Budget Overhauls Exit Rules, Ola Starts Shakti Deliveries, and Bharat AI Solves Rural Crisis

Union Budget 2026 quietly blew up one of the ecosystem’s most reliable exit routes. By reclassifying share buybacks as capital gains and shifting the tax burden directly onto shareholders, the government has closed a loophole that had existed for over a decade. What looks like a technical tax tweak is, in reality, a structural intervention in how founders, investors, and employees get paid.

For years, buybacks were the ecosystem’s pressure valve. When IPOs were distant and acquisitions uncertain, founders used company-led buybacks to give early investors and ESOP holders partial liquidity. Budget 2026 makes that path materially more expensive. Promoters now face effective tax rates of 22–30% on buybacks, while secondary sales continue to be taxed at 12.5% long-term capital gains. The message is blunt: sell to another investor, not to your own company.

This has created an immediate wedge between intent and incentive. Founders who promised buyback windows to early employees as retention tools are now discovering that those promises carry a 20 percentage point tax penalty. For ESOP holders, the damage is psychological as much as financial. What was positioned as deferred reward now feels like deferred loss. In a market where Global Capability Centres are aggressively hiring senior engineers with cash-heavy packages, this credibility hit matters. Talent is mobile. Trust is not.

The ecosystem-level consequence is a sharp pivot toward secondaries. Instead of waiting for IPO readiness, late-stage startups are increasingly using secondary rounds to provide liquidity to early investors and founders. Sovereign wealth funds, private equity firms, and dedicated secondary funds are stepping in as buyers of mature equity. This is not a stopgap. It is becoming the dominant exit route. Secondary markets, once seen as messy and opaque, are now the cleanest option on the tax sheet.

The reform also redraws the power balance between venture capital and private equity. VCs traditionally relied on buybacks and IPOs to bridge liquidity gaps in older portfolios. Private equity prefers secondaries and control transactions by design. Budget 2026 aligns the tax code with PE’s natural behavior. The winners are firms that buy large minority or control stakes in profitable or near-profitable companies and hold them for structured exits. The losers are mid-stage startups that are neither acquisition-ready nor IPO-ready, now trapped between expensive buybacks and valuation-sensitive secondaries.

Globally, the contrast is stark. In the United States, founders can use Qualified Small Business Stock exemptions to eliminate or sharply reduce capital gains tax. In Singapore, capital gains are not taxed at all. India has chosen a different path: extract revenue at the moment of realization. From a fiscal standpoint, this is defensible. From an ecosystem standpoint, it creates a powerful incentive to shift holding structures overseas. The “reverse flip” to Singapore becomes not a loophole, but a rational response.

The government’s stated goal is revenue neutrality and minority shareholder protection. Its unstated objective is to tap into the wealth created by the post-2024 startup rebound. But policy rarely lands where it is aimed. The real impact of this reform is behavioral. Founders will redesign ESOP programs around secondary windows. VCs will plan exits earlier. PE will consolidate control later. And employees will learn that equity liquidity is no longer something the company can guarantee.

India has not killed exits. It has re-priced them. The buyback trap is not about taxation alone. It is about who controls liquidity, when it arrives, and who pays for it. That may sound like accounting. In reality, it is about power - between founders and talent, VCs and PE, and startups and the state.

Let’s go through what else is happening in Indian startup world - Grab your simmering cup of StartupChai.in and unwind with our hand-brewed memes.

“Dharti Maa Shakti De”: Ola Electric begins deliveries of residential storage system, secures certification for smaller unit

Ola Electric has started deliveries of its Shakti residential battery system, rolling out the 6kW/9.1kWh model in Bengaluru as what it claims is India’s first domestically engineered home energy storage solution.

Built on in-house 4680 Bharat Cells, the company has also secured certification for a smaller unit, with a nationwide expansion planned next.

Read more here

“AI Ki Shakti Dhoom Machaye”: Bharat Intelligence uses AI to solve farm labor crisis in Maharashtra’s villages

Bharat Intelligence is deploying AI to address acute farm labor shortages across Maharashtra’s villages by rethinking how agricultural work is discovered, allocated, and managed at scale.

Founded by Azhaan Merchant after studying horticulture value chains in rural Maharashtra, the startup emerged from the insight that mechanization alone was neither affordable nor practical for small farmers.

Read more here

“Hum Saath Saath Hai”: Govt, RBI In Talks With Ant International To Link Alipay+ With UPI

The government and Reserve Bank of India are in discussions with Ant International to link Alipay+ with Unified Payments Interface, a move that could allow Indian tourists to use UPI at overseas merchants on the Alipay+ network.

Spun off from Ant Group in 2024 and headquartered in Singapore, Ant International claims its platform connects 1.8 Bn users with over 150 Mn merchants worldwide, potentially extending UPI’s global footprint.

Read more here