New Delhi: As Finance Minister Nirmala Sitharaman prepares to present the Union Budget for FY25-26 on 1 February, stakeholders from the fintech sector are abuzz with expectations.
This budget is seen as a critical opportunity for the government to address key economic and policy challenges while propelling growth and innovation in one of India’s fastest-growing industries.
A Continued Focus on Employment and MSMEs
Ameet Venkeshwar, Chief Business Officer at LoanTap, highlighted the government’s consistent emphasis on employment generation and skill development in recent budgets. He anticipates that this positive momentum will continue, with the budget FY25-26 offering targeted measures to foster innovation, inclusion, and growth in the fintech sector. Venkeshwar noted that the government’s strides in promoting digital payments and financial inclusion could be amplified this year.
“Credit to the MSME sector saw promising growth in Q2 2025, with micro and small enterprises increasing by 13.4 per cent and medium enterprises by 20.5 per cent,” he said. This could encourage the government to introduce new investment opportunities and policies for MSME expansion. Special incentives for non-banking financial companies (NBFCs), focusing on MSMEs, small borrowers, and environment-friendly assets like electric vehicles, are also expected.
Balancing Growth with Fiscal Prudence
Gaurav Goel, Founder of Fynocrat Technologies, outlined a detailed macroeconomic outlook for the upcoming budget FY25-26. He expects the government to balance growth with fiscal discipline by continuing capital expenditure on infrastructure projects, which would stimulate job creation and economic expansion. Policies supporting manufacturing and exports are also anticipated to keep India competitive in global markets.
Goel predicts incremental changes in income tax slabs and further expansion of the simplified tax regime to ease compliance and provide relief to the middle class. “Incentives for startups and small businesses in the form of tax rebates and exemptions could boost entrepreneurship,” he added. However, he does not expect drastic fiscal deficit cuts or major tax hikes, given the election-year pressures.
Strengthening Fintech Infrastructure
Anu Tiwari, Partner and Head of Fintech at Cyril Amarchand Mangaldas, highlighted the need for fintech-specific government guidance funds, unified licensing frameworks, and incentives for exporting India’s fintech capabilities globally. “A focused plan to create Indian and eventually global fintech heavyweights could redefine the industry,” Tiwari said.
Akshat Pande, Managing Partner at Alpha Partners, emphasized the immense potential of the fintech industry, which encompasses payment systems, neobanking, blockchain, and embedded finance. He urged the government to rationalize regulatory requirements and consider setting up fintech hubs with subsidized land, lower taxes, and seamless compliance frameworks.
“Integration of data sources and open banking APIs will enhance credit assessments and pave the way for ‘OneKYC’,” Pande noted, adding that reduced stamp duty on fintech share transfers could facilitate capital raises and secondary exits.
Boosting Digital Payments and Cybersecurity
Kritika Seth, Founding Partner at The Victoriam Legalis, called for increased budgetary allocations to support digital payments and fintech ecosystems. “Given the greater dependency on technology post-COVID, the budget must prioritize robust policies to improve the ease of doing business standards and user experience within the sector,” she explained.
Seth also stressed the importance of allocating funds for infrastructural and human resource development in law enforcement to counter cyber fraud and digital scams. “Building a fool-proof digital infrastructure requires significant incubation, and the government must continue to nurture this nascent sector,” she said.
Advancing 5G and Open Banking Frameworks
Alay Razvi, Managing Partner at Accord Juris, believes the fintech sector will serve as a catalyst for growth and innovation in FY25-26. He expects the government to prioritize digital infrastructure, particularly expanding 5G connectivity and fostering open banking frameworks.
“Tax breaks and grants for AI-driven fintech solutions, blockchain, and cybersecurity tools could drive technological advancements and attract global investments,” Razvi added.
Fintech and MSMEs: A Symbiotic Growth Path
The fintech sector’s role in supporting MSMEs was a recurring theme among experts. Easier access to credit through government-backed schemes, tax incentives for startups, and simplified regulatory frameworks were highlighted as critical measures. These initiatives would not only boost entrepreneurship but also strengthen the backbone of India’s economy.
The Union Budget 2025-26 is expected to address the fintech sector’s immediate needs while laying the groundwork for long-term growth. Tax relief for the middle class, incentives for MSMEs and startups, and robust digital infrastructure development are likely to dominate the agenda. At the same time, major overhauls in defence spending, universal healthcare, or wealth tax implementation may remain off the table due to fiscal constraints.
As the industry waits for 1 February, the spotlight remains on how the government balances economic growth with election-year sensitivities and the ambitious vision for India’s fintech landscape.
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