India Pre-Budget 2025: Digital Asset Community Seeks Favorable Regulatory Framework

Indian Finance Minister Nirmala Sitharaman will present the Union Budget for the 2025-26 fiscal year on February 1, 2025.

India’s digital asset community is pinning its hopes on the upcoming Union Budget 2025, anticipating favorable regulatory changes that will breathe new life into the once-thriving crypto markets. The current policy landscape, marked by a 30% tax on profits and a 1% Tax Deducted at Source (TDS) on transactions, has dampened digital currency markets and pushed traders to offshore platforms, reducing liquidity and momentum.

This year’s budget holds special significance as India’s digital asset exchanges are likely looking at consolidation in 2025, with smaller exchanges either shutting down operations or merging with larger ones due to the country’s punishing taxation regime.

“The Union Budget 2025 is on the horizon, and India’s cryptocurrency community is holding its breath, eagerly awaiting a glimmer of hope in the regulatory framework. The current policy landscape has cast a pall over the once-thriving crypto markets,” Raj Kapoor, founder of India Blockchain Alliance (IBA), told CoinGeek.

Making digital currencies an allowable asset class, like stocks or bonds, with provisions for loss offsets and carry-forward mechanisms, could restore liquidity, attract global players, and strengthen India’s role in the blockchain space, industry leaders say.

“The Web3 ecosystem, with its decentralized platforms and applications, holds transformative potential for India’s digital economy. However, its growth has been impeded by existing tax structures and regulatory ambiguities,” pointed out Amit Kumar Gupta, a legal practitioner at the Supreme Court of India.

“Clear and progressive regulatory frameworks are essential to foster growth in the Web3 space. Providing explicit guidelines can reduce uncertainty, encourage compliance, and attract both domestic and international investments,” Gupta told CoinGeek.

India is expected to lose $1.2 trillion in trade volume on domestic digital asset exchanges in the coming years, according to the Esya Centre, an Indian policy think tank. The study also highlights that harsh tax measures have driven $3.85 billion to foreign digital asset trading platforms as traders seek to avoid the heavy tax burden in India.

With global innovation hubs on the rise, India risks falling behind if it maintains its cautious approach. The question remains: Will the government embrace bold reforms in this year’s Budget, or will it continue with slow, incremental changes for the Web3 industry?

“It’s high time to adopt a clean mix of policies that seamlessly integrate visionary regulation with bold incentives. Regulatory clarity is the foundation of innovation…opaque policies breed fear, but clear, comprehensive frameworks that define legal boundaries for cryptocurrencies, tokenized assets, and decentralized finance (DeFi) will bring in a new world of innovation,” Kapoor said.

“As blockchain transforms industries from finance to logistics, those that embrace its potential today will wield the competitive edge tomorrow. It’s not just about keeping pace with change—it’s about leading the charge and reshaping the rules of global commerce,” Kapoor added.

Nasscom, India’s top IT industry association, has urged reforms in this budget to bolster the nation’s IT and startup sectors.

“We have requested to implement a range of ease of doing measures to significantly boost competitiveness for IT-BPM (business process management), e-commerce and startups. These measures should boost efficiency for the broader industry,” Nasscom said.

The industry body has proposed the establishment of a central DeepTech fund and creating a grant framework to support the DeepTech ecosystem. It also recommends providing equity funding for early-stage DeepTech startups through a dedicated fund.

Nasscom highlights that DeepTech startups are at the forefront of innovation, utilizing advancements in science and engineering to address complex, real-world challenges. These startups focus on technologies such as artificial intelligence, the Internet of Things (IoT), blockchain, quantum computing, advanced materials, biotechnology, and more.

India is home to over 3,600 DeepTech startups, which make up about 12 percent of the country’s total startup ecosystem, according to Nasscom.

“The emergence of 211 new healthcare startups and the adoption of artificial intelligence and machine learning by 4,000 startups have driven a remarkable 28.03% growth in health-tech investments over the past year,” Harshit Jain, founder and global chief executive of Doceree, said in an emailed statement.

“This momentum underscores the need for the upcoming Budget to focus on expanding India’s health-tech startup ecosystem through substantial tax relief and targeted incentives to empower practicing and aspiring healthcare entrepreneurs to further amplify the benefits of ongoing government initiatives for healthcare like the Ayushman Bharat Digital Mission,” Jain added.

Doceree uses AI, machine learning, and behavioral science to create a connected healthcare ecosystem.

Additionally, prioritizing the creation of a dedicated financial pool for technology-driven solutions is essential to accelerate drug research and development, improve patient outcomes, and lower clinical trial costs. According to Jain, allocating resources for healthcare data management to enhance digital adoption across the sector can pave the way