Union Budget 2026 wishlist: Co-working firms seek asset-class status and institutional funding
With flexible office demand reaching a new post-pandemic peak, the co-working sector is seeking targeted policy support in the Union Budget 2026. Industry leaders are calling for a clear and consistent policy framework, sustained infrastructure investment, and formal recognition of flexible workspaces as a distinct asset class. They also emphasise the need for easier access to institutional financing and explicit policy recognition of flex offices as core business infrastructure.
India’s flexible workspace market is projected to expand to $9–10 billion by 2028, nearly tripling from the current $3–4 billion, fuelled largely by the rapid growth of Global Capability Centres (GCCs), a recent industry report shows.
According to Utkarsh Kawatra, CEO and co-founder of MyHQ by Anarock, the demand for co-working spaces is being reshaped by improved connectivity, new micro-markets along transit corridors, and the steady expansion of companies into Tier-2 cities, often starting small before committing to long leases.
Amal Mishra, CEO of UrbanVault, said flexible offices have become essential to India’s evolving work culture and require support for digital infrastructure, energy-efficient fit-outs, and smart-building integration to scale sustainably.
Also Read: India’s flex office space segment likely to touch $9–10 billion by 2028, driven by GCC demand: Report
Incentives to boost Tier-2 and 3 cities expansion
Industry stakeholders also point out that regulatory compliance remains a major barrier to the expansion of co-working centres in Tier-2 and Tier-3 cities.
Sanjay Chatrath, co-founder and managing partner of Incuspaze, noted that accelerating co-working penetration in Tier 2 and Tier 3 locations will require a calibrated blend of fiscal incentives and targeted policy interventions.
He argued that capital subsidies or viability gap funding for flex-office centres in priority districts can significantly de-risk early-stage investments, particularly in emerging startup corridors and nascent GCC hubs where operators face higher gestation periods.
“Outcome-linked incentives tied to employment generation, local hiring, ESG compliance, and digital skilling would encourage operators to expand beyond metros while aligning with national goals such as inclusive growth and urban decentralisation,” he said.
Experts also point out that integrating shared office infrastructure into state-level startup policies, IT/ITES promotion programmes, and smart city missions could help create sustained anchor demand from startups, SMEs, and global capability centres seeking cost-efficient, plug-and-play office environments.
Capital subsidies for co-working centres, exemptions or reductions in stamp duty, property tax, and electricity duty in smaller cities, and interest subvention for new centres are among the recommendations made by ANAROCK’s commercial leasing leadership. Faster approvals, single-window clearance systems, and integration of coworking spaces into smart-city and urban development programmes are also seen as key enablers.
“To create demand from start-ups and SMEs, the government can provide some rental subsidies, while for GCCs, it can provide some employment-linked incentives or maybe payroll subsidies, and plug-and-play office support, thereby encouraging them to first lease space in flexible office spaces and then scale to large campuses,” Peush Jain, Managing Director – Commercial Leasing and Advisory, ANAROCK Group said.
315Work Avenue’s founder, Manas Mehrotra, stressed the need for better access to institutional finance at competitive rates to strengthen working capital and support the rapid establishment of high-quality office environments across non-metro markets.
Also Read: India’s flex office space segment expected to cross 100 million sq ft by 2027: Colliers
Co-working sector seeks a formal definition to standardise tax and regulatory treatment
“Operational inconsistency is a bigger challenge than cost,” said Kawatra.
“A formal definition of flexible workspaces would help standardise how the sector is treated across utilities, taxation, and regulations. This kind of clarity can unlock meaningful efficiencies without the need for direct financial incentives. Instead of subsidies, aligning flexible workspaces with existing startup and GCC policies at the state level could go a long way in accelerating demand in these markets,” he said.
Experts also point out that rationalisation of electricity tariffs for co-working spaces at par with commercial IT/ITES rates, rather than retail commercial slabs, would materially reduce operating expenses.
