budgetary outlay of ₹25,938 crore (over US$3 billion).⁴⁷ The scheme focuses on promoting the manufacturing of Advanced Automotive Technology (AAT) products, with a strong emphasis on Battery Electric Vehicles (BEVs) and Hydrogen Fuel Cell Vehicles (HFCVs) and their components.⁶⁰ Traditional ICE vehicle components may receive lower incentives in later years.⁷⁸
• Structure: Comprises two components: Champion OEM Incentive Scheme (for vehicle manufacturers) and Component Champion Incentive Scheme (for auto part makers).⁷⁶
• Eligibility: Separate criteria exist for existing automotive players (based on global group revenue and investment in fixed assets) and new non-automotive investors (based on global net worth and committed investment plan).⁷¹ Minimum cumulative new domestic investment thresholds must be met over the 5-year period.⁷⁶ A crucial requirement is achieving a minimum 50% Domestic Value Addition (DVA) in the eligible AAT products, certified by testing agencies following a standard operating procedure.⁶⁴
• Incentive Calculation: Incentives are calculated based on the ‘Determined Sales Value’ (incremental eligible sales over the base year FY 2019-20). Incentive rates are tiered based on the determined sales value, ranging from 13-16% for OEMs and 8-11% for component manufacturers. Additional incentives (2-5%) are available for achieving cumulative sales targets or manufacturing BEV/HFCV components.⁷¹ A minimum 10% year-on-year growth in Determined Sales Value is generally required to claim incentives.⁷⁵
• Impact: The scheme has attracted significant interest, with 115 applications received and 85 approved (as of Aug 2024).⁴⁸ Investment commitments reportedly exceeded targets, potentially reaching US$8 billion (₹67,690 crore).⁴⁸ As of December 2024, reported cumulative investment was ₹25,219 crore, generating incremental sales of ₹15,230 crore and creating 38,186 jobs. Incentive disbursement stood at ₹322 crore as of March 2025.⁶⁴
• Pharmaceuticals / Medical Devices / Bulk Drugs:

• Impact: PLI schemes in these areas have bolstered India’s status as the ‘Pharmacy of the World’, ranking it third largest globally by volume.⁴⁷ Exports constitute about 50% of production.⁴⁷ A key achievement has been the reduction in import dependency for critical raw materials, with domestic manufacturing of unique intermediates and bulk drugs like Penicillin G commencing in India.⁴⁷ The scheme also facilitated technology transfer from global firms for producing sophisticated medical devices locally, such as CT scanners and MRI machines, covering 39 types of devices.⁴⁸
• Schemes: Separate PLI schemes exist for Bulk Drugs, Medical Devices, and Pharmaceuticals.²⁹
• Other Sector Examples:

• Telecom & Networking Products: Achieved 60% import substitution; global giants setting up manufacturing, making India an exporter of 4G/5G equipment.⁴⁷ PLI scheme outlay is ₹12,195 crore.⁷²
• Drones & Drone Components: Sector turnover increased seven-fold, driven largely by MSMEs and startups benefiting from the PLI.³⁰
• Food Products: PLI scheme (PLISFPI) with ₹10,900 crore outlay focuses on segments like Ready-to-Eat/Cook foods (including millets), processed fruits/vegetables, marine products, mozzarella cheese, and supports branding/marketing abroad.¹⁴
• High Efficiency Solar PV Modules: Implemented in two tranches with a total outlay of ₹24,000 crore (₹4,500 Cr Tranche-I, ₹19,500 Cr Tranche-II) aiming to build GW-scale integrated manufacturing capacity and reduce import dependence.⁸ Letters of Award issued for significant capacity addition.⁸³

How to Apply

The application process for PLI schemes is generally managed online through dedicated portals set up by the respective implementing Ministries or designated Project Management Agencies (PMAs).

• Portals/Agencies: Examples include the Ministry of Electronics and Information Technology (MeitY) portal or its PMA (IFCI Ltd for LSEM) ⁶², the Ministry of Heavy Industries (MHI) PLI Auto Portal ⁸⁰, the Ministry of Food Processing Industries (MoFPI) PLISFPI Portal ⁶⁶, Mecon Limited for Specialty Steel ⁸⁶, Solar Energy Corporation of India (SECI) or Indian Renewable Energy Development Agency (IREDA) for Solar PV modules ⁸³, and the Department of Pharmaceuticals portal (managed by SIDBI) for Medical Devices.⁶⁷
• Process: Typically involves online registration, filling detailed application forms (company details, investment plans, production targets), uploading required documents (registration certificates, financial statements etc.), and payment of a non-refundable application fee.⁶²
• Approval: Applications undergo scrutiny by the PMA, followed by review by a Technical Committee, and final approval by an Empowered Committee (EC) or similar body within the Ministry. The process aims for defined timelines (e.g., 60 days assessment mentioned for one scheme).⁶²
• Disbursement: Incentives are disbursed periodically (quarterly, half-yearly, or annually) after the company submits claims and the PMA verifies eligibility based on achieved incremental sales and investment thresholds.⁶²

PLI Achievements Summary

The PLI schemes, across the 14 sectors, have shown considerable traction in attracting investment and boosting manufacturing output, although disbursements took time to ramp up.

Table 3: PLI Scheme Performance Snapshot (as of late 2024 / early 2025)

Note: Figures represent cumulative data reported across various sources and dates. Investment realized and production generated figures reflect progress, while disbursements represent actual incentives paid out based on performance verification.

The reported metrics, especially the high investment commitments and production figures relative to the incentive outlay, suggest that the PLI mechanism has been effective in mobilizing capital and scaling up manufacturing in targeted sectors like electronics and auto. However, the disbursement figures, particularly in the initial years ⁵⁴, were relatively low compared to the potential incentives earned, possibly indicating lags in project commissioning, meeting performance thresholds, claim submission, or verification processes. This highlights the importance of efficient scheme administration alongside attractive incentives.

Navigating the Make in India Ecosystem: Procedures and Benefits

Successfully participating in the Make in India initiative requires understanding the facilitative mechanisms, regulatory policies, and available incentives. The government has undertaken numerous reforms aimed at creating a more conducive environment for manufacturing investment.

Investment Facilitation

• Ease of Doing Business (EoDB): Improving the business climate has been a central theme of Make in India.² India made significant strides in the World Bank’s EoDB rankings, reaching 63rd position among 190 countries in the 2019 report (the report series was later discontinued).⁶ Key reforms contributing to this include the implementation of the Goods and Services Tax (GST), the Insolvency and Bankruptcy Code (IBC), simplification of construction permits, and a massive reduction in compliance burdens (over 42,000 compliances reportedly reduced and 3,800 provisions decriminalized).¹⁵ Decriminalization efforts, such as under the Jan Vishwas Act, aim to reduce the fear of minor procedural lapses leading to severe penalties.¹⁶
• Single Window Systems: To streamline the complex approval process involving multiple central and state agencies, single window systems have been established. The National Single Window System (NSWS) provides a unified digital platform for investors to apply for various pre-establishment and pre-operation approvals.¹⁹ Invest India also functions as a key facilitator offering single-window clearance support.³¹ Many states have also implemented their own single window clearance mechanisms.⁸⁹
• Investor Support Mechanisms:

• Invest India: As the national agency, Invest India provides comprehensive, free-of-cost support across the investment lifecycle. This includes pre-investment advisory, market research, policy guidance, strategic location assessment based on investor needs, incentive advisory, handholding for approvals, facilitating meetings with government officials, organizing site visits, and providing aftercare support for issue resolution and expansion plans.³¹ They have established international offices (e.g., Singapore, Dubai, Zurich, Saudi Arabia) to offer doorstep services to foreign investors.⁴⁰ A specific example cited is Invest India assisting robotics firm Addverb Technologies in securing land and fast-tracking clearances in Uttar Pradesh.⁴⁵
• Investor Facilitation Cell: Set up in 2014 to assist investors throughout their journey in India.⁶
• Project Monitoring Group (PMG): Housed within Invest India, this institutional mechanism focuses on expediting the resolution of issues and regulatory bottlenecks for large projects with investments exceeding INR 500 Crore.³¹
• Empowered Group of Secretaries (EGoS) & Project Development Cells (PDCs): Established to fast-track high-priority investments and proactively develop investible projects within ministries.¹¹

Foreign Direct Investment (FDI) Policy

India maintains a generally liberal FDI policy, aiming to attract foreign capital, technology, and expertise to fuel economic growth, particularly under the Make in India initiative.

• Investment Routes:

• Automatic Route: FDI is permitted without prior government approval in most sectors. Investors only need to notify the Reserve Bank of India (RBI) post-investment and comply with sectoral regulations.¹⁵ Over 90% of FDI inflows are received through this route.¹⁹
• Government Route (Approval Route): Prior approval from the concerned administrative Ministry/Department, with concurrence from DPIIT, is required for FDI in specified sensitive sectors or under certain conditions.¹⁵

• Sectoral Caps and Conditions: While 100% FDI is allowed under the automatic route for most manufacturing activities and many other sectors ⁵, specific caps and conditions apply in certain areas. (See Table 4 below). Prohibited sectors include atomic energy, lottery business, gambling and betting, chit funds, nidhi companies, trading in Transferable Development Rights (TDRs), real estate business (with some exceptions), and manufacturing of tobacco products.⁴²
• Press Note 3 (2020): A significant policy change mandated that any FDI from entities based in countries sharing a land border with India, or where the beneficial owner is situated in or is a citizen of such a country, requires prior government approval, irrespective of the sector or route.¹⁵ This requires clearance from the Ministry of Home Affairs (MHA).⁴²
• Policy Administration: DPIIT is responsible for formulating and consolidating the FDI policy, typically issuing an updated policy document annually.⁷ The Foreign Exchange Management Act (FEMA), 1999, and its rules/regulations, administered by the RBI and Ministry of Finance, govern the foreign exchange aspects of FDI.⁴²

Table 4: FDI Policy Snapshot for Key Manufacturing-Related Sectors

(Source: Derived from.⁵ Note: FDI policy is dynamic; investors must consult the latest official Consolidated FDI Policy document issued by DPIIT.)

Taxation Landscape

The tax regime is a critical factor influencing manufacturing investment decisions. India has undertaken significant reforms in both indirect and direct taxation.

• Goods and Services Tax (GST): Implemented on July 1, 2017 ⁹², GST replaced a complex web of central and state indirect taxes (like Excise Duty, VAT, Service Tax, CST, Entry Tax) with a unified, destination-based tax system.¹
• Impact on Manufacturing: GST is widely seen as beneficial for the manufacturing sector. Key positive impacts include:

• Reduced Logistics Costs & Time: Elimination of interstate check posts and cascading taxes like CST has streamlined the movement of goods, reducing transit times and logistics expenses.⁹²
• Supply Chain Efficiency: Uniform tax rates across states enable companies to optimize warehouse locations based on logistics efficiency rather than tax arbitrage, potentially leading to consolidation and cost savings.⁹⁴
• Reduced Tax Cascading: GST allows for input tax credits across the value chain, ensuring tax is levied primarily on value addition at each stage, mitigating the ‘tax on tax’ effect prevalent earlier.⁹²
• Enhanced Competitiveness: Simplified compliance (though initially challenging) and reduced operational complexities allow manufacturers to focus more on core activities like production quality and market expansion.⁹²

• Challenges: Initial implementation faced hurdles including compliance burdens, particularly for Small and Medium Enterprises (SMEs), the need for digital record-keeping, frequent changes in rates and rules, and technical issues with the GST Network (GSTN) portal.⁹²
• SEZs: Supplies of goods or services to SEZ developers or units are treated as zero-rated under the IGST Act, meaning no GST is levied, providing a significant benefit.⁸⁹

• Corporate Tax Reforms: To make India more competitive globally, the government significantly reduced corporate income tax rates in 2019.¹⁴ Notably, a concessional tax rate of 15% (plus surcharge and cess) was introduced for new domestic manufacturing companies incorporated on or after October 1, 2019, and commencing production before March 31, 2024 (deadline may be subject to extension), provided they do not avail certain other exemptions or incentives.¹⁴ Existing companies were also given the option to switch to a lower rate of 22% (plus surcharge and cess) if they forgo specified exemptions.
• Tax Incentives:

• Special Economic Zones (SEZs): Units established in SEZs are eligible for significant tax benefits, including duty-free import or domestic procurement of goods for their operations.⁷⁹ Under Section 10AA of the Income Tax Act, SEZ units could claim 100% exemption on export profits for the first 5 years, 50% for the next 5 years, and a further 50% on reinvested export profits for the subsequent 5 years. However, a ‘sunset clause’ stipulated that this benefit is available only for units that commenced operations on or before March 31, 2020.⁸⁹ Benefits for SEZ developers under Section 80-IAB also had a sunset date (April 1, 2017).⁸⁹ Exemptions from Minimum Alternate Tax (MAT) and Dividend Distribution Tax (DDT) for SEZs were withdrawn earlier.⁸⁹
• Startup Incentives: Eligible startups (meeting criteria related to incorporation date, turnover, innovation, and certification) can claim a 100% tax deduction on profits for any 3 consecutive years within their first 10 years of incorporation under Section 80-IAC of the Income Tax Act.⁶ Provisions also exist for exemption from ‘Angel Tax’ (tax on share premium received above Fair Market Value) subject to conditions ³⁸, and capital gains tax exemption for individuals/HUFs investing proceeds from residential property sales into eligible startup equity (Section 54GB).⁹⁷
• Research & Development (R&D): While specific current deduction rates require verification beyond the provided snippets, R&D expenditure is generally encouraged through tax incentives.²⁶ PLI schemes also often consider R&D expenditure as eligible investment.⁶²
• Customs Duty Measures: Besides exemptions for SEZs, schemes like the Export Promotion Capital Goods (EPCG) scheme allow duty-free import of capital goods for export production, subject to export obligations.⁶ The Phased Manufacturing Programme (PMP) strategically uses customs duties, increasing them on finished goods or components over time to incentivize domestic manufacturing and localization.²⁰

Intellectual Property Rights (IPR)

Protecting innovation is vital for a manufacturing-led growth strategy. India has a comprehensive IPR framework and has taken steps to strengthen it.

• Legal Framework: India’s IPR regime is governed by several key statutes, including The Patents Act, 1970 (as amended, notably in 2005); The Trade Marks Act, 1999; The Copyright Act, 1957 (as amended, notably in 2012); The Designs Act, 2000; The Geographical Indications of Goods (Registration and Protection) Act, 1999; and The Semiconductor Integrated Circuits Layout-Design Act, 2000.⁷ India is also a signatory to international treaties like the Patent Cooperation Treaty (PCT) and the Madrid Protocol for international trademark registration, facilitating global protection for Indian entities.¹⁰⁰
• Administration: The Office of the Controller General of Patents, Designs & Trade Marks (CGPDTM), commonly known as Intellectual Property India (IPO India), operating under DPIIT, is the administrative body responsible for granting and registering patents, trademarks, designs, and geographical indications.⁶ The Copyright Office administers copyright law.¹⁰²
• Protection and Benefits: The legal framework provides statutory rights to creators and inventors, enabling them to control the commercial exploitation of their IP for a limited period.⁹⁹ Specific benefits are offered to startups under the Startup India initiative to encourage innovation, including an 80% rebate on patent filing fees, a 50% rebate on trademark filing fees, access to facilitators for free assistance, and provisions for expedited examination of patent applications.¹¹ The government also runs awareness programs like NIPAM (National Intellectual Property Awareness Mission).¹⁰² Recent legislative changes under the Jan Vishwas (Amendment of Provisions) Act, 2023, have aimed to decriminalize minor procedural offenses under the Patents Act, Trade Marks Act, and Geographical Indications Act, potentially simplifying compliance.⁴⁰ IPO India has also enhanced transparency through online tools tracking application status and providing real-time data.¹⁰⁰

Regulatory Compliance

Navigating the regulatory landscape is essential for manufacturers in India. Compliance requirements vary significantly depending on the industry.

Key Regulatory Bodies:

• Bureau of Indian Standards (BIS): India’s national standards body, responsible for developing standards and operating product certification schemes. Mandatory BIS certification is required for numerous products sold in India, enforced through Quality Control Orders (QCOs).²¹
• Central Drugs Standard Control Organisation (CDSCO): The national regulatory authority for pharmaceuticals and medical devices, under the Ministry of Health & Family Welfare. CDSCO is responsible for approving new drugs, clinical trials, setting standards, controlling imported drug quality, and granting licenses for manufacturing critical drugs (like vaccines, blood products) and Class C & D medical devices.⁸⁸ State Licensing Authorities (SLAs) handle manufacturing licenses for other drug categories and Class A & B medical devices.⁸⁸
• Telecom Regulatory Authority of India (TRAI): Regulates the telecommunications sector, including tariffs and service quality.¹⁰³
• Food Safety and Standards Authority of India (FSSAI): Regulates food products, including licensing for food businesses.¹²
• Other Sectoral Regulators: Include bodies for power, environment, atomic energy, etc..¹⁰³
• Approvals and Licenses: Manufacturers typically require various approvals, including factory licenses, environmental clearances, consent to establish and operate from pollution control boards, fire safety certificates, and sector-specific licenses (e.g., CDSCO manufacturing licenses under Medical Devices Rules, 2017 or Drugs & Cosmetics Act, 1940 ⁸⁸; FSSAI licenses ¹²). Construction permits and land use approvals are also critical.¹⁵ QCOs issued by various ministries mandate compliance with specific BIS standards for identified products before they can be manufactured, sold, or imported.²¹

The overall ecosystem reflects a dynamic mix of liberalization (like high FDI limits and corporate tax cuts) and targeted state intervention (PLI, PMP). Simultaneously, there are ongoing efforts to simplify the operating environment through EoDB reforms, GST implementation, single window systems, and the proposed consolidation of labor laws. Successfully navigating this landscape requires businesses to understand both the broad policy direction and the specific regulations, incentives, and procedures applicable to their sector, scale of operation, and chosen location(s) within India. While national EoDB rankings show improvement, the actual experience on the ground can vary significantly due to sector-specific rules (e.g., stringent pharma regulations ¹⁰⁴), investment size triggering different approval layers ⁴², and the varying pace at which different states adopt and implement central reforms.³⁵

Synergies: The Linked Eco-System Initiatives

The Make in India initiative does not operate in isolation. Its success is intrinsically linked to a range of complementary government programs aimed at strengthening various facets of the Indian economy and creating a supportive ecosystem for industrial growth. These initiatives work synergistically to address critical prerequisites for a thriving manufacturing sector.

A. Skill India Mission

Launched in July 2015 ²⁴, the Skill India Mission is fundamental to realizing MII’s goals by addressing the critical need for a skilled workforce.² Manufacturing, especially advanced manufacturing involving automation and precision engineering, requires workers proficient in specific technical skills.³³ India faces a recognized skill gap, where many individuals lack the practical, industry-relevant skills demanded by employers.⁸ Skill India aims to bridge this gap by providing vocational training and upskilling opportunities across numerous sectors, with ambitious targets like training over 400 million people by 2022 (initial goal).²⁴ Key components include the National Skill Development Corporation (NSDC) facilitating private sector participation, and schemes like Pradhan Mantri Kaushal Vikas Yojana (PMKVY) offering short-term training.²⁴ The mission focuses on aligning training with industry needs, promoting apprenticeships, and establishing skill development centers.²⁴ Equipping the workforce with skills relevant to Industry 4.0 (AI, robotics, digital manufacturing) is also a focus area.⁸ A readily available pool of skilled labor enhances India’s attractiveness for manufacturing investment.³³

B. Startup India Initiative

Launched in January 2016 ², the Startup India initiative aims to build a robust ecosystem for nurturing innovation, entrepreneurship, and new business ventures.² This directly supports the MII objective of fostering innovation.¹¹ Startups often drive technological advancements and can play a significant role in developing new products and processes within the manufacturing sector, particularly in emerging fields like drones, AI, and medtech.⁴⁷ Startup India provides a range of support measures, including:

• Funding Support: Fund of Funds for Startups (FFS) managed by SIDBI (₹10,000 crore corpus) investing in AIFs, and the Startup India Seed Fund Scheme (₹945 crore corpus) providing early-stage funding.¹¹
• Incubation & Mentorship: Support for incubators and learning/development programs.¹¹
• IPR Benefits: Rebates on patent and trademark filing fees, expedited patent examination.¹¹
• Tax Exemptions: Income tax exemption for eligible startups for 3 out of 10 years.¹¹
• Easier Public Procurement: Relaxation of prior experience/turnover norms and exemption from earnest money deposit for government tenders; dedicated platform on GeM (Government e-Marketplace).²⁵
• Simplified Compliance: Self-certification options under certain labor and environmental laws.²⁵ India has rapidly grown into the world’s third-largest startup ecosystem, with over 148,000 recognized startups creating more than 1.5 million direct jobs as of late 2024.²

C. Digital India & Industry 4.0

The Digital India programme, launched around 2014-15 1, aims to transform India into a digitally empowered society and knowledge economy. It provides the essential digital infrastructure – widespread internet connectivity, digital identity (Aadhaar), digital payments – that underpins the adoption of advanced manufacturing technologies.27 This initiative is a key enabler for Industry 4.0, the fourth industrial revolution characterized by the integration of cyber-physical systems, IoT, AI, big data analytics, cloud computing, robotics, and automation into manufacturing processes.27

Digital India facilitates the creation of ‘smart factories’ where machines communicate, processes are optimized in real-time using data analytics, quality control is enhanced through AI-driven vision systems, and supply chains become more transparent and efficient.27 This leads to increased productivity, reduced waste and downtime (e.g., through predictive maintenance), enhanced product quality, and greater flexibility to meet changing market demands.28 Government initiatives like the India Semiconductor Mission, aiming to build a domestic semiconductor and display ecosystem 2, and support for AI and robotics 109 further align MII with Industry 4.0 trends. The adoption of these digital technologies is seen as crucial for Indian manufacturing to become globally competitive.107

D. Infrastructure Overhaul

Addressing India’s historical infrastructure deficit is critical for manufacturing competitiveness. Several large-scale initiatives aim to create seamless connectivity and reduce logistics costs:

• PM GatiShakti National Master Plan: Launched in October 2021 ², GatiShakti is a transformative approach to infrastructure planning and execution. It’s a digital platform that integrates geospatial data and infrastructure project planning across multiple ministries (initially 16, later expanded) including Railways, Roads, Ports, Waterways, Aviation, Power, Telecom, etc..² Its core aim is to break down departmental silos, enable holistic and synchronized planning, optimize routes, avoid duplication, monitor projects in real-time, and ensure multimodal, last-mile connectivity to economic zones.² By improving coordination and reducing execution delays, GatiShakti aims to significantly lower India’s high logistics costs (estimated at 13-14% of GDP) and enhance the efficiency of moving goods and people, directly benefiting manufacturers.²
• National Logistics Policy (NLP): Launched in September 2022 ², the NLP complements GatiShakti by focusing on the ‘soft infrastructure’ aspects of logistics – improving processes, promoting technology adoption (digitization), enhancing regulatory frameworks, and developing skilled manpower in the logistics sector.² Key targets include reducing logistics costs as a percentage of GDP, improving India’s rank in the World Bank’s Logistics Performance Index (LPI) to among the top 25 countries by 2030, and creating a data-driven decision support system for the logistics ecosystem.²
• National Industrial Corridor Development Programme (NICDP): This ambitious program focuses on developing planned industrial regions with world-class infrastructure.² These corridors, such as the Delhi-Mumbai Industrial Corridor (DMIC), Chennai-Bengaluru Industrial Corridor (CBIC), Amritsar-Kolkata Industrial Corridor (AKIC), etc., aim to create globally competitive manufacturing clusters by providing high-speed transportation networks (road and rail), reliable power, integrated logistics hubs, and smart cities with supporting social infrastructure.⁹ Specific nodes like Dholera SIR (Gujarat), Shendra-Bidkin (Maharashtra), and Integrated Industrial Township Greater Noida (UP) are being developed under this program.¹¹⁴ These corridors are being developed within the framework of PM GatiShakti to ensure multimodal connectivity.¹¹⁴
• National Infrastructure Pipeline (NIP): Announced earlier, the NIP outlined a massive investment plan for infrastructure projects across various sectors (energy, roads, railways, urban infrastructure) over a multi-year period, providing a roadmap for infrastructure development supporting overall economic growth, including manufacturing.²⁰

The concerted push on infrastructure development, particularly through the integrated planning approach of GatiShakti and NLP, addresses a long-standing bottleneck for Indian manufacturing. High logistics costs and inefficient transport networks have historically hampered competitiveness. These initiatives, by focusing on both physical infrastructure and process improvements, offer the potential for a more tangible and significant boost to manufacturing efficiency compared to earlier MII phases that relied more heavily on promotion and incremental regulatory reforms.²

E. Taxation Regime (Integrated View)

As detailed in Section 6, the implementation of GST ¹ and the reduction in corporate tax rates ¹⁴ are integral parts of the ecosystem supporting Make in India. They collectively aim to simplify the tax structure, reduce the tax burden on manufacturers, lower operational and logistics costs, eliminate tax cascading, and improve overall competitiveness, thereby creating a more favorable fiscal environment for domestic production and investment.⁹²

F. Labour Law Harmonization

Recognizing that complex and archaic labor laws could impede EoDB and manufacturing growth, the government undertook a major reform by consolidating approximately 29-30 central labor laws into four comprehensive codes ³⁵:

1. The Code on Wages, 2019: Consolidates laws relating to wages, bonus payments, and equal remuneration. Introduces concepts like a national floor-level minimum wage and standardizes the definition of ‘wages’.¹¹⁶
2. The Code on Industrial Relations, 2020: Consolidates laws on trade unions, conditions of employment, and industrial disputes. Notably, it increases the threshold for requiring government approval for layoffs, retrenchment, and closure from 100 to 300 workers, potentially offering greater flexibility to employers.¹¹⁶ It also modifies regulations concerning strikes.¹¹⁹
3. The Code on Social Security, 2020: Consolidates laws related to social security benefits like provident fund, gratuity, employees’ insurance, and maternity benefits. Crucially, it aims to extend social security coverage to unorganized sector workers and platform/gig workers through specific schemes and dedicated funds/boards.¹¹⁶
4. The Code on Occupational Safety, Health and Working Conditions (OSHWC), 2020: Consolidates laws regulating workplace safety, health, and working conditions. It expands coverage to include contract workers and inter-state migrant workers, mandates formal appointment letters, and sets standards for working hours, leaves, and workplace safety protocols.³⁵

The stated objectives of these codes are to simplify compliance for businesses, improve EoDB, promote formalization of the workforce, enhance worker safety and welfare, and provide greater flexibility in labor deployment.³⁵ However, the implementation of these codes has been delayed. While the central government passed the codes, labor is a concurrent subject, requiring states to frame and notify their own rules for the codes to become effective nationwide.³⁵ As of early 2025, while many states had reportedly drafted rules, universal notification and a final implementation date were still pending.³⁵ Some trade unions have also expressed concerns, arguing that certain provisions, particularly in the Industrial Relations Code, could dilute worker protections.¹¹⁹ If and when implemented effectively, these codes have the potential to significantly impact the manufacturing landscape by simplifying the complex web of legacy regulations.³³

These interconnected initiatives demonstrate that the government views Make in India not just as a manufacturing policy, but as part of a broader economic transformation strategy. Success hinges on the effective functioning and synergy between these programs – manufacturing growth requires skilled people, innovative ideas, digital tools, efficient movement of goods, a fair tax system, and modern labor regulations.⁶

Assessing the Impact: Progress, Successes, and Challenges

A decade since its launch, the Make in India initiative has demonstrably influenced India’s economic trajectory, policy landscape, and global positioning. Assessing its impact requires examining key performance indicators, celebrating successes through specific examples, and acknowledging the persistent challenges.

Key Performance Indicators

• Foreign Direct Investment (FDI) Trends: MII aimed to attract significant investment, and FDI inflows have shown a marked increase. Total FDI inflow during the ten financial years FY 2015-24 reached approximately $667 billion, a 119% increase compared to the $304 billion received in the preceding decade (FY 2005-14).¹⁶ FDI equity inflow specifically into the manufacturing sector rose by 55% during 2014-2023 ($148.97 billion) compared to 2005-2014 ($96 billion).¹⁵ Recent data indicates continued robustness, with total FDI inflow at $70.97 billion in FY 2022-23 ⁴² and gross inflows reaching $55.6 billion in the first eight months of FY25 (April-Nov 2024), up 17.9% year-on-year.⁸⁴ Government officials express targets of attracting $100 billion in FDI annually in the coming years.¹⁹
• Manufacturing Share of GDP: A core objective was to increase the manufacturing sector’s contribution to GDP to 25% by 2022/2025.⁵ This target remains largely unmet. Data suggests the share has stagnated or even slightly declined, moving from around 16-17% in 2013-14 to approximately 15.9% in 2023-24.⁵ This is frequently cited as a key challenge or failure of the initiative to achieve its stated structural economic shift.⁵ Despite this, government officials remain optimistic about future growth in this share, buoyed by initiatives like PLI.¹⁹
• Employment Generation: While MII aimed for substantial job creation (100 million additional manufacturing jobs target by 2022 ⁵), specific data for employment generated directly under the MII banner is not centrally compiled.¹¹ However, associated schemes report significant numbers: the PLI schemes are estimated to have created 8 to 9.5 lakh direct and indirect jobs across 14 sectors ², and the Startup India initiative reports over 1.55 million direct jobs created by recognized startups.² Broader national employment data shows improvement, with the overall unemployment rate declining from 6.0% in 2017-18 to 3.2% in 2023-24 (July-June period) according to Periodic Labour Force Survey (PLFS) data cited in the Economic Survey.⁸⁴ However, some analyses suggest that the scale of manufacturing job creation has fallen short of initial expectations.⁸
• Export Growth: India’s overall exports (Merchandise + Services) achieved a record high of $778.21 billion in FY 2023-24, marginally surpassing the previous year’s record despite global headwinds.¹⁹ Merchandise exports stood at $437.10 billion in FY24, a slight dip from the record $451.07 billion in FY23, attributed to global slowdown.¹²¹ However, non-petroleum and non-gems & jewellery exports showed positive growth.¹²¹ India’s share in global merchandise exports increased from 1.70% in 2014 to 1.82% in 2023, improving its global ranking from 19th to 17th.¹²¹ Services exports continued their strong performance, reaching $341.11 billion in FY24.¹²¹ Crucially, there has been significant export growth in sectors targeted by MII and PLI, such as mobile phones (transforming India into a net exporter) ¹⁴, defence goods (exports soaring 21 to 31 times over the decade) ¹⁴, and pharmaceuticals (exports nearly doubling from $15.07 billion in FY14 to $27.85 billion in FY24).¹⁴ This indicates a qualitative shift towards exporting more value-added manufactured goods.¹⁶ The government aims for $1 trillion in manufacturing exports by 2030.¹⁶

The divergence between strong FDI/export performance in specific areas and the stagnant overall manufacturing GDP share is notable. It suggests that while MII and associated policies like PLI have successfully attracted capital and boosted output and exports in targeted, often high-value sectors, this hasn’t yet translated into the broad-based industrial expansion needed to significantly lift the entire manufacturing sector’s weight in the overall economy.

Table 5: Make in India – Key Economic Indicators Trend (Select Years)

(Note: Data compiled from various sources ⁵ and external references like RBI/DPIIT data for consistency. Exact figures may vary slightly based on reporting methodology and specific time periods. FY refers to Financial Year ending March 31st.)

Case Studies & Success Stories

The impact of Make in India is best illustrated through progress in specific sectors:

• Electronics (Mobile Phones): Perhaps the most cited success story. Driven heavily by the PLI scheme, India transitioned from importing 78% of its mobile phones in 2014-15 (21 crore units imported vs 5.8 crore produced domestically) to manufacturing 99% domestically by 2023-24 (33 crore units produced, only 0.3 crore imported).¹⁴ India is now a net exporter, shipping nearly 5 crore units in FY24.¹⁶ Global giants like Apple, Samsung, Foxconn, Pegatron, and domestic players like Lava have established or significantly expanded manufacturing facilities.¹⁴
• Defence Manufacturing: This sector has seen a dramatic turnaround. The value of defence production in India more than doubled over the last decade, reaching US$15.3 billion (over ₹1 lakh crore) in FY24.¹⁴ Defence exports surged remarkably, reportedly by 21 to 31 times, reaching US$2.5 billion in FY24, with exports going to over 85 nations.¹⁴ Liberalized FDI norms (up to 74% automatic, 100% government route) ¹³ and a focus on indigenous procurement have led to major contracts being awarded to Indian companies like Tata Advanced Systems, Larsen & Toubro (L&T), and Bharat Forge.¹⁹ Joint ventures, like the one for Kamov Ka-226T helicopters with Russia, were initiated under MII.⁵ India is now producing indigenous fighter aircraft (Tejas), naval warships, submarines, and advanced weapon systems.⁸
• Automotive Industry: The sector has seen growth, particularly with the emergence of the Electric Vehicle (EV) segment, which grew from virtually non-existent in 2014 to a US$3 billion market.¹⁴ Major investments have flowed in, including Kia Motors’ initial $2 billion plan ⁵ and significant commitments from players like Hyundai, Tata Motors, Mahindra & Mahindra, Ola Electric, Ather Energy under the Auto PLI scheme.¹⁴ The PLI scheme is expected to attract substantial investments exceeding initial targets.⁴⁸
• Renewable Energy: Driven by climate goals and energy security needs, India has focused on renewable energy manufacturing. The cumulative domestic Solar PV Module manufacturing capacity doubled from 15 GW in 2020 to around 38 GW by March 2023.¹⁴ The PLI scheme for High Efficiency Solar PV Modules is providing a major impetus, aiming to add tens of GWs of integrated manufacturing capacity.⁴⁷ Companies like Adani Green Energy, ReNew Power, and Tata Power Solar are key players.¹⁴
• Pharmaceuticals: India strengthened its position as a global pharma hub, with the industry reaching US$50 billion in 2023 and projected to hit US$130 billion by 2030.¹⁴ The PLI schemes for Bulk Drugs, Medical Devices, and Pharmaceuticals have been instrumental in reducing reliance on imported Active Pharmaceutical Ingredients (APIs) and Key Starting Materials (KSMs), enabling domestic production of critical items like Penicillin G.⁴⁷ Exports nearly doubled between FY14 and FY24.¹⁶
• Food Processing: This sector, crucial for reducing agricultural wastage and adding value, has also benefited from MII focus and a dedicated PLI scheme.⁶⁶ The Gross Value Added (GVA) of the sector increased from US$21.91 billion in FY15 to US$27.95 billion in FY22.¹⁴ The share of processed food in India’s agricultural exports grew significantly from 13.7% to 25.6% over the last decade.¹⁴ Major domestic companies like Britannia, Haldiram’s, ITC, and Parle are active in this space.¹⁴
• Textiles and Apparels: A traditionally strong sector for India and a major employer. India is one of the world’s largest producers and exporters of cotton and the second-largest producer of silk.¹²² The PLI scheme targets high-value Man-Made Fibres (MMF) and Technical Textiles to move up the value chain.⁴⁷ One source mentioned a figure of 14.5 crore jobs in the textile industry, though the context and timeframe need careful consideration.²

These case studies suggest that targeted policy interventions, particularly the PLI scheme, combined with liberalized FDI and government focus, can yield significant results in specific sectors. Success appears concentrated where India has existing strengths (Pharma, Textiles), where global supply chains are shifting (Electronics), or where strategic imperatives drive investment (Defence, Renewables). This implies that while the broad MII umbrella provides direction, sector-specific strategies and incentives are crucial drivers of tangible outcomes.

Addressing the Hurdles

Despite the successes, the Make in India journey faces several persistent challenges:

• Manufacturing GDP Share Target: The most prominent challenge is the failure to achieve the targeted 25% share of manufacturing in GDP, with the actual share remaining stagnant or declining.⁵ This points to deeper structural issues hindering broad-based manufacturing growth.
• Implementation Consistency and Gaps: While policies are announced, effective and timely implementation remains key. Initial delays in PLI scheme disbursements ⁵⁴ and the stalled implementation of the four Labour Codes ³⁵ highlight potential gaps between policy intent and ground reality.
• Skill Deficits: Despite the Skill India mission, a shortage of adequately skilled workforce, particularly for advanced manufacturing and Industry 4.0 roles, continues to be a constraint.⁸
• Regulatory and Compliance Burden: While EoDB rankings improved, businesses, especially SMEs, still face complexities in navigating regulations, obtaining permits, and ensuring compliance across multiple central and state agencies.¹
• Infrastructure Bottlenecks: Although significant investments are underway through GatiShakti, NLP, and Industrial Corridors, infrastructure gaps in power supply, transportation, and logistics connectivity persist in many areas, adding to operational costs.³²
• Access to Finance: Small and Medium Enterprises (SMEs), which form the backbone of the manufacturing ecosystem, often face difficulties in accessing affordable credit for investment and working capital.²⁶
• Global Headwinds: External factors like global economic slowdowns, geopolitical tensions, supply chain disruptions (as seen during the pandemic and Ukraine conflict), and rising commodity prices impact domestic manufacturing demand, costs, and exports.⁸
• Land Acquisition: Acquiring land for industrial projects remains a complex and often time-consuming process in India.³²
• Investor Confidence: While FDI has increased, concerns regarding awareness of legal protections and enforcement mechanisms have been noted as potential deterrents for some investors.⁵

Conclusion and Future Outlook

Over the past decade, the Make in India initiative has undeniably reshaped India’s industrial policy landscape and its engagement with the global economy. Launched as a strategic response to economic headwinds, it evolved from a broad promotional campaign into a multi-faceted program encompassing significant reforms in Ease of Doing Business, Foreign Direct Investment liberalization, targeted sectoral interventions like the Production Linked Incentive scheme, and massive investments in physical and digital infrastructure. Key successes include attracting record levels of FDI, improving India’s standing in global EoDB rankings (prior to their discontinuation), and catalyzing impressive growth and export competitiveness in specific strategic sectors such as electronics, defence, pharmaceuticals, and renewable energy components, often driven by the PLI scheme.

However, the initiative’s journey has also been marked by persistent challenges. The ambitious goal of raising the manufacturing sector’s share in GDP to 25% remains elusive, indicating that a fundamental structural shift towards manufacturing-led growth has yet to fully materialize. Prime Minister Narendra Modi’s flagship “Make in India” initiative was launched with the ambitious goal of transforming India into a global manufacturing powerhouse. While the campaign successfully captured international attention and positioned India as an attractive investment destination, critics argue that the ground realities haven’t fully matched the hype. Industry leaders and policy analysts have urged PM Modi to bridge the gap between vision and execution by addressing long-standing structural challenges such as bureaucratic inefficiencies, regulatory hurdles, and inadequate infrastructure. Without these systemic reforms, many warn that “Make in India” risks being seen more as a branding exercise than a catalyst for industrial transformation. While employment has grown in certain segments and overall unemployment has decreased, the scale of job creation specifically within manufacturing may not have met the high initial expectations. Implementation consistency, bridging the skill gap for modern industry, further reducing compliance burdens (especially for SMEs), and overcoming infrastructure deficits continue to be critical areas requiring sustained focus.

India’s Position

India currently stands as a significant and rapidly evolving player in the global manufacturing landscape. Its primary strengths include a large and growing domestic market, favorable demographics providing a large potential workforce, a stable democratic polity, continuous government focus on manufacturing, improving physical and digital infrastructure, and a burgeoning innovation ecosystem fueled by initiatives like Startup India. The country has demonstrated resilience, maintaining relatively strong economic growth despite recent global uncertainties.⁸⁴ However, weaknesses such as relatively high logistics costs (though declining), persistent skill mismatches, complex regulatory navigation (despite improvements), and varying levels of implementation effectiveness across states need continued attention.

Future Directions

The trajectory of Make in India appears set towards deepening domestic capabilities and enhancing global integration. Potential future directions include:

• MII 3.0 Focus: A potential next phase focusing on aggressive export promotion, deeper integration into resilient global value chains, linking manufacturing with sustainable urbanization, and enhancing supply chain resilience.⁶
• PLI Scheme Evolution: Continued implementation and potential expansion of PLI schemes to other high-potential or strategic sectors like toys, leather/footwear, bicycles, and chemicals, focusing on employment generation and import substitution.³⁰ Ensuring timely disbursement and evaluating the scheme’s impact on MSMEs and regional development will be crucial.
• National Manufacturing Mission: The recently announced mission aims to provide coordinated policy support, execution roadmaps, and monitoring frameworks to further boost manufacturing, particularly for MSMEs, and promote clean technologies.⁶⁵
• Advanced Technology Focus: Continued emphasis on attracting investment and building ecosystems in cutting-edge areas like semiconductors (Semicon India programme ²), Artificial Intelligence, Electric Vehicles, Green Hydrogen, and advanced materials.²
• Infrastructure and Logistics: Effective and timely execution of projects under PM GatiShakti, the National Logistics Policy, and the National Industrial Corridor Development Programme is critical to realizing the potential cost reductions and efficiency gains.¹¹²
• Labour Reforms: The eventual implementation of the four Labour Codes could significantly impact the manufacturing environment, potentially improving EoDB and flexibility if managed effectively while addressing worker welfare concerns.³⁵

Recommendations for Stakeholders

• For Investors and Businesses:

• Leverage Support Systems: Actively engage with Invest India for facilitation and utilize platforms like the National Single Window System for approvals.¹⁹
• Understand Incentives: Thoroughly evaluate eligibility and benefits under PLI and other applicable central/state schemes, paying close attention to DVA and performance requirements.³⁰
• Navigate Nuances: Recognize that regulations, implementation efficiency, and infrastructure quality can vary by sector and state; conduct thorough due diligence.
• Focus on Value Addition & Technology: Align investment plans with government priorities on localization (DVA) and adoption of Industry 4.0 technologies to enhance competitiveness.⁵⁵
• Develop Local Talent: Partner with Skill India initiatives and local institutions to address skill requirements and build a capable workforce.²⁴
• For Policymakers:

• Ensure Implementation Efficacy: Focus on consistent, transparent, and timely execution of announced reforms and schemes, including PLI disbursements and the Labour Codes.³⁵
• Deepen Skill Development: Enhance the effectiveness of Skill India programs by strengthening industry linkages, improving training quality, and focusing on skills for emerging technologies.³³
• Simplify Compliance Further: Continue efforts to reduce regulatory burdens, particularly for SMEs, and streamline inter-departmental coordination.¹⁶
• Foster R&D and Innovation: Strengthen the ecosystem connecting academia, research institutions, and industry; provide targeted support for domestic R&D and technology commercialization.²⁶
• Monitor and Adapt: Continuously evaluate the impact of initiatives like PLI on the broader industrial structure, including MSME participation, regional balance, and overall GDP contribution, adapting policies as needed.

In conclusion, Make in India has set a clear direction for India’s industrial ambitions. While significant progress has been achieved in attracting investment and boosting capabilities in key areas, sustained effort in implementation, skill development, infrastructure creation, and continued policy adaptation is necessary to overcome the remaining challenges and fully realize the vision of transforming India into a truly global manufacturing powerhouse.

Works Cited:

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Promotion and Regulation of Online Gaming Bill, 2025

India’s online gaming industry is at a decisive turning point. With over 500 million users and revenues crossing ₹25,000–31,000 crore in 2024, gaming has been one of the fastest-growing segments of the digital economy. Real-Money Gaming (RMG) including fantasy sports, rummy, and poker contributed nearly 85% of industry revenues, with projections of reaching ₹50,000 crore by 2028.

The Promotion and Regulation of Online Gaming Bill, 2025 (“Gaming Bill 2025”) aims to reshape this sector by banning all forms of real-money gaming while promoting e-sports and social gaming. While the Bill seeks to protect users from risks like addiction and financial losses, it has also sparked debates about economic disruption, constitutional validity, and employment impact.

What Does the Gaming Bill 2025 Propose?

1. Ban on Real-Money Gaming (RMG)

• All online games involving user deposits, fees, or stakes for monetary gain are prohibited.
• This removes the long-standing “skill vs. chance” distinction treating games like poker, rummy, and fantasy sports as gambling.
• Advertising, payment facilitation, and transfers related to RMG are also banned.

2. Classification of Games

The Bill introduces three key categories:

• Online Money Games (Banned): Dream11, MPL, Junglee Rummy, PokerBaazi, Zupee, WinZO, etc.
• E-Sports (Allowed): Games recognized under the National Sports Governance Act, 2025 — such as BGMI, Dota 2, CS:GO.
• Online Social & Educational Games (Allowed): Minecraft, Clash of Clans, Pokémon Go, learning-based games.

3. Enforcement & Penalties

The Bill sets up a Central Gaming Authority with powers to classify games, regulate platforms, and conduct searches in virtual digital spaces. Penalties include:

• Creation of a Central Online Gaming Authority (COGA) with powers to classify, license, and regulate platforms.
• Penalties: Up to 3 years imprisonment or ₹1 crore fine for first-time violations.
• Repeat offenders face 2–5 years imprisonment and fines up to ₹2 crore.
• Authorities may order app blocking, payment gateway suspension, and even conduct searches in digital spaces without warrants.

What Are the Impacts of the Gaming Bill 2025?

What Are the Legal & Constitutional Challenges?

Article 19(1)(g) – Right to Trade & Profession

Indian courts have upheld skill-based games (like fantasy sports and poker) as legitimate businesses, not gambling. A blanket ban may be struck down as disproportionate under Article 19(1)(g), which protects the right to carry on business.

Article 21 – Right to Liberty & Privacy

The Bill allows warrantless searches, arrests, and digital surveillance. Critics argue this violates privacy rights under the Puttaswamy judgment (2017) and could be seen as excessive and unconstitutional.

Industry Fallout: Who’s Hit the Hardest?

• Dream11 paused contests and is reportedly in talks with BCCI to end its ₹358 crore sponsorship deal.
• MPL, Games24x7, WinZO, Zupee, GamesKraft have shut down RMG operations, processing withdrawals for users.
• WinZO is pivoting globally entering the U.S. market and adding short-video formats.
• Employees across companies like Paytm First Games report mass layoffs, with one describing the crash as: “Everything you built collapsed within hours with no prior warning.”

Key Contentious Issues

• Ambiguity in e-sports recognition – criteria remain unclear.
• Skill-based game precedent ignored – decades of legal recognition overturned.
• Implementation challenges – ban may only redirect users to unregulated foreign platforms.

Government’s Clarification

The government insists that the law is not against gaming as a whole:

• E-sports, casual games, and educational platforms will be encouraged with investments in infrastructure, training, and regulation.
• IT Secretary S. Krishnan stated the sector’s broader ecosystem outside of RMG remains welcome in India and will be supported with clear guidelines.

Conclusion

The Gaming Bill 2025 is a watershed moment for India’s digital economy. While it attempts to regulate harmful practices, its blanket prohibition on real-money games risks:

• destroying a ₹25,000 crore industry,
• eliminating jobs and investments, and
• creating constitutional conflicts.

The future of India’s gaming sector will depend on judicial review of the Bill and the government’s ability to balance user protection with economic growth.

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India is experiencing a significant surge in wealth, with the Hurun India Rich List 2024 reporting a total of 1,539 Ultra High Net-Worth Individuals (UHNWI), a substantial increase from 140 in 2013. The country’s billionaire count has also reached a record 334, marking a 29 percent increase from the previous year, with a new billionaire emerging every five days in 2024. This growth isn’t limited to established tycoons; a new generation of wealth creators, including Harshil Mathur & Shashank Kumar (Razorpay) and Kaivalya Vohra (Zepto), are also contributing to this rise. Alongside this, the HNI (High Net-Worth Individual) population, defined as individuals with investable assets exceeding $1 million, saw a 4.5% year-on-year growth in 2022. This era of burgeoning wealth underscores the critical importance of robust succession planning.

At Treelife, we have developed an in-depth guide to help UHNWIs and families understand the need for succession planning and how it can be used to secure and transfer wealth efficiently.

What is Succession Planning?

Succession planning is the strategic process of managing and distributing your assets both during your lifetime and after your passing. Its primary objective is to ensure a smooth transfer of business ownership, leadership, and family wealth, while proactively maintaining harmony and preventing disputes among beneficiaries.

Key Goals of Succession Planning

1. Protect Assets: Safeguard your wealth from potential risks.
2. Provide for Loved Ones: Ensure financial security for your family.
3. Safeguard Against Estate Duty Levy: Reduce the impact of potential estate taxes and other associated costs, ensuring your wealth isn’t eroded unnecessarily.
4. Fulfill Personal Wishes: Ensure that your assets are distributed according to your desires, maintaining control over how your wealth is shared.
5. Ringfencing: Protect personal assets from business liabilities, ensuring they are kept separate and safe.
6. Ensure Seamless Wealth Transfer: Facilitate intergenerational asset migration with minimal administrative hurdles.

Why is Succession Planning Necessary?

With an increasing number of High Net-Worth Individuals (HNIs) and families in India, succession planning has never been more crucial. Below are the reasons why it is needed:

• Protecting Family Assets: Succession planning safeguards family assets from external risks, including creditors and legal challenges.
• Preventing Family Disputes: It helps ensure that there are clear guidelines in place to prevent conflicts over inheritance.
• Establishing Governance Structures: Clear succession and governance structures define roles and responsibilities for family members and ensure the long-term management of family wealth.
• Tax Efficiency: Succession planning ensures that wealth transfer is managed in a tax-efficient manner, optimizing the potential tax benefits for heirs.
• Shielding Wealth from Inheritance Tax: A well-structured succession plan can help minimize inheritance tax and other potential levies.
  

Typical Modes of Succession Planning: Will vs. Trust

When it comes to succession planning, two common legal instruments are used: Wills and Trusts.

Will

A Will is a legal document that dictates how assets are to be distributed after death. It offers straightforward benefits for individuals with simple estates or those who wish to maintain control of their assets posthumously.

Who it works for: Individuals with straightforward estates and clear heirs, and those who desire immediate, direct legal control over their estate after death.

Process Flow:

1. Drafting of the will.
2. Executing and notarizing the will.
3. Appointment of an executor.
4. Probate of the will (if required) upon demise.
5. Distribution of assets by the executor.

Important Note: If a person dies without a will, their wealth is distributed to legal heirs as per the applicable succession law based on their faith.

Trust

A Trust, on the other hand, is a legal arrangement where assets are transferred to a trustee for the benefit of designated beneficiaries. Trusts are effective in maintaining privacy, protecting assets from creditors, and ensuring long-term control.

Typical Structure:

• Settlor/Contributor: The person who initially contributes money or assets to the Trust. The settlor may also be a trustee or beneficiary, and once the trust is established, any subsequent contributors are considered contributors.
• Trustee(s): Individuals entrusted with managing the trust’s assets and exercising rights and powers for wealth distribution. A trustee can be a family member, an external advisor, or a professional trustee company.
• Beneficiary: The individuals for whose benefit the trust has been settled.
• Investments & Assets: The wealth held within the trust.
• Income & Distribution: The flow of income and assets from the trust to the beneficiaries.
  

Types of Trusts

• Discretionary Trust: The trustee has the discretion to determine the distribution amount for each beneficiary. This is preferred when the share of beneficiaries is not decided upfront.
• Specific Trust: The list of beneficiaries and their beneficial interests are clearly defined in the trust deed. This is preferred when the share of beneficiaries is decided upfront.
• Revocable Trust: The settlor retains the right to cancel or revoke the transfer of assets or property to the trust during their lifetime. This is used when the settlor wishes to retain control and the option to reclaim ownership.
• Irrevocable Trust: Once assets are transferred, the transfer cannot be altered, amended, or revoked. This is useful when the settlor desires to permanently transfer ownership and control of assets to the trust.

Pros and Cons of Trusts

Pros of a Trust:

• Hassle-free wealth transition to future generations.
• Opportunity to document family philosophy, guiding future generations.
• Segregation of ownership and control.
• Planning for proposed estate duty taxes.

Cons of a Trust:

• Families may not be familiar with the concept.
• Possibility of the trust’s validity being challenged by a dissenting family member.
• Difficult to manage if a professional trustee company is desired.
• Generally, no upfront wealth distribution is done.
• Stamp duty implications need to be evaluated for real estate transfers to the trust.
• Practical difficulties may arise in transferring mutual fund units with lock-in from individuals to a trust.
  

Taxation of Trusts

Understanding how trusts are taxed is essential for effective succession planning. The type of trust and its setup can significantly affect the tax liabilities of the trust and its beneficiaries.

• Discretionary Trust: Income is taxable at the Trust level, subject to the maximum marginal tax (MMR) rate of approximately 39% (assuming the Trust opts for section 115BAC). Specific income heads like capital gains and dividends may still be taxed at concessional rates. Any income distributed to beneficiaries is generally not subject to additional taxation.
• Specific Trust: Akin to a pass-through status as beneficiaries’ shares are known. Generally, the proportionate share of beneficiaries is taxed in their respective hands as per Section 161 of the Income-tax Act, 1961.

Proper tax planning ensures that the trust’s assets are maximized and wealth is protected for future generations.

Treelife Insights: Practical Considerations for Succession Planning

• Stamp Duty on Real Estate: When transferring real estate to a trust, stamp duty implications must be considered, as they can be significant.
• Handling Lock-In Periods: Transferring mutual funds with lock-in periods to a trust can be complex. Understanding these nuances is key to ensuring smooth wealth transfer.

Practical Insights:
Succession planning isn’t just about creating legal documents—it’s about understanding how your family and business will function in the future. The right strategy balances the ownership and management of wealth, ensuring that both are protected.

Will vs. Trust: A Comparison

Conclusion

With the increase in wealth across India, succession planning has become more than just an option; it’s a necessity for those looking to protect their legacy. By establishing clear governance, selecting the right tools (Will or Trust), and planning for potential tax implications, individuals can ensure that their wealth is preserved, protected, and efficiently passed down.

Get In Touch to Plan and Protect Your Legacy

At Treelife, we specialize in succession planning to help you safeguard your wealth, protect your family’s interests, and ensure the smooth transition of your assets. Let’s work together to secure your legacy for future generations.

Contact us today to get started on your succession planning journey:

support@treelife.in
+91 99301 56000 | +91 22 6852 5768
Book a Consultation

In an increasingly interconnected global economy, startups and growing companies face the challenge of managing cross-border operations efficiently while complying with complex tax regulations. One critical area demanding attention is transfer pricing the pricing of transactions between related companies operating in different jurisdictions.

This comprehensive guide demystifies transfer pricing concepts, methods, regulatory frameworks, common challenges, and best practices, helping founders, CFOs, and finance teams navigate this complex terrain with confidence.

What is Transfer Pricing and Why Is It Important?

Transfer pricing refers to the price charged for goods, services, or intangible assets (like intellectual property) exchanged between related entities within the same multinational group. For example, when a U.S.-based startup sells software licenses to its Indian subsidiary, the price charged is a transfer price.

Why does this matter? Transfer pricing directly affects how profits are allocated among the entities and, consequently, how much tax is paid in each jurisdiction. Incorrect transfer prices can trigger tax audits, adjustments, penalties, and in some cases, double taxation where the same income is taxed in more than one country.

With estimates showing that over 60% of global trade occurs between related parties, governments worldwide prioritize transfer pricing enforcement to protect their tax base. For startups scaling internationally, understanding and managing transfer pricing is crucial to avoid costly disputes and maintain investor confidence.

Fundamentals of Transfer Pricing: The Arm’s Length Principle

The Arm’s Length Principle (ALP) is the foundation of transfer pricing globally. It requires that transactions between related parties be priced as if they were conducted between independent, unrelated parties under similar circumstances. This principle ensures fairness and prevents multinational companies from shifting profits artificially to minimize taxes.

For startups, this means intercompany transactions—whether for goods, services, royalties, or loans—must be priced at fair market value. Applying ALP involves comparing related-party transactions with similar transactions between independent parties, often through benchmarking studies and economic analyses.

Transfer Pricing Methods: How to Set the Right Price

Several internationally recognized methods exist to determine arm’s length prices, each with specific applications:

1. Comparable Uncontrolled Price (CUP) Method: Compares the price charged in a related-party transaction to that charged between independent parties for comparable goods or services. CUP is preferred when exact comparables exist but is often challenging due to differences in terms or products.
2. Resale Price Method (RPM): Starts from the price at which a related party resells goods to independent customers, subtracting an appropriate gross margin. Useful for distributors or resellers who add limited value.
3. Cost Plus Method (CPM): Adds an appropriate markup to the costs incurred by a supplier in a related-party transaction. Commonly applied for manufacturing or service transactions.
4. Transactional Net Margin Method (TNMM): Examines the net profit margin relative to a suitable base (e.g., costs or sales) of a related party compared to independent firms. TNMM is flexible and widely used when exact price comparables are unavailable.
5. Profit Split Method (PSM): Allocates combined profits from related-party transactions among entities based on their relative contributions. Applied in highly integrated operations or where unique intangibles are involved.
   

Choosing the right method requires careful consideration of the transaction type, data availability, and functional analysis.

Global and India-Specific Transfer Pricing Regulations

OECD Guidelines and BEPS

The Organisation for Economic Co-operation and Development (OECD) provides internationally accepted transfer pricing guidelines adopted by over 120 countries. Its Base Erosion and Profit Shifting (BEPS) project strengthened rules on transparency and documentation, introducing mandatory country-by-country reporting and master/local file documentation.

Indian Transfer Pricing Framework

India’s transfer pricing laws, under the Income Tax Act, 1961, align closely with OECD standards but have unique features:

• Applicability: Transfer pricing applies to international transactions and certain specified domestic transactions (SDT), particularly when entities claim tax holidays or other benefits.
• Documentation: Companies must maintain contemporaneous documentation including a Local File, Master File, and, where applicable, Country-by-Country Reports.
• Compliance: Filing an accountant’s report (Form 3CEB) is mandatory for entities engaged in international transactions.
• Penalties: Non-compliance or inadequate documentation can lead to penalties amounting to a percentage of the transaction value, alongside interest and additional tax demands.
• Advance Pricing Agreements (APA): India’s APA program allows taxpayers to pre-agree transfer pricing methods with authorities, reducing audit risk.
  

Challenges in Transfer Pricing Compliance

• Finding Comparables: Identifying reliable independent comparables is difficult, especially for unique intangibles or services.
• Documentation Burden: Preparing and maintaining extensive, contemporaneous documentation requires resources and expertise.
• Risk of Tax Adjustments: Tax authorities globally scrutinize transfer pricing aggressively, leading to adjustments, interest, and penalties.
• Double Taxation Risk: Disputes over transfer pricing can result in the same income being taxed in multiple jurisdictions, requiring costly resolution mechanisms.
• Changing Regulations: Businesses must keep up with evolving rules, reporting requirements, and safe harbor provisions.
  

Best Practices for Startups and CFOs

• Develop a Clear Transfer Pricing Policy: Establish a well-defined policy detailing how intercompany prices are set, the rationale behind decisions, and procedures for regular review.
• Adhere to the Arm’s Length Principle: Ensure all transfer prices reflect what independent parties would agree upon under similar circumstances.
• Clearly Define Roles and Responsibilities (FAR Analysis): Conduct a thorough analysis of Functions, Assets, and Risks (FAR) for each related entity and document them precisely.
• Maintain Robust Documentation (Local File): Prepare comprehensive, contemporaneous documentation detailing intercompany transactions, functional analyses, and benchmarking studies.
• Consider Advance Pricing Agreements (APAs): For complex or high-value transactions, explore APAs with tax authorities to gain prior certainty on pricing methods and reduce dispute risks.
• Utilize Safe Harbors (if available): Leverage safe harbor provisions, such as those offered in Indian transfer pricing regulations, to simplify compliance where applicable.
• Ensure Intercompany Agreements are in Place: Formalize all significant related-party transactions through written agreements outlining terms, pricing, and responsibilities.

Real-World Case Studies

Coca-Cola vs. IRS:

One of the most prominent examples discussed in the guide is the transfer pricing dispute involving Coca-Cola and the U.S. Internal Revenue Service (IRS). This case highlights the complexity and financial risks associated with transfer pricing compliance, especially for multinational corporations with substantial intangible assets.

Background

Coca-Cola faced scrutiny over the allocation of profits between its U.S. headquarters and foreign subsidiaries involved in the manufacturing and distribution of concentrate. The IRS challenged the transfer pricing methodology used for royalty payments on intangible assets, asserting that Coca-Cola’s pricing undervalued the profits attributable to the U.S. operations.

Key Issues

• Valuation of Intangible Assets: The core of the dispute centered on the appropriate valuation of Coca-Cola’s brand and related intangibles transferred to foreign affiliates.
• Profit Allocation: Determining how much profit should be allocated to the U.S. entity versus foreign subsidiaries based on their contributions and risks.
• Functional Analysis: Evaluating the functions performed, assets used, and risks assumed by each entity was critical to justify pricing.
  

Outcome

The U.S. Tax Court upheld the IRS’s adjustments, significantly increasing Coca-Cola’s taxable income in the United States. The case underscored the importance of a rigorous transfer pricing framework, especially in valuing intangibles and conducting detailed functional analyses.

Conclusion

Transfer pricing is a complex but critical area in international business and taxation. Startups, CFOs, and finance teams must understand and apply transfer pricing principles to maintain compliance, reduce tax risks, and support sustainable growth.

By adopting a clear transfer pricing policy, maintaining robust documentation, choosing appropriate methods, and staying abreast of evolving regulations—especially under India’s regime and global OECD standards—businesses can confidently navigate transfer pricing challenges.

If your company needs assistance in managing transfer pricing risks or compliance, Treelife’s experts are ready to help. Reach out to priya@treelife.in for tailored solutions.

The International Financial Services Centre (IFSC) at GIFT City has emerged as a pivotal platform for Indian financial institutions to tap into international capital markets. The debt market at IFSC showed impressive growth in FY 2024-25, with total issuances reaching USD 6.99 billion across 57 listings, underscoring its growing role as a global capital hub. This article provides an in-depth analysis of the trends, sectoral shifts, and emerging patterns shaping the debt landscape at IFSC.

Market Size and Composition

Cumulative Issuance:
In FY 2024-25, GIFT IFSC facilitated 57 debt issuances, totaling USD 6.99 billion, reflecting its strong presence in the global debt market. Although issuance volumes fluctuated throughout the year, the total issuance volume for the year remained significant, reinforcing IFSC’s role as a key player in global capital flow.

Sectoral Distribution:
The Non-Banking Financial Companies (NBFCs) dominated the market, accounting for 50 issuances totaling USD 5.23 billion. This highlights IFSC’s critical role in facilitating funding for Indian financial institutions, especially NBFCs, that are leveraging international capital markets to fuel their growth.

Issuer Profile:
The top five issuers by volume in FY 2024-25 were:

• Muthoot Finance: USD 650 million (9.3% of total issuance)
• Continuum Trinethra: USD 650 million (9.3% of total issuance)
• State Bank of India: USD 500 million (7.2% of total issuance)
• REC Limited: USD 500 million (7.2% of total issuance)
• Shriram Finance: USD 500 million (7.2% of total issuance)

Together, these five issuers accounted for nearly 40% of the total market volume, highlighting some concentration within the market.

Instrument Analysis

Fixed vs Floating Rate:
The market exhibited a clear preference for fixed-rate bonds, which made up 95% of the total value, with 22 issuances totaling USD 6.66 billion. In contrast, floating-rate bonds represented only 5% of the total value, with 35 issuances totaling USD 329.2 million. This reflects a demand for larger, more stable issuances through fixed-rate bonds, while floating-rate bonds cater to more specialized, smaller funding needs.

Coupon Rates:

• Fixed Rate Bonds: Coupon rates ranged from 3.75% to 9.7%, with an average rate of 6.63%.
• Floating Rate Bonds: Predominantly SOFR-linked, with spreads ranging from SOFR + 0.95% to SOFR + 5.0%, averaging SOFR + 4.43%.
  

Sustainable Finance: ESG-Focused Instruments

Sustainable finance has gained significant traction at IFSC. In FY 2024-25, ESG-focused instruments accounted for 39.4% of the total debt issuance, with green bonds leading the charge.

• Green Bonds: USD 1.455 billion (20.8% of total issuance)
• Social Bonds: USD 850 million (12.1% of total issuance)
• Sustainable Bonds: USD 450 million (6.43% of total issuance)
  

This shift towards sustainable finance underlines the increasing interest in ESG investments and positions IFSC as a hub for sustainable capital flow.

Market Infrastructure & Participants

The trustee services market at IFSC was split between Indian and foreign trustees. Key participants include global entities such as BNY Mellon, Deutsche Bank, and Citicorp International, along with Indian trustees like Catalyst Trusteeship.

• Foreign Trustees: 17 issuances totaling USD 5.415 billion.
• Indian Trustees: 36 issuances totaling USD 1.15 billion.
  

This distribution shows the global and local participation in the IFSC debt market, further enhancing its accessibility to a wide range of institutional investors.

Credit Rating Trends

Out of the 57 issuances, 45.6% were rated, representing 89.5% of the total issuance volume. The ratings were predominantly high yield (BB+ and below), with 20 issuances amounting to USD 4.63 billion, while investment-grade bonds (BBB- and above) accounted for 6 issuances, totaling USD 1.63 billion.

Key Takeaways

• Growth in Debt Issuances: IFSC continues to grow as a critical hub for global debt markets, with USD 6.99 billion raised in FY 2024-25.
• Sectoral Leadership: NBFCs dominated the issuances, reflecting IFSC’s role in connecting Indian financial institutions to international markets.
• Rise of ESG: Sustainable finance gained momentum, with 39.4% of total issuances being ESG-focused instruments.
• Instrument Preferences: Fixed-rate bonds remain dominant, while floating-rate bonds cater to specialized funding needs.
• Credit Rating Mix: A balanced mix of high-yield and investment-grade bonds demonstrates the market’s attractiveness to a wide range of investors.
  

Explore Opportunities at IFSC

The debt market at IFSC is evolving rapidly, offering substantial opportunities for investors and issuers alike. To navigate this dynamic market and explore tailored solutions for your business, connect with Treelife’s expert team.

Maharashtra continues to assert its dominance as India’s economic powerhouse, and the recently released Economic Survey 2024-25 not only reinforces this status but also sets the tone for a forward-looking growth narrative. From impressive economic fundamentals to a vibrant startup ecosystem, robust infrastructure, and strategic policy reforms, Maharashtra is setting benchmarks for inclusive and sustainable development.

This article presents a comprehensive deep dive into the highlights of the survey, accompanied by contextual insights and implications for entrepreneurs, investors, and businesses seeking to scale in India’s most dynamic state economy.

Section 1: Macroeconomic Overview

Solid Fundamentals, Strong Outlook Maharashtra’s economy is projected to grow at 7.3% in FY25 — a rate higher than India’s overall growth estimate of 6.5%. This comes on the back of a strong 7.6% real GSDP growth in FY24. More importantly, Maharashtra’s per capita income stands at ₹2.79 lakh (FY24), nearly 47% above the national average (₹1.89 lakh), highlighting superior prosperity levels and strong consumption potential.

These figures are a testament to Maharashtra’s structural resilience and diversified growth engines, positioning it as an engine of India’s broader economic momentum.

Section 2: India’s Largest State Economy

Maharashtra by the Numbers The state accounts for 13.5% of India’s GDP — the highest share among all states. Its nominal GSDP is estimated at ₹40.56 lakh crore (~$550 billion), which places it ahead of many countries including Portugal, UAE, and Thailand.

With this scale, Maharashtra is not only the largest subnational economy in India but also one of the top 20 economic regions globally. The depth of its economy is driven by a diversified industrial base, high financial inclusion, and strong urban-rural economic linkages.

Section 3: Maharashtra on the Global Stage

Not Just a Regional Leader If Maharashtra were a standalone nation, it would rank among the top 20 global economies in terms of GDP. Mumbai — the capital — is the nerve center of India’s financial ecosystem. It hosts institutions like RBI, SEBI, BSE, NSE, and serves as the operational base for many global banks and corporations.

This global positioning enhances investor confidence, facilitates capital flows, and elevates Maharashtra’s strategic significance on the international map. Moreover, the state’s efforts to integrate into global value chains through trade and investment policies further strengthen this standing.

Section 4: GSDP Composition

A Balanced Growth Engine The GSDP composition highlights a structurally balanced economy:

• Services (58%): Dominated by trade, transport, communication, finance, real estate, education, health, and IT-enabled services.
• Industry (27%): Includes manufacturing (automobiles, electronics, pharmaceuticals), construction, electricity, gas, water supply, and mining.
• Agriculture & Allied (15%): Comprises agriculture, animal husbandry, forestry, and fishing.

Such diversification acts as a natural buffer against sector-specific downturns and underpins Maharashtra’s sustained economic momentum.

Section 5: Fiscal Health

Sound and Sustainable Public Finances Maharashtra has demonstrated fiscal prudence while pursuing economic development:

• Debt-to-GSDP ratio (FY25 BE): 17.3%, comfortably below the FRBM benchmark of 25%.
• Total Debt Stock: ₹7.83 lakh crore
• Revenue Receipts (FY24): ₹4.86 lakh crore, showing steady growth.
• Own Tax Revenue (FY24): ₹2.43 lakh crore, primarily driven by GST, excise duties, stamp duty, and registration charges.

Notably, committed expenditure (salaries, pensions, interest) forms about 60% of total expenditure — a fiscal challenge that requires efficiency reforms. Still, the state has fiscal headroom to expand capital investments and welfare spending.

Section 6: FDI Inflows

Maharashtra Leads from the Front Maharashtra continues to be the top destination for foreign direct investment:

• 31% share of India’s total FDI inflows (Oct 2019 – Sep 2024).
• Driven by investor-friendly policies, skilled workforce, and robust infrastructure ecosystem.
• FDI sectors include financial services, IT/ITeS, manufacturing, logistics, and renewable energy.

The government has complemented this with proactive facilitation through initiatives like MAITRI (single-window clearance), district investment councils, and sector-specific promotion.

Section 7: Startup Capital of India

Deep and Distributed Innovation Maharashtra has emerged as India’s most prolific startup hub:

• 26,686 DPIIT-recognized startups as of FY25 — nearly 24% of India’s total.
• 27 Unicorns — highest among all Indian states.
• Startups present in every district — highlighting democratization of entrepreneurship.

Support infrastructure includes over 125 incubators, state-backed venture funds, innovation grants (like Maharashtra Startup Week), and women-focused startup incentives. The Maharashtra State Innovation Society (MSInS) has been instrumental in coordinating startup policy and programs.

Section 8: Domestic Investment Momentum

Capital Inflows Beyond Metros In early 2024, the state conducted investment drives across 34 districts:

• 2,652 MoUs signed
• Proposed Investment: ₹96,680 crore
• Estimated Employment Generation: 2.3 lakh jobs

This decentralization of investment reflects the state’s commitment to inclusive industrial growth and job creation beyond Tier 1 cities.

Section 9: Export Performance & Infrastructure Edge

A Trade Powerhouse Maharashtra ranks second in India’s merchandise exports with a 15.4% share in FY24. Key sectors include:

• Automobiles
• Pharmaceuticals
• Chemicals
• Textiles
• Machinery and Equipment
• Software and IT Services (2nd highest software exports in India)

Infrastructure Highlights:

• JNPT: India’s largest container port (~50% of India’s container cargo handled here)
• Mumbai & Pune: International airports with cargo capabilities
• Multi-modal logistics parks, dry ports, and industrial corridors strengthen last-mile connectivity.

These trade-enabling assets position Maharashtra as a global manufacturing and services export hub.

Section 10: What This Means for Startups, Businesses & Investors Maharashtra’s economic, infrastructural, and policy foundations create an ideal launchpad for

• Startup scaling and access to capital
• Manufacturing and export-oriented ventures
• Venture capital & private equity investments
• ESG-aligned infrastructure and green economy initiatives

The state’s fiscal headroom, deep consumer base, and integrated markets provide unparalleled leverage for long-term business expansion.

At Treelife, we work with high-growth businesses, startups, funds, and global investors to navigate Maharashtra’s economic landscape — from fundraising, structuring, tax & compliance to legal enablement.

If you’re looking to grow or invest in India’s most powerful state economy, let’s talk.

We simplify the complex — so you can focus on what matters most: building, scaling and creating impact.

Mahakumbh 2025 was more than just a spiritual event—it was a massive economic catalyst that reshaped Prayagraj and beyond. With 660 million attendees from 76 countries, this grand gathering generated ₹3 lakh crore (approximately $36 billion) in transactions, highlighting the intersection of faith and finance. From tourism and hospitality to fintech and startups, Mahakumbh 2025 showcased how religious events can fuel an entire ecosystem of economic growth.

Mahakumbh 2025: A Rare Celestial Event

Unlike the regular Kumbh Mela held every 12 years, Mahakumbh 2025 was a once-in-144-years occurrence due to a rare alignment of the Sun, Moon, and Jupiter. Held at the sacred Triveni Sangam in Prayagraj, where the Ganga, Yamuna, and the mythical Saraswati rivers meet, this event attracted the highest number of religious tourists ever recorded.

Mahakumbh’s scale dwarfed global festivals:

• Mahakumbh 2025: 660 million visitors
• Haj Pilgrimage: 2.5 million visitors
• Rio Carnival: 7 million visitors
• Oktoberfest: 7.2 million visitors

The massive footfall cemented Mahakumbh’s place as the largest religious gathering in human history.

The Religious Tourism Boom in India

Religious tourism in India is experiencing unprecedented growth:

• 2022: 1.43 billion religious tourists generated ₹1.34 lakh crore (~$16 billion).
• Projected for 2028: Religious tourism revenue to hit $59 billion.
• Job Creation: Estimated 140 million jobs by 2030.
• Growth Rate: A CAGR of 16% (2023-2030).

Mahakumbh 2025 played a major role in this growth, surpassing previous records and driving domestic and international tourism to new heights.

The Maha Economic Impact: Infrastructure, Employment & Commerce

Mahakumbh 2025 wasn’t just a spiritual milestone; it was an economic powerhouse that fueled multiple industries.

Infrastructure Development

To accommodate the massive influx of visitors, major infrastructure upgrades were undertaken:

• 12 km of paved ghats for holy dips
• 1,850 hectares of parking space
• 30 pontoon bridges
• 67,000 streetlights installed
• 1.5 lakh public toilets

These enhancements not only improved the Mahakumbh experience but will continue benefiting the region for years.

Employment & Revenue Generation

Mahakumbh significantly boosted employment:

• 60 lakh jobs (direct & indirect)
• ₹54,000 crore in state revenue

Hospitality, travel, and financial services flourished, further expanding economic opportunities.

Commerce & Consumer Spending

Devotees and tourists drove enormous spending:

• Pooja essentials: ₹2,000 crore
• Flowers: ₹800 crore
• Groceries & daily essentials: ₹11,500 crore
• Hospitality industry: ₹2,500 crore
• Boatmen services: ₹50 crore

These transactions reflect the massive economic potential of faith-based tourism.

Startups at Mahakumbh 2025: The New-Age Economy

Mahakumbh 2025 provided a platform for startups and digital innovations that enhanced visitor experiences:

Spiritual Startups

• Vama: Offered live kathas, Gangajal delivery, and virtual pujas.
• Sri Mandir: Launched guided pilgrimages and the Maha Kumbh Ashirvad Box.
• AstroYogi: Allowed virtual darshan via its app.

Quick Commerce & Convenience

• Blinkit: Set up a 100-square-foot store for rapid essentials delivery.
• Swiggy Instamart: Created a life-sized “S” pin serving as a meeting point for lost visitors.

Fintech & AI in Mahakumbh

• Paytm: Introduced a special Maha Kumbh QR Code for seamless payments.
• ParkPlus: Implemented AI-powered smart parking for congestion control.
• Amazon India: Repurposed delivery boxes into free upcycled beds for pilgrims.

These startups blended technology with tradition, making Mahakumbh more accessible, organized, and efficient.

Unique Business Ventures: Innovation at Mahakumbh

Mahakumbh 2025 inspired creative entrepreneurs who turned religious tourism into innovative business ideas:

• Digital Snan: A photographer offered digitally enhanced images of pilgrims’ spiritual baths for ₹1,100.
• Riverbed Coin Collection: A devotee used magnets to retrieve coins from the river, earning ₹40,000 daily.
• Sacred Water Business: Sellers bottled and distributed Triveni Sangam water to devotees worldwide.

These initiatives showcase how faith-based tourism fuels grassroots innovation and micro-entrepreneurship.

Celebrity & International Presence

Mahakumbh 2025 attracted global icons, industrialists, and political leaders:

• Chris Martin (Coldplay), Dakota Johnson, Laurene Powell Jobs
• Vicky Kaushal, Katrina Kaif, Anupam Kher, Rajkummar Rao, Shankar Mahadevan
• Mukesh Ambani, Gautam Adani, top diplomats from 76 countries

Even cricketer Suresh Raina described Mahakumbh as his “karm bhoomi”, further cementing its cultural impact.

The Future of Religious Tourism in India

The success of Mahakumbh 2025 marks a turning point for India’s religious tourism industry:

• 450,000+ pilgrimage sites across India are primed for tourism growth.
• Government-backed tourism initiatives will increase infrastructure investments.
• Varanasi’s tourism economy grew by 20-65%, showcasing how religious tourism boosts local economies.

With the next Mahakumbh over a century away, India’s religious tourism sector is poised for long-term expansion, attracting global investments and fostering innovation.

Final Thoughts: Mahakumbh as an Economic and Spiritual Beacon

Mahakumbh 2025 was not just a religious event—it was a global spectacle, a booming economy, and a launchpad for startups. It showcased how faith, business, and innovation can co-exist to create a once-in-a-lifetime experience.

For entrepreneurs, investors, and businesses, Mahakumbh 2025 opened doors to limitless possibilities. Whether it’s startups in Mahakumbh, fintech innovations, or tourism ventures, this event has redefined the role of religious tourism in India’s economy.

Concerts aren’t just about music—they’re multi-billion-dollar economic engines that impact multiple industries, from ticketing platforms to tourism, hospitality, taxation, and sustainability.

As Coldplay’s 2025 India tour took the country by storm, we at Treelife took a closer look at the numbers, stakeholders, and economic impact behind this massive event. With revenue numbers, total attendees, and a ripple effect across various sectors, this was more than just a concert—it was a case study in how live events fuel economy and growth.

What’s the Concert Economy?

A concert economy refers to the ripple effect large-scale music events have on multiple industries, including hospitality, transport, food & beverages, merchandise, and other local businesses. 

When a global artist like Coldplay performs in India, the financial impact extends far beyond ticket sales. The entire event ecosystem—from airlines and hotels to restaurants, transport, and local businesses—experiences a surge in revenue.

Concerts drive employment, generate tax revenue, and contribute to the growth of industries like ticketing, event management, and streaming platforms. The Indian live events market was valued at ₹88 billion in 2023 and is projected to reach ₹143 billion by 2026, reflecting a compound annual growth rate (CAGR) of 17.6%. The ticketed live music segment alone is expected to reach ₹1,864 crore ($223 million) in 2025. Music events form a substantial part of this ecosystem, with concert numbers expected to double from 8,000 in 2018 to over 16,700 by 2025.

Key Components of the Concert Economy

1. Ticketing Revenue – The biggest driver of revenue, shared between artists, event promoters, and ticketing platforms.
2. Sponsorship & Brand Partnerships – Brands pay crores to associate with global tours (e.g., BMW & DHL for Coldplay).
3. Media Rights & Streaming – Platforms like Disney+ Hotstar acquire streaming rights, adding a new revenue channel.
4. Tourism & Hospitality Boost – Hotels, flights, and local businesses benefit from concert-driven travel.
5. Government Earnings – GST, venue permits, and licensing fees contribute to the public economy.
6. Local Business Growth – Restaurants, cafés, shopping malls, transport services, and even street vendors see a surge in demand, with metro stations in Ahmedabad handling over 4,05,000 passengers during Coldplay’s concerts.
7.  Government Earnings – GST, venue permits, entertainment taxes, and licensing fees contribute to state and national revenue. Coldplay’s concerts alone generated an estimated ₹58 crore in GST revenue from ticket sales. 

In essence, a concert isn’t just a musical event—it’s a massive business operation that impacts multiple industries.

Coldplay’s India Tour by the Numbers

Here’s a breakdown of the financial impact Coldplay’s concerts had in India:

1. Revenue from ticket sales – ₹322+ crore across five shows in Mumbai & Ahmedabad
2. BookMyShow’s earnings from convenience fees – ₹32.2 crore
3. GST collection for the government – ₹58 crore at 18% GST (ticket sales)
4. Metro revenue spike – ₹66 lakh in additional earnings (during concert days)
5. Metro passenger surge – 4,05,264 passengers to Motera Stadium during Ahmedabad concerts
6. Disney+ Hotstar streaming numbers – 8.3 million views during concert days
7. Total concert attendance – 400,000+ fans across five shows

Coldplay’s concerts didn’t just impact the fans inside the stadiums—it boosted local businesses, increased hospitality demand, and drove digital engagement across streaming platforms.

Who Makes Money in the Concert Economy?

A concert of this scale involves multiple stakeholders working together to create a profitable and smooth experience.

1. Tour Promoters & Event Organizers – Live Nation (Coldplay’s global promoter), BookMyShow (ticketing & event organization in India)
2. Ticketing Platforms – BookMyShow, Paytm Insider, District by Zomato
3. Venue Operators – DY Patil Stadium (Mumbai), Narendra Modi Stadium (Ahmedabad)
4. Sponsorship & Branding – BMW (Battery Partner), DHL (Logistics Partner), Mastercard, Disney+ Hotstar (Streaming Rights)
5. Media & Streaming Rights – Disney+ Hotstar exclusively streamed the concerts in India
6. Production & Logistics –responsible for stage design, sound, and lighting
7. Sustainability & Energy Partners – BMW-powered show batteries, kinetic floors for energy generation
8. Government & Regulatory Bodies – Earnings from GST, licensing fees, and event permits

From ticketing to brand partnerships, venue revenues to tax collections, the concert economy is an interconnected web of businesses, governments, and event specialists working together.

The Challenges & Future of India’s Concert Economy

While concerts bring massive economic benefits, they also come with significant challenges that impact the overall experience for fans, organizers, and businesses. Addressing these barriers is essential for the growth of India’s live music industry.

1. Ticket Scalping & Resale – Black-market ticket prices surged up to ₹80,000, highlighting the need for stricter regulations.
2. Infrastructure Gaps – Venue congestion, inadequate public transport, and lack of large-scale arenas limit event scalability.
3. Taxation & Licensing Complexities – High GST rates (18%), multiple permits, and regulatory approvals make organizing large concerts more challenging.
4. Sustainability Issues – While Coldplay introduced kinetic floors and battery-powered shows, most concerts still rely on diesel generators.

What’s Next for India’s Concert Economy?

India’s live concert economy is on the verge of massive expansion, driven by increasing demand, rising disposable incomes, and global interest in music tourism. Here’s what lies ahead:

Projected Market Growth

• India accounted for 27,000 live events, from music to comedy shows and theatre, in 2024, 35% more than in the same period last year.
• Estimated concert-linked spending is expected to reach 60 billion rupees and 80 billion rupees on an annual basis over the next 12 months.
• Aggregate revenue from India’s live entertainment market is projected to be around $1.7 billion by 2026, growing at a CAGR of nearly 20% over the next three to five years.
  

More Concerts, Bigger Events

• In 2018, India hosted 8,000+ concerts—by 2025, this is expected to double to 16,700+.
• Large-scale music & food festivals are expected to attract 1.5 million unique visitors annually—Ziro Festival, Hornbill Festival, NH7 Weekender, Zomaland, Nykaaland, and more.
  

Expanding Revenue Streams

• OTT Platforms live-stream digital platforms and sponsorships will further boost industry revenues (e.g., Disney Hotstar x Coldplay – 8.3 million views).
• Growth in regional concerts will create new revenue opportunities in Tier 2 & 3 cities.
  

Better Infrastructure & Investments

• Modern multi-purpose venues are being developed across major cities.
• Improved logistics, ticketing technology, and audience experience will drive higher attendance.

India’s concert economy is poised to become a global leader, benefiting from strong growth, technological advancements, and an increasing global appetite for music tourism. As the industry evolves, it presents a wealth of opportunities for businesses, brands, and fans alike.

Read our report for more information on how India’s concert economy is evolving and the opportunities it presents for businesses and artists alike.

Budget 2025: Key Highlights and Analysis 

The Union Budget 2025 presents a reform-driven and growth-focused vision for India’s economic trajectory, aligning with the government’s long-term goal of Viksit Bharat 2047. With a strong emphasis on fiscal prudence, policy continuity, and structural transformation, the budget outlines measures to accelerate infrastructure growth, economic stability, and private sector participation.

India remains one of the fastest-growing major economies, with a real GDP growth forecast of 6.4% for FY 2025 and a fiscal deficit target of 4.4% for FY 2026. The budget’s total expenditure stands at ₹50.65 lakh crore, reflecting a 14% increase, largely focused on investment-led growth.

The government reiterates its commitment to inclusive development for GYAN, centering its initiatives around Garib (poor), Yuva (youth), Annadata (farmers), and Nari (women). The budget also prioritizes MSMEs, exports, energy security, and employment generation, ensuring long-term economic resilience.

Budget 2025 – Key Growth Drivers

The Union Budget 2025 is structured around six core reform domains:

1. Taxation – Simplified tax policies to enhance compliance.
2. Power Sector – Boosting clean energy investments.
3. Urban Development – Expanding infrastructure.
4. Mining – Strategic development of natural resources.
5. Financial Sector – Policy predictability and economic stability.
6. Regulatory Reforms – Improving ease of doing business.

Additionally, the budget introduces sector-specific funds, regulatory overhauls, and incentives for startups and MSMEs to drive innovation and economic growth.

Key Policy Announcements in Budget 2025

The Union Budget 2025 highlights several major reforms and policy announcements:

1. Introduction of a New Income Tax Bill

A new Income Tax Bill will be introduced to modernize and simplify India’s tax laws, promoting efficiency and predictability in the tax regime.

2. Startup and MSME Incentives

• ₹10,000 crore Fund of Funds to support startups.
• Deep Tech Fund of Funds for next-gen technology startups.
• MSME classification limits revised for investment and turnover, expanding opportunities for small businesses.
• National Manufacturing Mission to enhance ease of business, support a future-ready workforce, and drive clean tech manufacturing.

3. Investment and Business-Friendly Policies

• FDI in the insurance sector increased to 100% (from 74%).
• Fast-track merger procedures streamlined to boost corporate consolidation.
• Investor Friendliness Index to be launched for states in 2025.

4. Financial Sector and Compliance Easing

• Rationalization of TDS & TCS provisions, including:
  • Higher TDS exemption limits for various income categories.
  • Removal of higher TDS/TCS for non-filers of ITR.
  • TCS exemption threshold for overseas remittances increased from ₹7 lakh to ₹10 lakh.
• Simplified transfer pricing framework – 3-year ALP (Arm’s Length Price) assessment period to reduce litigation.
• Introduction of a revamped Central KYC registry in 2025.

5. Boosting Investments through GIFT IFSC

• Enhanced tax benefits for offshore funds relocating to GIFT IFSC.
• Exemption on capital gains and dividends for ship leasing units in IFSC, aligning it with aircraft leasing benefits.
• Simplification of fund manager compliance rules, making GIFT IFSC a more attractive financial hub.

Decoding Tax Reforms in Budget 2025

I. Startups and Other Businesses

Budget 2025 brings notable tax reforms aimed at boosting the startup ecosystem and improving business ease. Key highlights include:

1. Extension of Startup Tax Holiday: The 100% tax deduction under Section 80-IAC has been extended till March 31, 2030, supporting early-stage startups. However, the low utilization rate of this benefit (only ~2.36% of DPIIT-registered startups) signals a need for further streamlining.
2. Restrictions on Loss Carry Forward in Amalgamations: Startups and businesses undergoing mergers will now be restricted from indefinitely carrying forward losses, ensuring tax compliance and preventing evergreening of losses.
3. Rationalization of TCS on LRS & Tour Bookings: The TCS threshold under the Liberalized Remittance Scheme (LRS) has been increased from ₹7 lakh to ₹10 lakh, easing overseas transactions for businesses and individuals.
4. Higher TDS Thresholds to Improve Compliance: Businesses benefit from higher TDS applicability limits across multiple categories, reducing compliance burdens. For instance, TDS on professional services and rent has been revised, making compliance more streamlined.

Treelife Insight: While these changes improve compliance efficiency, the impact on startup liquidity and cash flow management will be key to watch.

II. AIFs and Other Investors

The Budget introduces critical reforms for Alternative Investment Funds (AIFs) and institutional investors, ensuring regulatory clarity and tax stability.

1. Clarity on Tax Treatment of Securities Held by AIFs: Category I & II AIFs will have their securities classified as capital assets, ensuring uniform capital gains tax treatment rather than business income taxation.
2. Removal of TCS on Sale of Goods (Including Securities): The 0.1% TCS on sales above ₹50 lakh has been abolished, significantly reducing tax compliance burdens for investment funds and capital market transactions.
3. Reduced TDS on Securitization Trust Distributions: The TDS rate for residents receiving payments from securitization trusts has been slashed from 25%-30% to 10%, ensuring smoother fund flow within investment structures.
4. Streamlined Tax Rate for FPIs & Specified Funds: Long-term capital gains (LTCG) tax for FPIs has been standardized at 12.5%, reducing disparities and bringing tax certainty.

Treelife Insight: These reforms simplify fund structures and reduce compliance friction, making India’s investment ecosystem more competitive.

III. Personal Taxation

Personal taxation changes in Budget 2025 focus on increasing exemptions, easing compliance, and rationalizing TDS/TCS:

1. Higher Basic Exemption & Rebate Under the New Tax Regime:

• Basic exemption limit raised to ₹4 lakh (from ₹3 lakh).
• Rebate under Section 87A increased to ₹12 lakh, reducing tax outgo for middle-income taxpayers.

2. Crypto Asset Reporting Mandate: Section 285BAA introduces strict reporting requirements for cryptocurrency transactions, increasing transparency in digital asset taxation.
3. Extension of Time Limit for Filing Updated Returns: Taxpayers now have up to 48 months (from 24 months) to file updated ITRs, subject to additional tax payments.
4. Tax Deduction for NPS Vatsalya Scheme: A new deduction of ₹50,000 under Section 80CCD is introduced for contributions towards NPS for minors, encouraging long-term savings.

Treelife Insight: While these changes offer tax relief for middle-income earners, the lack of direct income tax cuts may leave higher-income taxpayers wanting more.

IV. GIFT-IFSC

Budget 2025 strengthens GIFT City’s role as a global financial hub with extended tax incentives and new opportunities:

1. Extension of Tax Exemptions Till 2030: Sunset clauses for tax benefits on aircraft leasing, ship leasing, and offshore banking units have been extended to March 31, 2030, boosting investor confidence.
2. Leveling the Playing Field for Category III AIFs: Non-residents investing in offshore derivative instruments (ODIs) through Category III AIFs in GIFT IFSC will now enjoy tax exemptions, making GIFT City more attractive for international funds.
3. Tax-Free Life Insurance Proceeds from IFSC Insurance Offices: Policies issued by IFSC insurers are now fully exempt from tax, driving more offshore participation in India’s insurance market.
4. Simplified Fund Management in IFSC: Investment funds based in GIFT IFSC now have relaxed compliance thresholds, making India’s first International Financial Services Centre (IFSC) more competitive with global financial hubs.

Treelife Insight: These reforms strengthen India’s global positioning in financial services, but long-term success will depend on ease of implementation and market response.

Conclusion

Budget 2025 introduces progressive tax reforms aimed at simplifying compliance, encouraging investment, and driving economic growth. With reforms as the fuel, inclusivity as the guiding spirit, and Viksit Bharat as the destination, the government reaffirms its commitment to policy stability and long-term transformation.

By reducing administrative burdens, improving tax certainty, and fostering a business-friendly environment, these reforms create a strong foundation for India’s evolving economic landscape. While some measures may require further refinements, the overall direction of Budget 2025 marks a positive shift towards a predictable, stable, and globally competitive tax regime.

With the new Income Tax Bill set to be unveiled soon, anticipation is high for further transformative reforms that will shape India’s tax landscape and its emergence as a global economic powerhouse.

The Software as a Service (SaaS) industry is transforming how businesses operate, enabling organizations to scale rapidly, reduce costs, and enhance accessibility. India’s SaaS story is particularly compelling: once a nascent segment, the Indian SaaS market is now projected to reach $50 billion by 2030, contributing significantly to the global market valued at over $200 billion in 2024. The country is home to over 1,500 SaaS companies, several of which have achieved unicorn status, contributing to a market valued at approximately $13 billion in 2023. 

In India, the SaaS ecosystem is experiencing an unprecedented boom, becoming a global hub for innovation, entrepreneurship, and investment. Treelife’s SaaS Blueprint: Unlocking India’s Potential with Industry Insights and Regulatory Guide offers a comprehensive exploration of the Indian SaaS landscape, delving into industry growth trends, regulatory frameworks, investment landscape, risk mitigation strategies, and key government initiatives driving the sector. Whether you’re an entrepreneur, investor, or an industry observer, this handbook provides actionable insights and a clear roadmap to navigate the opportunities in this vibrant and fast growing ecosystem.

If you have any questions or need further clarity, please don’t hesitate to reach out to us at garima@treelife.in

Why SaaS is the Future of Technology

The Indian SaaS sector stands at the intersection of global opportunity and local ingenuity, ready to redefine industries with cutting-edge solutions. As businesses embrace technologies like artificial intelligence, blockchain, and machine learning, the potential for innovation and impact is limitless. The SaaS model is projected to surpass $300 billion globally by 2026 – a testament to its scalability and adaptability. From CRM and ERP solutions to AI-driven platforms and industry-specific tools, SaaS caters to diverse business needs. In India, the sector’s growth is equally remarkable, with the market expected to reach $50 billion by 2030. Fueled by affordable cloud infrastructure, a highly skilled workforce, and supportive government policies, the Indian SaaS sector has become a powerhouse of global significance.

However, navigating the complexities of regulation, compliance, and market dynamics is essential for long-term success. With actionable insights and a deep dive into the regulatory framework, this handbook equips businesses and stakeholders to harness the immense potential of SaaS while staying compliant and resilient.

Inside the SaaS Blueprint – Key Highlights

1. A Comprehensive Industry Overview

The handbook provides an analysis of the SaaS industry’s evolution, market size, and the role of technology in driving transformation. Key highlights include:

• The global rise of SaaS, driven by innovations in AI, machine learning, and cloud computing.
• Insights into the Indian SaaS market, which is home to over 1,500 companies generating $13 billion in annual revenue, with 70% of revenue generated in international markets.
• An exploration of key SaaS segments like Customer Relationship Management (CRM), Enterprise Resource Planning (ERP), cybersecurity, fintech, and more, showcasing India’s ability to serve both local and global markets.

2. Regulatory and Legal Framework

The legal and regulatory landscape for SaaS businesses is complex, with both domestic and international considerations. The handbook covers:

• Contract Law: SaaS agreements such as subscription, service level, and licensing agreements, and the importance of safeguarding intellectual property (IP).
• Data Protection and Privacy: Navigating India’s Digital Personal Data Protection Act, 2023, and ensuring compliance with global laws like GDPR, HIPAA, and CCPA.
• Intellectual Property Protection: Securing patents, copyrights, trademarks, and trade secrets to protect proprietary technology.
• Taxation: Detailed insights into GST implications, equalization levy updates, and income tax considerations for SaaS businesses operating domestically and internationally.

3. Investment Landscape

India’s SaaS sector has emerged as an attractive destination for venture capital and private equity investment, with the handbook providing: 

• The growing preference for vertical SaaS solutions catering to niche industries like agritech and climate tech.
• Key investment trends, including the role of AI in creating new SaaS categories like software testing, predictive analytics, and automation.
• Challenges such as founder dilution and valuation pressures, with strategies for navigating these hurdles while attracting sustainable funding.

4. Mitigating Risks and Building Resilience

The digital nature of SaaS exposes companies to unique risks, including data breaches and operational disruptions. Learn more about strategies to mitigate risk and build resilience through::

• Enhancing data security through encryption, access controls, and compliance with local and global regulations.
• Building operational resilience with disaster recovery plans, fault-tolerant infrastructure, and robust incident response and reporting frameworks.
• Addressing third-party risks by vetting external vendors and ensuring alignment with security standards like SOC 2 and ISO 27001.

5. Government Initiatives Supporting SaaS

Aimed at fostering innovation and promoting adoption of SaaS, the Government of India has launched multiple initiatives and policies, the most prominent of which are below:

• MeghRaj Initiative: Accelerating cloud adoption in public services to improve efficiency and scalability.
• National Policy on Software Products (NPSP): Supporting 10,000 startups and developing clusters for software product innovation.
• Government eMarketplace (GeM): Enabling SaaS companies to tap into public sector procurement opportunities.
• SAMRIDH Program: Connecting startups with resources for scaling and growth.

Key Takeaways for Stakeholders

Whether you’re an entrepreneur, investor, or policymaker, this handbook provides actionable insights to navigate the opportunities and challenges of the SaaS ecosystem. Key takeaways include:

• The roadmap to build and scale a successful SaaS business in India.
• Strategies to ensure compliance with complex regulatory frameworks.
• Insights into investment trends and funding opportunities in SaaS.
• A detailed analysis of risks and resilience strategies to future-proof your business.

Download the SaaS Blueprint today and take the next step in shaping the future of SaaS in India. For inquiries or further guidance, reach out to us at garima@treelife.in.

Environmental, Social, and Governance (ESG) principles have evolved from being a global framework for responsible business practices into a cornerstone of sustainable and ethical growth. In India, the prominence of ESG is rapidly increasing, with the total assets under management (AUM) of ESG funds reaching substantial growth of USD 1.17 billion (INR 9,753 crores) in March 2024. In fact, ESG could represent approximately 34% of the total domestic AUM by 2051. 

These principles originated as a response to growing concerns on climate change, social equity, and corporate accountability. Today, they are critical for businesses aiming to align with international sustainability goals. Startups are uniquely positioned to integrate ESG frameworks into their operations from the outset, contributing to global sustainability objectives while enhancing financial performance. Improved risk management, operational efficiencies, and stronger stakeholder trust are among the many benefits of embedding ESG practices. Furthermore, companies with strong ESG performance are increasingly favored by investors, reflecting a global shift toward sustainable financing and prioritizing climate action.

India’s ESG evolution mirrors international trends while addressing domestic opportunities and challenges. Initiatives such as the Business Responsibility and Sustainability Report (BRSR) framework and increasing green finance options have propelled India into the global spotlight. Startups can leverage these developments to scale responsibly, align with India’s international commitments, and position themselves as leaders in the evolving ESG landscape.

Tailored for practical insight, this handbook focuses on individual contributions to ESG as the building blocks for collective progress, enabling startups to align their practices with India’s international commitments and sustainability objectives, and to: (i) scale responsibly; (ii) contribute to global sustainability goals; and (iii) position themselves as leaders in India’s evolving ESG landscape. 

This handbook is developed as a comprehensive look into the ESG framework in India covering the evolution of ESG in corporate governance, key components, the Indian regulatory landscape, accounting and reporting standards, and market trends. With case studies on Tata Power, Zomato and IKEA, the handbook also addresses challenges, investment opportunities, and the future of ESG in India. This handbook provides startups with practical strategies to integrate ESG principles into their operations, enabling them to align with India’s global sustainability goals and unlock opportunities for responsible growth. For further guidance or inquiries, reach out to us at garima@treelife.in

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India’s Fintech Report 2024-25 by Treelife provides a data-driven analysis of the fintech industry in India, highlighting key trends, growth drivers, and future opportunities. As the fintech market size in India continues to expand rapidly, this report offers a comprehensive view of how fintech companies and fintech startups in India are transforming the financial landscape.

A major highlight of the India Fintech Report 2024-25 is the transformative role of India Stack in shaping the fintech ecosystem. India Stack, a government-backed digital infrastructure, provides a suite of open APIs that enable seamless integration between private companies and government services, paving the way for digital financial inclusion on an unprecedented scale.

India Stack’s Four Layers

1. Identity (Aadhaar): A unique digital identity for over 1.3 billion Indians, facilitating secure, real-time identity verification. Aadhaar has been instrumental in enabling digital onboarding, reducing costs, and expanding access to financial services.
2. Payments (UPI, AEPS): The Unified Payments Interface (UPI) and Aadhaar-enabled Payment System (AEPS) provide a secure, real-time digital payments system, transforming digital payments in India and making it accessible to both urban and rural populations.
3. Paperless (DigiLocker): Digital management of documents through DigiLocker allows users to store, manage, and share official documents securely, supporting financial transactions and government interactions without physical paperwork.
4. Data (DEPA): The Data Empowerment and Protection Architecture (DEPA) framework empowers individuals to securely share personal and financial data with their consent, enabling innovative fintech services and fostering data privacy.

India Stack has been a game-changer for fintech companies in India, democratizing access to banking, insurance, lending, and wealth management services. It has supported the rapid expansion of fintech startups in India by reducing barriers to entry, lowering costs, and enabling interoperability across financial services.

Impact of India Stack on Fintech in India

The implementation of India Stack has not only increased the fintech market size in India but also boosted financial inclusion, particularly in rural areas where traditional banking access is limited. By facilitating over 63 billion Aadhaar authentications and enabling UPI to process billions of transactions annually, India Stack has become the backbone of India’s digital economy.

Key Insights from the Report

1. Market Growth: The fintech sector in India is projected to reach a valuation of $420 billion by 2029, with a compound annual growth rate (CAGR) of 31%. This growth is driven by digital innovations, increased internet penetration, and supportive regulatory frameworks. India has emerged as one of the top three fintech ecosystems globally, with over 3,000 fintech startups contributing to this growth.
2. Digital Payments in India: Digital payment systems in India have witnessed exponential growth, largely powered by the Unified Payments Interface (UPI) and RuPay cards. In FY 2023-24 alone, UPI processed over 131 billion transactions, representing more than 80% of retail digital payments. The UPI market size is expected to increase significantly as UPI expands globally, positioning India as a leader in digital payments.
3. Opportunities at GIFT IFSC: GIFT IFSC (Gujarat International Finance Tec-City) has become a key strategic location for fintech growth, offering a gateway to global markets. The report highlights the benefits for fintech firms establishing operations in IFSC GIFT City, including tax incentives and access to international markets. With over 55 fintech entities already operational in GIFT IFSC, it is fast becoming a preferred destination for new fintech startups in India.
4. Investment and Funding Trends: The fintech market in India has attracted significant investment, with total funding peaking at $9.6 billion in 2021. Although funding levels normalized to $6 billion in 2022 and $2.7 billion in 2023, the report indicates that investor interest remains high, particularly in areas like digital lending, payments, and insurance technology.
5. Fintech Job Market: The expansion of the fintech ecosystem has also spurred job creation. Fintech jobs in India are on the rise, with demand for talent in areas such as digital payments, data analytics, AI, and cybersecurity. This surge in job opportunities underscores the sector’s potential for sustained growth and innovation.
6. Public Market Performance and Leading Companies: The Report 2024-25 also examines the public market performance of key fintech companies in India and compares it with traditional financial institutions. The report discusses how fintech companies, such as Paytm and Angel One, have navigated the challenges of going public, highlighting trends in valuation and market perception. While new-age fintech firms are driving innovation and growth, they face scrutiny around profitability and sustainability, which can impact stock performance in the public market.
7. Top Companies in India’s Fintech Ecosystem: The report sheds light on leading players in the fintech sector in India, including Razorpay, PhonePe, Zerodha, and Cred, which are shaping the landscape across segments like digital payments, lending, and wealth management. These companies exemplify the rapid growth and transformative impact of fintech on India’s economy.
8. Investment Landscape and Major Investors: The investment landscape in India’s fintech market has attracted some of the biggest names in venture capital and private equity. Key investors, including Blume Ventures, Accel, Matrix Partners India, and Kalaari Capital, have played a vital role in funding the growth of fintech in India. In 2021, fintech funding peaked at $9.6 billion, and though it moderated to $6 billion in 2022, investor interest remains high, particularly in sectors like digital payments and LendingTech.

Types of Fintech Covered in the Report

The Treelife India Fintech Report 2024-25 covers a wide array of fintech segments that are driving innovation across the financial landscape in India:

• Digital Payments (PayTech): Exploring the growth of UPI and mobile wallets, which now dominate the digital payments system in India.
• LendingTech: Covering advancements in digital lending, Buy Now Pay Later (BNPL) models, and platforms providing seamless credit access to individuals and businesses.
• InsurTech: Examining technology-driven innovations in the insurance sector, including digital policy management and AI-powered risk assessments.
• WealthTech: Highlighting platforms that democratize investment, from robo-advisors to digital wealth management solutions.
• Fintech Infrastructure/SaaS: Analyzing backend technologies and SaaS solutions that support financial services, including Banking-as-a-Service (BaaS) and compliance tools.

Each of these segments plays a pivotal role in the fintech ecosystem, transforming how financial services are delivered and accessed in India.

Why Download the India Fintech Report?

The India Fintech Report 2024-25 by Treelife is a valuable resource for industry professionals, investors, and policymakers seeking in-depth insights into the growth of fintech in India. Covering all major segments of the fintech market in India, from digital payments to wealth management, the report provides essential data and analysis on the drivers, challenges, and future directions of this rapidly evolving sector.

Get the Treelife India Fintech Report 2024-25 to stay informed about:

• The transformative impact of UPI and RuPay cards on the digital payments landscape
• The role of GIFT IFSC in driving fintech globalization
• Key players, investment trends, and employment opportunities within the fintech industry in India

Download your copy today to explore the latest trends and stay ahead in the evolving fintech sector in India.

The 2024 U.S. presidential election was a highly anticipated and fiercely contested affair, with the outcome having far-reaching implications globally. As the nation grappled with a range of pressing issues, from the economy and healthcare to climate change and social justice, the political landscape was marked by a clash of ideologies and the continued influence of money and celebrity in the electoral process. Here are 10 fascinating facts about the 2024 US elections:

1. Historic Comeback: Former President Donald Trump became the second U.S. president, after Grover Cleveland, to serve non-consecutive terms since 1897. His comeback bid was fueled by a loyal base and a message of “America First” policies.
2. Divided Electorate: The 2024 U.S. election polls painted a picture of a deeply divided electorate, with the race for the White House too close to call. The Republican ticket of Trump and Ohio Senator JD Vance campaigned on a platform of limited government and a hardline stance on immigration, while the Democratic duo of Vice President Kamala Harris and Minnesota Governor Tim Walz put forward a progressive agenda.
3. Record Voter Turnout: The 2024 election saw unprecedented voter participation, with over 160 million Americans casting their ballots. This high level of engagement underscored the profound political polarization and the high stakes involved in the outcome.
4. Battleground States: As in previous elections, the 2024 U.S. election results hinged on the performance of the candidates in the key battleground states, such as Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania, and Wisconsin. On US election day, these states, with a combined 88 electoral votes, proved crucial in determining the overall outcome.
5. Popular Vote vs. Electoral College: The 2024 election once again highlighted the discrepancy between the popular vote and the Electoral College system. While Harris and Walz secured a narrow majority in the Electoral College, Trump received the most votes nationally, with 74 million votes (50.8%) compared to Harris’ 67 million votes (47.5%). Trump becomes the first Republican candidate to win the popular vote in 20 years.
6. Youth Voter Engagement: One of the notable trends in the 2024 election was the increased voter turnout among individuals aged 18-29, which saw an 8% increase compared to the 2020 election. This younger generation of voters played a significant role in shaping the outcome.
7. Celebrity Endorsements: High-profile figures, including musicians and actors, actively endorsed various candidates, underscoring the increasingly blurred lines between popular culture and the political sphere.
8. Campaign Expenditures: The combined spending by both campaigns exceeded $5 billion, making the 2024 election one of the most expensive in U.S. history. This further highlighted the outsized influence of wealthy donors and special interests in the electoral process.
9. Early Voting: Over 100 million votes were cast before Election Day through early and mail-in voting, accounting for more than 60% of the total votes. This trend, driven in part by the ongoing COVID-19 pandemic, reflected the evolving nature of the electoral process.
10. Midnight Voting Tradition: Dixville Notch, a small New Hampshire town, continued its tradition of being the first to vote at midnight on US Election Day, showcasing the enduring commitment to the democratic process.

These 10 fascinating facts from the 2024 U.S. elections provide a glimpse into the complex and dynamic landscape of American politics. As the nation moves forward, the key challenge will be to find ways to bridge the deep partisan divides and address the pressing issues facing the country.

The success or failure of the incoming administration in navigating these challenges will have far-reaching implications for the future of American democracy. The 2024 election has once again demonstrated the resilience and adaptability of the U.S. electoral system, as well as the enduring passions and loyalties that shape the political landscape.

As the nation looks ahead, the 2024 U.S. elections will undoubtedly be remembered as a pivotal moment in the country’s history, one that will continue to shape the course of the nation for years to come. The path forward will require a renewed commitment to bipartisanship, civic engagement and preservation of democratic norms.

As India marches towards its goal of becoming a $5 trillion economy, innovation and global connectivity in finance have become critical components of this journey. At the heart of this transformation lies the Gujarat International Finance Tec-City (GIFT City) India’s first operational International Financial Services Centre (IFSC). Launched in 2007, GIFT City is not just a hub for international finance; it represents India’s vision of becoming a leader in global finance, technology, and innovation. GIFT IFSC provides a comprehensive platform for financial activities, including banking, insurance, capital markets, FinTech, and Fund Management Entities (FMEs). Its attractive tax incentives and solid regulatory framework make it a gateway for both inbound and outbound global investments, drawing businesses and investors from around the world.

At Treelife, we are excited to present “Navigating GIFT City: A Comprehensive Guide to India’s First International Financial Services Centre (IFSC).” This guide offers insights into the current legal, tax, and regulatory framework within GIFT IFSC, highlighting the strategic advantages of establishing a presence here, with a focus on the FinTech and Fund Management sectors. Whether you’re an investor, financial institution, or corporate entity exploring opportunities, we believe this guide will be a valuable resource in navigating the exciting prospects within GIFT IFSC.

What Does GIFT City Offer?

GIFT City is positioned as a global hub for financial services, offering a range of services across banking, insurance, capital markets, FinTech, and Fund Management Entities (FMEs). By combining smart infrastructure and a favorable regulatory environment, GIFT City is becoming the go-to destination for businesses seeking ease of doing business, innovation, and access to global markets.

Here are some key takeaways from the guide:

1. Introduction to GIFT City and IFSCA

GIFT City is the epitome of India’s ambition to establish a world-class international financial center. The International Financial Services Centres Authority (IFSCA) is the primary regulatory body that oversees operations within GIFT City, ensuring a seamless and globally competitive financial environment. IFSCA’s unified framework offers businesses ease of compliance and flexibility, making it an attractive hub for both domestic and international entities.

2. Regulatory Framework for Permissible Sectors with Treelife Insights

Our guide provides an in-depth look at the regulatory landscape governing GIFT City’s key sectors, including banking, insurance, capital markets, and many more, with a special focus on FinTech, and Fund Management Entities (FMEs). Alongside Treelife insights, we highlight how the city’s regulatory framework promotes innovation, offering businesses a fertile ground for growth. 

3. Setup Process

Our guide walks you through the step-by-step setup process for entities looking to establish operations. Whether you are a startup, a financial institution, or a multinational company, guide through GIFT City’s infrastructure and compliance processes.

4. Tax Regime

One of the standout advantages of operating within GIFT City is its favorable tax regime. Businesses enjoy significant tax exemptions, including a 100% tax holiday on profits for 10 out of 15 years, exemptions on GST, and capital gains tax benefits. These incentives are designed to attract global businesses and investors, positioning GIFT City as a competitive alternative to other international financial hubs. Our guide details these tax benefits and how businesses can leverage them for maximum advantage.

Why This Guide is Essential

Our guide provides a comprehensive overview of the opportunities within GIFT City, focusing on FinTech and Fund Management sectors. It also includes a detailed analysis of the tax incentives, setup processes, and regulatory requirements that make GIFT City an attractive destination for global financial institutions.

Whether you’re an investor looking to tap into India’s expanding economy, or a business exploring new markets, this guide will serve as your roadmap to success within GIFT City.

Download the Guide

Discover how GIFT City is shaping the future of finance and how you can be part of this exciting journey. Download our guide to learn more about the opportunities, regulatory framework for the permissible sectors, incentives, and innovations that await in India’s first IFSC.

For any questions or further information, feel free to reach out to us at gift@treelife.in.

As we are witnessing NIFTY 50’s 52-week high, it’s a moment to reflect on the extraordinary journey this index has taken since its inception in 1996. Launched with an index value of 1000, NIFTY 50 has steadily grown, reaching an impressive 25,940.40 by September 2024—marking a growth of approximately 2,494%. This performance solidifies its place as a cornerstone of the Indian stock market.

A Benchmark of Indian Financial Growth

The NIFTY 50 index, short for National Stock Exchange Fifty, represents the performance of the top 50 companies listed on the NSE. It serves as a key benchmark for mutual funds, facilitates derivatives trading, and is a popular vehicle for index funds and ETFs. Over the last 28 years, it has been a testament to the robustness of the Indian economy, demonstrating the potential of long-term investment in the stock market.

A Comparison Across Asset Classes

Over the years, NIFTY 50 has outshined other traditional asset classes like gold, silver, and real estate. While these assets have held their value, particularly in times of economic volatility, NIFTY 50 has consistently delivered superior returns.

• NIFTY 50: A ₹1000 investment in NIFTY 50 in 1996 would have grown to ₹25,790.95 by 2024, reflecting a 12.31% CAGR.
• Gold: A similar investment in gold would have appreciated to ₹14,193.80, giving a 10.72% CAGR.
• Silver: Investing ₹1000 in silver in 1996 would be worth ₹12,591.89 today, with a 10.30% CAGR.
• Real Estate: A standard 9.3% CAGR would take ₹1000 to ₹10,903, reflecting real estate’s slower but steady growth in India.

These figures showcase how NIFTY 50 has not only matched but outpaced traditional safe-haven assets. While gold and silver offer reliability during economic uncertainty, they cannot compete with the compounding returns offered by the stock market.

Sectoral Shifts Reflecting India’s Growth

The sectoral composition of NIFTY 50 has evolved significantly. In 1995, Financial Services contributed just 20% of the index. Fast forward to 2024, and they now dominate with 32.6%. The rise of Information Technology, which was non-existent in 1995, grew to 20% by 2005 but has slightly reduced to 14.17% today. This shift from manufacturing and resource-based sectors to services and technology highlights India’s transformation into a modern, service-driven economy.

Resilience Through Market Challenges

NIFTY 50’s journey has not been without challenges. The index has weathered multiple crises, including the Dot-com bubble (2000-2002), Sub-prime crisis (2007-2008), Demonetization (2016), and the COVID-19 pandemic (2020). Despite these hurdles, NIFTY 50 has shown resilience, rebounding stronger each time and proving to be a robust long-term investment option.

Conclusion

As NIFTY 50 celebrates 28 years of excellence, its consistent returns and ability to outperform other asset classes make it a dominant force in India’s financial markets. For investors looking to balance risk and reward, NIFTY 50 remains a reliable choice, reflecting the strength and potential of India’s growing economy.

The Union Budget 2024 marks a significant milestone in India’s economic journey. This Budget underscores the Government’s commitment to maintaining fiscal prudence while driving substantial investments in critical sectors. Despite global economic challenges, the Indian economy has fared well, maintaining stability and growth. For 2024-25, the fiscal deficit is expected to be 4.9% of GDP, with a target to reduce it below 4.5% next year. Inflation remains low and stable, moving towards the 4 percent target, with core inflation (non-food, non-fuel) at 3.1 percent.

The theme of the Budget focuses particularly on employment, skilling, MSMEs, and the middle class. This budget outlines the roadmap to Viksit Bharat 2047 focusing on  nine priority areas to generate ample opportunities for all: productivity and resilience in agriculture, employment and skilling, inclusive human resource development and social justice, manufacturing and services, urban development, energy security, infrastructure, innovation and R&D, and next-generation reforms.

The Budget introduces several pivotal reforms aimed at simplifying tax structures, incentivizing investments, and promoting sustainable growth. The abolition of angel tax, reduction in corporate tax rates for foreign companies, and comprehensive review of the Income-tax Act, 1961 in the coming days are expected to bolster the startup ecosystem and attract international investments.

The subsequent sections of this Budget document provide an in-depth analysis and key highlights related to personal taxation, business reforms, investment opportunities, and developments in GIFT-IFSC. Personal taxation changes include revised income tax slabs, increased deductions, and adjustments in Taxes Collected at Source (TCS) and Taxes Deducted at Source (TDS) regulations. Business reforms cover the abolition of the angel tax, reduction in corporate tax rates for foreign companies, and measures to enhance ease of doing business. Investment opportunities are improved through rationalization of the capital gains tax regime, changes in holding periods and tax rates, and amendments related to buyback taxation and Securities Transaction Tax (STT) rates. GIFT-IFSC developments include tax exemptions for Retail Schemes and Exchange Traded Funds (ETFs), removal of surcharges on specified income, and other measures. These sections provide a comprehensive overview of the Union Budget 2024’s measures to support individuals, businesses, and investors, and to enhance India’s position as an attractive destination for global investment and financial activities.

The Union Budget 2024 is a balanced and forward-looking document, reflecting the Government’s resolve to steer the economy towards sustainable growth, innovation, and inclusiveness. This detailed presentation analysis aims to provide a comprehensive analysis of the Budget’’s key highlights, policy changes, and their implications for various sectors of the economy.

Overview 

Key Macroeconomic Indicators from Budget 2024 

Notes: 1. Inflation: Low, stable and moving towards the 4 per cent target, 2. Core inflation (non-food, non-fuel): 3.1 per cent

Key Policy Highlights – Budget 2024

1. Employment and Skilling

• Provides wage support and incentives for first-time employees and job creation in manufacturing, along with employer reimbursements for EPFO contributions. Expected to benefit 2.1 crore youth, 30 lakh manufacturing jobs, and incentivize 50 lakh employees.
• Internships for 1 crore youth in 500 top companies over 5 years, with INR 5,000 monthly allowance along with one-time assistance of INR 6,000. Companies eligible to cover training costs and 10% of internship costs from their CSR funds.

2. MSMEs and Manufacturing

• Credit Guarantee and Support: The Credit Guarantee Scheme facilitates term loans for machinery and equipment purchases without collateral, covering up to INR 100 crore per applicant. Additionally, a new mechanism will ensure continued bank credit to MSMEs during stress periods, supported by a Government-promoted fund.
• New Assessment Model for MSME Credit: Public sector banks to develop new credit assessment models based on digital footprints rather than traditional asset or turnover criteria.

3. Ease of Doing Business (Tax and Compliance)

• Angel Tax Abolished: Abolishment of angel tax for all classes of investors to boost the startup ecosystem and entrepreneurial spirit.
• Income Tax Reforms: Comprehensive review of the Income-tax Act, 1961 in the coming days to reduce disputes and litigation.
• Variable Capital Company (VCC) Structure: Legislative approval sought for providing an efficient and flexible mode for financing leasing of aircrafts and ships and pooled funds of private equity through a ‘variable company structure’.
• Stamp Duty Reduction: Encouraging states to moderate high stamp duty rates and consider further reductions for properties purchased by women.
• Foreign Direct Investment (FDI) and Overseas Investment: The rules and regulations for FDI and Overseas Investments will be simplified to facilitate foreign direct investments, nudge prioritization, and promote opportunities for using Indian Rupee as a currency for overseas investments.

4. Space Economy and Technology

• A venture capital fund of INR 1,000 crore to expand the space economy by five times in the next decade. 
• Full exemption of customs duties on 25 critical minerals and reduction on two others to support sectors like space, defense, and high-tech electronics.

5. Services

• Development of  Digital Public Infrastructure (DPI) applications at population scale for productivity gains, business opportunities, and innovation by the private sector. Planned areas include credit, e-commerce, education, health, law and justice, logistics, MSME services delivery, and urban governance.
• An Integrated Technology Platform will be set up to improve the outcomes under the Insolvency and Bankruptcy Code (IBC) for achieving consistency, transparency, timely processing, and better oversight for all stakeholders.

6. Others

• Urban Land Related Actions: Land records in urban areas will be digitized with Geographic information system (GIS) mapping. An IT-based system for property record administration, updating, and tax administration will be established. These will also facilitate improving the financial position of urban local bodies.

9 Pillars to Viksit Bharat 2047 and Policy Initiatives

To drive India’s growth and development, the Union Budget 2024 outlines nine strategic pillars that form the foundation for the nation’s economic agenda, aiming towards Viksit Bharat 2047. These pillars encompass key sectors and initiatives aimed at enhancing productivity, fostering innovation, and ensuring inclusive development. Each pillar is supported by targeted policy measures designed to create opportunities, boost investments, and address critical challenges. The following sections detail these pillars and the corresponding policy initiatives.

Decoding Tax in Budget 2024 

The subsequent part of this Budget document is broken down into 4 primary sections providing in-depth tax analysis including:

• Personal – Individuals including founders, team members, etc.

• Investment – Primarily taxation norms around capital gains.

• Business – Startups and other businesses.

• GIFT-IFSC – Proposed amendments for IFSC units.

These sections provide a comprehensive overview of the Union Budget 2024’s measures to support global investment and financial activities.

I. Personal

• Revision of slab rates for individuals under new tax regime

Proposed changes in personal income tax slabs for individuals (highlighted below) resulting in a tax saving of up to INR 17,500 excluding surcharge and cess under new tax regime.

Note : Full tax rebate available for taxable income upto of INR 7,00,000

Treelife Insight: 

We have prepared a tax calculator to explore potential tax savings here. 

Increase in tax deductions under new tax regime

• Standard deduction for salaried employees is proposed to be increased to INR 75,000 from
  INR 50,000.
• Cap of deduction against income from family pension for pensioners increased to INR 25,000 from INR 15,000.
• Deduction for employer’s contribution to NPS increased from 10% to 14% even for employees other than Central or State Government employees.

TCS collected from minors

TCS collected from minors can only be claimed as credit by the parent in whose income the minor’s income is clubbed. This amendment is effective from January 1, 2025.

Credit for TCS and all TDS for salaried employees

It is proposed to allow employees to club their TCS and TDS (other than salaries) for the purpose of computing TDS to be deducted from salary. 

Treelife Insight:

TCS is usually collected on foreign travel, LRS remittances, purchase of cars beyond a limit. This will help salaried employees effectively manage tax cash flows.

Income classification of rent on residential house

It has been clarified that income from letting out of a residential house to be classified under the heading “Income from house property” and not “business income”.  

Increase in limits for applicability of Black Money Act, 2015 for disclosure of foreign income and asset in the Income Tax Return (ITR)

Penal provisions under section 42 and 43 of the Black Money Act, 2015 proposed to not apply in case of non-reporting of foreign assets (other than immoveable property) with value less than
INR 20,00,000 (increased from earlier threshold of INR 5,00,000).

Quoting of Aadhaar Enrolment ID in ITRs discontinued 

Quoting of Aadhaar Enrolment ID proposed to be no longer allowed in place of Aadhaar number for ITRs filed after October 1, 2024.

II. Investment

1. Rationalization of Capital Gains Tax Regime 

Capital gains tax regime is proposed to be rationalized with effect from July 23, 2024 as summarized below:

Rationalization of Holding Period: 

Change in Tax Rates:

Long term capital assets

Notes:   

1. Exemption available under LTCG has been increased to INR 125,000.
2. No indexation benefit available for LTCG however forex fluctuation benefit available to NR on sale of unlisted shares.
3. Indexation available for unlisted shares on March 31, 2018 and sold in Offer for Sale (OFS)

Short term capital assets

Treelife Insight: 

Mandatory classification of income on sale debentures (including CCDs / NCDs)  and bonds as short term capital gains is a big move and could impact the Real Estate investors where such instruments are widely used. It will be interesting to see how such investors will react to this increase in tax rates.

Reduction in tax rates for long term capital gains on unlisted equity shares should give an impetus to PE / VC funds investing in startups as the lower tax rate will ultimately lead to an increase in the IRR for investors. 

Reducing the period of holding for immovable properties to 24 months and reducing the long term capital gains tax rate to 12.5% will be looked at positively.

2. Change in taxation of buyback 

Currently, buyback distribution tax is levied on the company at ~23% on the distributed income. It is proposed to tax the buyback proceeds in the hands of the shareholders as “dividend income” at applicable tax rates. The cost of acquisition of shares being bought back to be claimed as a capital loss (depending on holding period).

This amendment is proposed to be effective from October 1, 2024

Treelife Insight: 

This will deter companies from offering buybacks as there is a significant tax outflow for the shareholders under the proposed regime. Further there could be timing mismatch between the claiming of loss and payment of tax on buyback proceeds resulting in cash outflow for the shareholders.

3. Increase in STT rates

STT rates for futures and options proposed to be increased with effect from to be effective from October 1, 2024:

III. Business

1. Abolition of Angel Tax

Angel tax i.e. section 56(2)(viib) of the Income-tax Act, 1961 proposed to be abolished with effect from April 01, 2024

Treelife Insight:

• This is a big and welcome move for the startup ecosystem which should significantly boost investor confidence, especially foreign investors which were bought under the ambit of angel tax recently
• This amendment is prospective in nature and thus, past tax disputes to still continue
• Gift tax i.e. section 56(2)(x) for recipient of shares continues to apply
• Differential equity pricing structures will now evolve with this relief
• It may be interesting to see if investors insist on ‘merchant banker’ valuation reports under section 56 (2) (x)  in small equity fundings which materially affect startups.

2. Reduction in corporate tax rate for foreign companies

Tax rates for foreign companies proposed to be reduced from 40% to 35%.

3. Clarification for taxes withheld outside India 

It is clarified that taxes withheld outside India are to be included for the purposes of calculating total income. 

4. Increase in limit of remuneration to working partners of a firm allowed as deduction

5. Miscellaneous 

• Equalisation levy of 2% proposed to be abolished with effect from August 1, 2024 
• Vivaad Se Vishwas Scheme proposed to be introduced
• Time limit for issue of notice for initiation of re-assessment reduced from maximum 10 years from end of assessment year to 5 years and 3 months from end of assessment year.
• Insertion of section 74A , an approach that consolidates the dealing with discrepancies irrespective of fraud and simplifying the procedural aspects under the CGST Act (on recommendations of GST Council) from FY 2024-25 as under 

• Limitation period stands at 42 months (from the due date of furnishing the annual return for the financial year) for the purpose of issuance of notice (earlier it was 36 months in case of no allegation of fraud or suppression and 60 months in case of allegation of fraud or suppression)
• Time period of 12 months for purposes of passing order (beyond 42 months as aforesaid) extendable by 6 months with approval.

6. Clarificatory amendments related to TDS

Section 194-IA (TDS on sale of immovable property) – Proposed to add a proviso to clarify that the threshold limit of INR 50 lakhs is to be checked on the total value of the property and not on amount paid to each individual seller (with effect from October 1, 2024).

Excluding sums paid under section 194J from section 194C (Payments to Contractors) –Earlier, taxpayers used to deduct TDS under section 194C even if the payment was liable to TDS under section 194J because there was no specific mutually exclusive clause while defining the word “work”. It is proposed to amend the definition of “work” under section 194C to specifically exclude any sum referred to in section 194J (with effect from October 1, 2024)

7. Rationalization of TDS/TCS rates

8. Procedural changes related to TDS proposed:

1. Time limit to file belated TDS/TCS return in order to not-attract penal provisions to be reduced from 1 year to 1 month from the due date of filling of such TDS/TCS returns (Section 271H) – with effect from April 1, 2025.
2. Provision to include levy of TCS at 1% on Luxury goods of value exceeding INR 10 lakhs. (Section 206C(1F)) List of such luxury goods are yet to be notified.  – with effect from January 1, 2025
3. Exemption from prosecution if the payment of TDS is made before the due date of filing of TDS return as applicable for such TDS payments (Section 276B)  – with effect from October 1, 2024
4. Applications for Lower tax deductions / collection at source can be made in respect of TDS/TCS u/s 194Q and 206C respectively – with effect from October 1, 2024.
5. Non revision of the TDS / TCS filings post 6 years of the end of the financial year in which the returns are to be filed. – with effect from April 1, 2025.
6. Fixation of time limit for deeming an assessee in default as under –
   1. 6 years from the end of FY in which credit given / payment was made.
   2. 2 years from the end of FY in which the correction statement is filed – with effect from April 01, 2025.
7. Nil / Lower Tax rates for certain class of notified persons (Class of persons yet to be notified) – with effect from October 1, 2024.

IV. GIFT-IFSC

1. Tax exemptions extended to Retail Schemes and ETFs

Proposed to amend the definition of ‘Specified Fund’ under Section 10(4D) to  include Retail Schemes and ETFs launched in GIFT-IFSC thereby extending the beneficial tax regime applicable for CAT III AIFs to GIFT-IFSC to Retail Schemes and ETFs

Treelife Insight: 

Relevant only for Inbound Funds setup by pooling money from non-resident investors as the condition that units (other than Sponsor / Manager units) to be held by non-resident investors continues to apply.

2. No surcharge on income for Specified Fund

Surcharge rate on interest and dividend income proposed to be removed for Specified Fund set-up in GIFT-IFSC even if setup as other than Trust

3. Section 68 provisions no longer applicable to Venture Capital Funds            (VCFs)

Section 68 dealing with unexplained cash credits allows the tax officer to seek an explanation to provide the source of its funds used for making investment / offer loans to companies subject to these provisions. It is proposed to amend the definition of ‘venture capital funds’ to include VCFs in GIFT-IFSC thereby exempting them from questioning by the tax officer under section 68.

4. Finance Companies exempted from complying with ‘Thin       capitalisation’ norms

Exemption from ‘Thin Capitalisation’ norms prescribed under section 94B for Bank and NBFCs extended to Finance Companies in GIFT-IFSC

Treelife Insight:

Finance companies in GIFT-IFSC, especially those engaged in treasury functions, lending or borrowing from non-residents should benefit from the removal of the cap on the deduction for interest expenditure, which was previously limited to 30% of EBITDA for that financial year.

5. Exemption on specified income from Core Settlement Fund setup by recognised clearing corporations

Proposed to amend the definition of ‘recognised clearing corporations’ under Section 10(23EE) to  include ‘recognised clearing corporations’ setup in GIFT-IFSC, thereby, exempting any specified income of Core Settlement Guarantee Fund, set up by such corporations.

The “Navigating Labour Laws: A Comprehensive Regulatory Guide for Startups” by Treelife offers a comprehensive overview of India’s intricate labour law landscape, emphasising the significance of these compliances for startups. Rooted in the fundamental rights (specifically, the Rights to Equality; to Freedom; and against Exploitation) and the directive principles of state policy (contained in Articles 38, 39, 41, 42, and 43) enshrined in the Indian Constitution, labour laws in India are fundamentally welfare legislations, imposing significant compliance responsibility on employers as a result of a socialist outlook seeking to protect the dignity of human labour.

Given the dual role played by central and state governments in labour law, startups are oftentimes unaware of applicable compliances or are under-equipped to navigate the complex framework, lacking the deep technical understanding required. It is this gap in understanding that this Regulatory Guide attempts to bridge, with the major highlight being a quick reference guide for startups to identify critical compliances at both levels of governance.

Other key highlights include:

1. Complex Regulatory Framework: A breakdown of the multifaceted compliance environment, highlighting for instance, added layer of compliance as seen in the Industrial Employment (Standing Orders) Act, 1946, which dictates terms of employment, and the relevant state-specific Shops and Establishments Acts, which also prescribe similar conditions but with variations, necessitating detailed assessments to determine applicable compliances.
   
2. Critical Central Legislations: In order to ensure complete clarity of compliances at the central level, the Regulatory Guide highlights the critical legislations that are typically applicable across industries/sectors to startups, applicability factors, compliance requirements and penalties for violation. Notwithstanding the inconsistent enforcement in these laws, it is pertinent to note that many of these legislations prescribe imprisonment for the officer in default, as potential penalty for failure to comply.
   
3. State-Specific Regulations: Beyond central laws, startups must navigate state-specific legislations, which can provide detailed provisions governing the terms of employment and service and even tax obligations, and impose additional compliance requirements.
4. Statutory Leave Entitlements: A critical point for any startup formulating a leave policy, the Regulatory Guide provides a quick reference to the types of and minimum number of leaves that are mandated by laws. Typically, this can flow from a central legislation (like in the case of maternity benefits) or from state-specific legislations (such as each state’s Shops and Establishments Act, the mandates under which can vary from state to state).
   
5. Upcoming Labour Codes: While highlighting the structural issues in the Indian labour law framework, the Regulatory Guide also provides an overview of the proposed Labour Codes, which aim to simplify and reduce ambiguities in law enforcement across states, making it easier for startups to understand and comply with labour regulations, thereby fostering a more straightforward regulatory environment conducive to business operations and growth. The Indian government is consolidating existing the labour laws into four new codes:
   i) Code on Wages
   ii) Occupational Safety, Health and Working Conditions Code
   iii) Social Security Code
   iv) Industrial Relations Code 
6. Challenges and Recommendations: In addition to navigating the two-level governance required, the Regulatory Guide also identifies some critical challenges faced by startups in complying with the applicable labour laws which include:
   i) Lack of technical expertise to understand the critical distinctions in certain legally defined terms, such as “workman” and “employee” which have similar meaning outside of the legal parlance, but which can have varying definitions across laws, affecting the applicability of protections and remedies. 
   ii) Requirement for proactive compliance, which can help startups avoid legal pitfalls but which may result in increased compliance costs.

The Labour Law Handbook by Treelife is an essential guide for businesses navigating India’s complex labour law framework. Tailored for startups and growth-focused enterprises, this report simplifies intricate compliance requirements, offering actionable insights into central and state-specific regulations, statutory obligations, and upcoming labour code reforms. With detailed explanations of critical laws, practical compliance checklists, and expert recommendations, this handbook empowers businesses to mitigate legal risks, ensure workforce welfare, and operate confidently in a dynamic regulatory environment.

India’s Space Technology Sector: An Industry Overview

The Indian space sector is currently undergoing a significant transformation, driven by increased private sector participation and substantial government support. With over 523 private companies and research institutions now actively contributing, India’s space economy is projected to reach $44 billion by 2033, capturing nearly 10% of the global market. This manual aims to provide comprehensive insights into the industry overview, investment landscape, legal considerations, tax incentives, and intellectual property rights essential for stakeholders in the space tech ecosystem.

Government Initiatives and Investment Landscape

The government has allocated nearly $1.6 billion for the Department of Space (DoS), which oversees the Indian Space Research Organisation (ISRO) and other space-related activities. Since 2014, there has been a notable increase in private investments, particularly in satellite manufacturing and launch services, amounting to $233 million across more than 30 deals by July 2023.

Key Participants and Activities

The Indian spacetech ecosystem comprises a mix of public and private entities working collaboratively to advance the country’s space capabilities. Key activities include:

• Satellite manufacturing
• Launch services
• Space research
• Space-based applications
• Space exploration
• Space debris management
• Commercial spaceflight
• Development of space law and policy

Regulatory Framework

India’s space sector operates under a comprehensive legal and regulatory framework designed to promote innovation and facilitate private sector participation.

Key regulatory bodies and agencies include:

• Department of Space (DoS)
• Indian Space Research Organisation (ISRO)
• Indian National Space Promotion and Authorization Center (IN-SPACe)
• NewSpace India Limited (NSIL)
• Antrix Corporation Limited (ACL)

Foreign Direct Investment (FDI) Policy

The existing FDI policy allows up to 100% foreign investment in satellite establishment and operation through the government route. Proposed amendments aim to further liberalize the sector, but gaps and ambiguities remain, particularly regarding compliance with sectoral guidelines and definitions of key terms.

Tax Incentives and Government Schemes

To encourage private participation, several tax measures have been implemented, including GST exemptions for satellite launch services and income tax exemptions for R&D expenditures. Key government schemes supporting the sector include:

• Startup India Seed Fund Scheme
• Technology Development Fund under DRDO
• iDEX (Innovations for Defence Excellence)
• Atal Innovation Mission (AIM)

GIFT City IFSC: A Gateway to Global Markets

GIFT City (Gujarat International Finance Tec-City) provides a favorable regulatory environment, cutting-edge infrastructure, and a robust ecosystem for space tech companies. It facilitates funding, international collaboration, and regulatory support, making it an ideal gateway for scaling operations and innovation.

Anticipated Developments

The Indian space tech sector is poised for significant growth, driven by increased FDI, public-private partnerships, advanced technologies, and upcoming incentives. The development of reusable launch vehicles and the Gaganyaan mission, slated for 2025, are set to showcase India’s capabilities and bolster its position in the global space community.

Conclusion

India’s space technology sector is at a pivotal moment, characterized by unprecedented growth, innovation, and collaboration. This report serves as a comprehensive guide for industry players, investors, policymakers, and legal professionals navigating the landscape of India’s space tech ecosystem. The combined efforts of public and private entities are driving the sector’s ascent, positioning India as a major player in the global space economy.

Report Highlights

Shark Tank India, the Indian adaptation of the globally renowned business reality show, has taken the nation by storm. Since its debut in December 2021, the show has become a hot topic for entrepreneurs, investors, and viewers alike. But has it truly lived up to the hype?

The show boasts a panel of cutthroat investors (Sharks) like Ashneer Grover, Namita Thapar, Peyush Bansal, Aman Gupta, and Vineeta Singh, all business tycoons (Sharks) in their own right. The high-stakes environment and candid deal negotiations (pitches) have captivated audiences, with each season witnessing a surge in venture capitalist (VC) activity and startup funding. Data suggests that over INR 100 crore was invested across the first two seasons, propelling many innovative direct-to-consumer (D2C) brands and social enterprises into the limelight.

However, Shark Tank India has also faced its share of criticism. Some argue that the emotional appeals employed by contestants overshadow the business fundamentals. Others point out that securing a deal on the show doesn’t guarantee long-term success. While many funded startups have witnessed a post-show funding boost, a significant number haven’t been able to translate the television exposure into sustainable growth.

Despite the debate, Shark Tank India undeniably democratized entrepreneurship in India. It has ignited a startup revolution, inspiring millions to chase their business dreams. Whether it’s a funding platform or simply a launchpad for publicity, Shark Tank India has undoubtedly disrupted the entrepreneurial landscape in the country.

Report Highlights

Power Play: A Regulatory Guide for Indian Gaming Companies

India’s gaming industry is on the brink of a monumental transformation, evolving from a budding market to a global leader. With over 500 gaming studios now operational, the country is at the forefront of innovation and creativity in the gaming world. The country boasts a substantial gaming community, comprising 568 million gamers, out of which 25% are paying users. Industry analysts predict a future even brighter, forecasting the Indian gaming industry to surpass $3.9 billion by 2025. This phenomenal growth signals a golden era for aspiring entrepreneurs and gaming enthusiasts.

The Indian Gaming Industry: A Snapshot of Facts

As India’s gaming industry navigates through a phase of exponential growth and regulatory evolution, several key facts highlight its current status and forecast its future trajectory.

1. India is the second-largest gaming market worldwide with a staggering 568 million gamers out of which 25% are paying users. 
2. The segment has attracted consistent investments totaling INR 22,931 crore between FY20 and FY24 YTD from both domestic and foreign investors.
3. The sector has grown at a CAGR of 28%, reaching INR 16,428 crore in FY23, and is expected to reach INR 33,243 crore by FY28.
4. The Indian gaming industry is expected to surpass $8.6 billion by 2027 (according to EY and FICCI).
5. India has produced three gaming unicorns: Dream11, Mobile Premier League, and Games24x7. Furthermore, it directly and indirectly employs around one lakh individuals, with the prospect of expanding to 250,000 job opportunities by 2025.

Diving Into the Ecosystem

At the heart of this revolution are game developers, gaming platforms, esports ventures, RMG (Real Money Gaming) companies, and blockchain gaming innovators. Each segment contributes uniquely to the vibrancy and diversity of India’s gaming landscape.

Navigating Success in India’s Gaming Industry

To thrive in this booming ecosystem, understanding the legal and regulatory frameworks is crucial. The distinction between “games of skill” and “games of chance” forms the legal cornerstone. Moreover, the implementation of the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules 2023 marks a pivotal shift, introducing a regulatory framework tailored for online gaming companies.

Innovation at the Forefront

Protecting innovation is paramount in the competitive gaming industry. Intellectual Property Rights (IPR) serve as the foundation for safeguarding game developers’ creativity and originality, covering everything from trademarks and copyrights to patents and designs. This protective measure ensures companies can maintain their competitive edge and continue to push the boundaries of creativity.

The Road Ahead

Despite facing regulatory challenges and the intricacies of GST and taxation, India’s gaming industry stands on the precipice of a new dawn. The sector’s ability to navigate these hurdles while harnessing its vast potential will shape its trajectory in the years to come. With the promise of increased FDI, job creation, and continued technological innovation, the future of gaming in India shines brightly.

Explore the Full Report

For those looking to dive deeper into the intricacies and opportunities within India’s gaming industry, our comprehensive report, “Power Play: A Regulatory Guide for Indian Gaming Companies” offers an invaluable resource on investment landscape, market size and opportunity,  landmark happenings, legal and regulatory framework, compliance essentials and IPR, taxation and anticipated developments. The report equips readers with the knowledge needed to navigate entrepreneurs and enthusiasts in India’s vibrant gaming ecosystem.

Regulators position – primary breach of S 42 (Issue of Shares on Private Placement basis) of CA, 2013

Extract of S 42(7) of the CA, 2013: “(7) No company issuing securities under this section shall release any public advertisements or utilize any media, marketing or distribution channels or agents to inform the public at large about such an issue.”

“S 42 of the Act clearly provides that the private placement shall be made to a select group of persons who have been identified by the Board. The number of such persons cannot exceed 200 (prescribed in the rules). The Explanation I. to S 42(3) makes it very clear that the process of “private placement” covers:
• the offer or
• invitation to subscribe or
• issue of

securities to a select group of persons by a company (other than by way of public offer) through private placement offer-cum-application, which satisfies the conditions specified in the section.

”In summary – the concept of the term ‘private placement’ stands for the fact that the company is identifying a certain set of parties to whom it wants to offer its securities rather than making any kind of public offer which generally happens in the case of listed companies. Private is construed as 200 people.

TYKE + Company’s position

“Tyke provides value added services in the form of facilitation of connecting like-minded people. Community with start-ups. Tyke also provides the verification of KYC, identification of KYC of people who have shown interest to invest in the company.”

“The Companies have only availed the value added services (VAS) which is provided by the Tyke platform.”

In summary – Tyke calls itself like a ‘community of like minded people and startups’ where the startup is leveraging on the community to raise investments and TYKE acts as a facilitator for the investment once the proposed investor and startup agree.

Our thoughts!

In the era of Shark Tank, every individual aspires to be a ‘shark’ and wants to participate in the startup ecosystem and ride the wave. TYKE serves as a great platform to provide access to both startups and retail investors for raising money and to invest money in startups respectively. In the USA, for example, this is considered as a high risk asset class and hence there are restrictions on the annual investment amount for regular investors other than ‘accredited investor’. Keeping this in mind, in the current scenario, despite all the explanations given by Tyke and the Company, the regulator primarily points out to the intent of the law where private placement (fundraise) cannot be published in open markets to solicit any investments through communities, etc