Dr. Ajai Chowdhry, Founder of HCL and Chairman of EPIC Foundation, says India is at a decisive moment in its ambition to emerge as a global innovation hub, and policy reforms in the upcoming Budget could significantly shape the future of the startup ecosystem.

He highlighted that the current ESOP (Employee Stock Option Plans) taxation structure in India is a major concern. Unlike mature startup ecosystems, India follows a dual taxation model—taxing employees at the time of exercising ESOPs and again at the time of sale. This, he noted, creates unnecessary friction and is driving startups and founders to relocate offshore. Chowdhry expressed hope that the government would introduce a simplified ESOP taxation regime for startups, calling it critical for attracting and retaining talent and sustaining long-term growth.

Chowdhry also emphasized the transformative role of government procurement in scaling startups. Despite an annual government spend of nearly ₹37 lakh crore, less than 1% reaches innovative startups. He cited the success of the iDEX initiative, which has engaged with over 400 startups and is running 74 active projects with the Indian Army alone, demonstrating how structured procurement combined with funding can accelerate startup growth by up to 10 times.

He pointed out that many other ministries still operate fragmented schemes without direct startup engagement. Chowdhry urged the government to create a Cross-Ministry Startup Procurement Framework and replicate the iDEX model across ministries to unlock innovation aligned with critical national needs and ensure sustained startup growth.