🗞️ Recent Regulatory Developments

1. SEBI eases ESOP norms for founders and investors

SEBI now allows startup founders to retain ESOPs even after IPO, and has simplified rules for existing investors in offer-for-sale components—removing key hurdles for IPO-bound startups like PhonePe, Zepto, Pine Labs, and Razorpay.

Industry reaction: Founders describe it as “much-needed relief” that smooths the post-IPO transition and helps retain talent.

2. Budget 2025 boosts startup incentives

Startup India 3.0 launched: includes a larger Fund of Funds, single-window recognition portal, and support for deep‑tech, AI, agritech, and climate tech.

Extended tax breaks: Startups can now apply for income-tax holiday under Section 80‑IAC for three out of ten years if incorporated before April 1, 2030—up from the earlier 2025 cutoff.

Dual recognition allows startups to register under both Startup India and MSME schemes, unlocking additional benefits such as collateral-free loans, procurement preference, and GST refunds.

The Budget also established a ₹10,000 cr Fund of Funds, deep-tech financing (~₹20,000 cr), expanded credit guarantees, and new central schemes for women and SC/ST entrepreneurs.

3. Simplified registration & self‑certification

New DPIIT portal now enables end-to-end online Startup India recognition, with approvals in just 5 working days, no incubator endorsements required, and eligibility extended to 12-year-old firms with turnover up to ₹150 crore.

DPIIT-recognized startups can self-certify compliance for six labour and three environmental laws, reducing audit pressures in early years.

4. Reforms on inbound IPO process

Process for “reverse-flip” of foreign-based startups has been significantly accelerated—from 12–18 months to roughly 3–4 months—by scrapping NCLT approvals.

Major startups like Zepto are now finalizing their reverse flip to return and list in India.

5. Calls for broader reform

Startup veteran Mohandas Pai flagged the lack of domestic capital and urged structural policy reforms with stronger R&D support.

Zoho’s Sridhar Vembu advocated further simplification—especially around GST, licensing, and bank access, cautioning against state funding bias.

🧭 Why This Matters

• Smooth IPO path: Enhancements to ESOP rules and reverse-flip process help founders and increase the domestic listing pipeline.
• Boost to funding & liquidity: Bigger funds, tax breaks, and credit guarantees lower entry barriers.
• Less red tape: Digitized registrations and self-certification lighten early-stage compliance.
• Entrepreneurial push: Extending recognition periods and expanding incentives support more founders across India.

Overall, India’s policy landscape for startups is rapidly evolving—embracing deeper digital processes, tax incentives, capital flow, and regulatory ease, while still facing calls for stronger domestic investment infrastructure.

By
Team Anbac Advisors