Startups call for unlocking risk capital, tax breaks amid H1B concerns

Startups call for unlocking risk capital, tax breaks amid H1B concerns

India’s startup ecosystem continues to struggle with a shortage of risk capital even as the government rolls out reforms in taxation and industrial policy. Founders and investors sought from the Centre targeted tax breaks to unlock new pools of capital and frame policies that will allow startups to compete globally at a time of shifting talent and trade dynamics.
At a panel discussion on September 22 at Network 18 Reforms Reloaded event, Archana Jahagirdar, Founder and Managing Partner of Rukam Capital, said the startup winter was far from over and early-stage ventures remain undercapitalised. “Startups are undercapitalised in risk capital,” she said, adding that sovereign wealth fund support and tax incentives are needed.
“If we unlock enough risk capital then the H1B visa issue will be a boon,” she noted, emphasising that India must “unshackle risk capital quickly.” Jahagirdar also stressed that “some tax breaks for risk capital will be extremely important.”
H1B visa concerns

The recent hike in H1B visa fees in the United States was seen by founders as both a challenge and an opportunity for India. “The H1B visa issue has sent out a strong message of self-reliance,” said Anshoo Sharma, Founder and CEO of Magicpin.
Echoing this sentiment, Ankit Gupta, CEO of Offline, PhysicsWallah, described it as “a blessing in disguise.” Ritesh Malik, Founder of Innov8, added that “we will see deep tech companies thriving once the H1B visa issue brings talent back.”

Earlier this month, the United States announced a sharp increase in H1B visa application fees, with the hike set to take effect from 2026. While the change is expected to raise costs for American and Indian IT firms that rely on skilled workers, Indian entrepreneurs believe it could redirect talent and innovation back to India.

GST reforms

While startups see potential in India’s evolving policy landscape, founders also pointed to gaps in taxation. Malik noted that “hotels with below Rs 7,500 room rent will be increasing their prices as they will not get GST input tax credit.”
Gupta argued that the education sector is being left behind. “For the education industry we need better reforms as GST is still at 18 per cent,” he said, adding that there was a need for “central guidelines for coaching institutes, as it varies in states.”

On the domestic front, the Goods and Services Tax (GST) Council in its 56th meeting approved wide-ranging reforms to simplify the structure into two slabs of 5 percent and 18 percent. Essential household goods, life-saving medicines and certain food items have moved into lower tax categories. However, several sectors such as education and hospitality continue to face anomalies, with input tax credit restrictions and higher rates limiting the benefits of the reform.
At the same time, entrepreneurs highlighted positive shifts. Sharma said, “This is the best time for startups to build with a thriving public market,” and credited government efforts in green technology.