According to a MoneyControl report, India plans to attract significant global investment into its AI ecosystem. The publication quoted a senior government official saying, “There is an immense opportunity in India for investors. We saw that in 2025, with the announcement of a $15 billion investment by Google for its AI hub, including a data centre and fibre-optic network in Andhra Pradesh.”
Building on this momentum, Budget 2026 is expected to introduce targeted incentives for hyperscale data centres, including tax holidays, reduced power tariffs, and faster environmental clearances. Given the energy-intensive nature of AI infrastructure, the government may also push for renewable energy-linked incentives to encourage green data centres, aligning with India’s sustainability goals.
Additionally, policy clarity around cross-border data flows and data localisation norms could be announced to make India a more attractive destination for global cloud and AI firms.
Support for deep-tech startups
Deep-tech startups—working in areas such as AI, robotics, space tech, quantum computing, and advanced materials—are expected to be another major focus area in Budget 2026.
The government may:
Expand the Fund of Funds for Startups (FFS) with a dedicated deep-tech corpus
Introduce longer tax exemption periods for deep-tech startups due to their longer R&D cycles
Provide government-backed grants for research-heavy startups in strategic sectors like defence, healthcare, and climate tech
There is also speculation that the budget could address long-standing startup concerns around angel tax, ESOP taxation, and easier access to public procurement opportunities.
Skill development and AI talent pipeline
To support the rapid expansion of AI and semiconductor industries, Budget 2026 is expected to prioritise skill development and talent creation.
Possible announcements include:
National AI skilling programmes in collaboration with IITs, IIITs, and global tech firms
Expansion of future skills curricula in engineering colleges
Incentives for companies investing in employee upskilling in AI, cybersecurity, and semiconductor design
The government may also push for industry-academia collaboration to ensure that India produces job-ready talent for next-generation technologies.
Tax and regulatory incentives for tech companies
From a taxation standpoint, the industry expects:
R&D tax deductions for AI, chip design, and deep-tech innovation
Simplified compliance for startups and MSMEs in the tech ecosystem
Customs duty rationalisation on imported equipment used in AI training, semiconductor fabrication, and data centre infrastructure
Such measures could significantly lower entry barriers and operational costs for technology-driven businesses.
The bigger picture: Viksit Bharat 2047
Overall, Budget 2026 is expected to position technology as a core pillar of India’s economic transformation, aligning with the long-term Viksit Bharat 2047 vision. By focusing on AI, semiconductors, data infrastructure, and deep-tech entrepreneurship, the government aims to reduce import dependence, create high-value jobs, and establish India as a global technology powerhouse.
If executed effectively, these initiatives could not only boost investor confidence but also accelerate India’s transition from a services-led digital economy to a product- and innovation-led tech ecosystem.
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