India’s startup ecosystem is governed by a chaotic patchwork of 73 central laws, 412 state acts, and 1,500+ compliances. A simple deep-tech founder today juggles the Companies Act, IT Act, FDI Policy, IPR laws, labour codes, GST, Shops & Establishment, FSSAI, BIS, DGCA, CDSCO, AERB, and dozens of state-specific rules, often with contradictory clauses and overlapping regulators. The average early-stage startup spends 22% of its runway on compliance instead of customers. This regulatory cholesterol is the single biggest reason India remains stuck at 0.64% GDP on R&D, 15% patent commercialisation, and 90% five-year failure rate while Israel (one law, one portal) boasts 8× higher deep-tech density and 60% survival.

The cost is no longer abstract. In 2025 alone, 41% of hardware, drone, and biotech founders incorporated overseas because domestic regulatory timelines exceeded their runway. Log9 Materials flipped to Singapore for battery certifications, Aereo moved drone operations to the US after 14-month DGCA delays, and at least 200 deep-tech startups are now “Silicon Valley on paper, India in heart”. Every flipped startup is a lost $100-500 crore future valuation and thousands of high-skill jobs.

A Unified Startup Act (USA) is not another scheme; it is a complete regulatory reset. One law, one portal, one 48-hour timeline for every approval an early-stage company needs. Modelled on Estonia’s e-Residency and Israel’s Innovation Authority law, it would create a single legal identity: “Startup Enterprise” with the following non-negotiable features:

Single Registration = Single Number
One 5-minute registration on a new StartupOS portal grants automatic DPIIT recognition, GSTIN, PAN, labour exemptions, and ESOP tax deferment. No separate applications ever.
Deemed Approval in 48 Hours
Every licence, NOC, or certification (drone, biotech import, BIS, FSSAI, FEMA ODI, angel tax exemption) is deemed approved if no response within 48 hours. No exceptions, no escalations, no bribes.
10-Year Regulatory Holiday
Startups under ₹500 crore revenue get blanket exemption from 90% of compliance burdens: no inspections, no prior approvals for layoffs under 100 employees, no angel tax, automatic fast-track IPR examination (6 months vs. 36), and self-certification for labour & environment norms.
One National Sandbox
Single window for testing drones, gene editing, new battery chemistries, and autonomous vehicles across India instead of 28 separate state sandboxes with conflicting rules.
Unified Funding & Procurement Law
Mandates 5% of every government and PSU capex (₹6 lakh crore annually) to be reserved for Startup Enterprises with simplified tendering. SISFS, credit guarantee, and Fund of Funds routed through one click.
Exit & ESOP Simplification
Automatic FEMA compliance for secondary sales, no lock-in for ESOP taxation until liquidity event, and fast-track merger approvals under 30 days.

A single act would instantly slash compliance cost from ₹12-18 lakh per year to under ₹50,000, free 5 million founder-hours annually, and make India the easiest place on earth to start and scale deep tech, climate tech, and hardware ventures. N n 2035, McKinsey estimates a friction-free startup ecosystem could add $4.8-5.2 trillion to GDP, create 110 million jobs, and produce 1,000 unicorns instead of today’s 112.

The alternative is grim: continued fragmentation, continued flips, continued mediocrity. China has one civil code and one mission-driven deep-tech law. The US has the JOBS Act and SBIR. Israel has the Innovation Authority Law. India has 73 laws and zero coherence.

One nation, one ecosystem, one law.
Pass the Unified Startup Act in the 2026 Budget session, or watch the $5 trillion innovation explosion detonate somewhere else.
The choice is now.

Last Updated on Friday, November 21, 2025 5:41 pm by Entrepreneur Edge Team https://entrepreneuredge.in/