Union Budget 2026: R&D incentives, investment in Generative AI -- Industry's to-do list for Sitharaman ahead of Feb 1
Union Budget 2026: Support for AI, cloud services and cybersecurity is expected to feature as policymakers look to accelerate digital transformation.
- Jan 30, 2026,
- Updated Jan 30, 2026 5:19 PM IST
The Union Budget 2026-27 is expected to place greater emphasis on accelerating technology adoption and digitalisation among MSMEs, with targeted support for areas such as cloud computing, artificial intelligence, SaaS platforms and cybersecurity. Such measures could help smaller enterprises improve efficiency, scale operations and remain competitive in an increasingly digital economy.
Support for AI, cloud services and cybersecurity are expected to feature prominently in the Budget speech as policymakers look to accelerate digital transformation.
Ahead of the Union Budget, Dr Debashis Sanyal, Director, Great Lakes Institute of Management, Chennai, said “India’s AI agenda should focus on building durable capability rather than short-term acceleration. He added that the budget can play a crucial role in strengthening research ecosystems, fostering academic industry collaboration, and developing responsible AI frameworks, ensuring innovation remains scalable, trusted, and relevant across sectors.”
At the same time, the global economic landscape is shifting. Trade tensions, evolving tariff structures, fragmented supply chains and heightened geopolitical risks have begun to erode the foundations of the globalised system that shaped growth for decades. For a developing economy like India, still deepening its participation in global value chains while safeguarding domestic growth, this transition brings both challenges and opportunities.
Joseph Anantharaju, Co-Chairman & CEO, Happiest Minds Technologies, stated that “As India moves towards Union Budget 2026, the technology sector is looking for policies that firmly anchor India’s leadership in AI-led digital transformation. He argued that the IT industry today plays a strategic role in enabling innovation, competitiveness and inclusive growth.
According to him, the expectation is stronger emphasis on investments in artificial intelligence, Generative AI, cybersecurity and digital engineering, supported by R&D incentives and IP creation. Equally critical is sustained focus on large-scale skilling and reskilling to keep India’s talent future ready. A forward-looking Budget that encourages innovation, simplifies regulations and strengthens digital public infrastructure can meaningfully accelerate the vision of a Viksit Bharat.”
The immediate task is to counter global headwinds without turning inward. Equally important is the need to identify sectors capable of supporting economic momentum at a time when traditional export drivers face pressure. In this context, India’s digital ecosystem emerges as a critical growth engine. By strengthening domestic resilience and enabling global outreach, the digital sector has the potential to play a disproportionate role in sustaining growth and expanding India’s presence in the global economy.
Dr. Sorabh Bajaj, Director, Centre for Digital Learning, FLAME University stated that, "India must move beyond fragmented AI pilots and towards a clear, time-bound national strategy for education. Every learner, whether in a rural classroom or a leading university, should be able to access AI-powered tools, high-quality content, and personalised mentorship in their own language.
He emphasised that the Union Budget 2026 presents a critical opportunity to enable this shift by prioritising three foundational pillars -- robust digital infrastructure across schools and colleges with reliable internet connectivity, affordable devices, and secure cloud ecosystems that can support AI at scale; large-scale and continuous capacity-building for teachers is essential so that AI becomes an enabler in the classroom, not an added burden; and India must invest in open, India centric datasets and platforms, allowing educators, researchers, and entrepreneurs to build solutions rooted in local realities.
He noted that if these priorities are addressed together, AI can become a powerful equaliser in education, narrowing learning gaps rather than widening them, and nurturing a generation of problem-solvers equipped to design solutions not just for India, but for the world."
Avanish Agarwal, Founder, Nutriya, said that the Budget presents a critical opportunity to strengthen AI-led health-tech.
“As the country’s startup ecosystem crosses 1 lakh recognised startups, we look at Union Budget 2026–27 as a crucial opportunity to strengthen AI-led health-tech solutions. With the nation’s digital health market projected to cross $70 billion in the upcoming years, targeted incentives for AI adoption, R&D, and data infrastructure can assist startups scale impact while enhancing Digital India and the foresight of a healthier Viksit Bharat 2047. Encouraging policies, digital infrastructure and funding can aid startups in supporting AI for customised nutrition and preventive care, driving inclusive growth," Agarwal said.
Union Budget 2026 will be presented by Finance Minister Nirmala Sitharaman on Sunday, February 1, 2026, at 11:00 AM in Parliament.
Track live Budget updates, breaking news, expert opinions and in-depth analysis only on BusinessToday.in
The Union Budget 2026-27 is expected to place greater emphasis on accelerating technology adoption and digitalisation among MSMEs, with targeted support for areas such as cloud computing, artificial intelligence, SaaS platforms and cybersecurity. Such measures could help smaller enterprises improve efficiency, scale operations and remain competitive in an increasingly digital economy.
Support for AI, cloud services and cybersecurity are expected to feature prominently in the Budget speech as policymakers look to accelerate digital transformation.
Ahead of the Union Budget, Dr Debashis Sanyal, Director, Great Lakes Institute of Management, Chennai, said “India’s AI agenda should focus on building durable capability rather than short-term acceleration. He added that the budget can play a crucial role in strengthening research ecosystems, fostering academic industry collaboration, and developing responsible AI frameworks, ensuring innovation remains scalable, trusted, and relevant across sectors.”
At the same time, the global economic landscape is shifting. Trade tensions, evolving tariff structures, fragmented supply chains and heightened geopolitical risks have begun to erode the foundations of the globalised system that shaped growth for decades. For a developing economy like India, still deepening its participation in global value chains while safeguarding domestic growth, this transition brings both challenges and opportunities.
Joseph Anantharaju, Co-Chairman & CEO, Happiest Minds Technologies, stated that “As India moves towards Union Budget 2026, the technology sector is looking for policies that firmly anchor India’s leadership in AI-led digital transformation. He argued that the IT industry today plays a strategic role in enabling innovation, competitiveness and inclusive growth.
According to him, the expectation is stronger emphasis on investments in artificial intelligence, Generative AI, cybersecurity and digital engineering, supported by R&D incentives and IP creation. Equally critical is sustained focus on large-scale skilling and reskilling to keep India’s talent future ready. A forward-looking Budget that encourages innovation, simplifies regulations and strengthens digital public infrastructure can meaningfully accelerate the vision of a Viksit Bharat.”
The immediate task is to counter global headwinds without turning inward. Equally important is the need to identify sectors capable of supporting economic momentum at a time when traditional export drivers face pressure. In this context, India’s digital ecosystem emerges as a critical growth engine. By strengthening domestic resilience and enabling global outreach, the digital sector has the potential to play a disproportionate role in sustaining growth and expanding India’s presence in the global economy.
Dr. Sorabh Bajaj, Director, Centre for Digital Learning, FLAME University stated that, "India must move beyond fragmented AI pilots and towards a clear, time-bound national strategy for education. Every learner, whether in a rural classroom or a leading university, should be able to access AI-powered tools, high-quality content, and personalised mentorship in their own language.
He emphasised that the Union Budget 2026 presents a critical opportunity to enable this shift by prioritising three foundational pillars -- robust digital infrastructure across schools and colleges with reliable internet connectivity, affordable devices, and secure cloud ecosystems that can support AI at scale; large-scale and continuous capacity-building for teachers is essential so that AI becomes an enabler in the classroom, not an added burden; and India must invest in open, India centric datasets and platforms, allowing educators, researchers, and entrepreneurs to build solutions rooted in local realities.
He noted that if these priorities are addressed together, AI can become a powerful equaliser in education, narrowing learning gaps rather than widening them, and nurturing a generation of problem-solvers equipped to design solutions not just for India, but for the world."
Avanish Agarwal, Founder, Nutriya, said that the Budget presents a critical opportunity to strengthen AI-led health-tech.
“As the country’s startup ecosystem crosses 1 lakh recognised startups, we look at Union Budget 2026–27 as a crucial opportunity to strengthen AI-led health-tech solutions. With the nation’s digital health market projected to cross $70 billion in the upcoming years, targeted incentives for AI adoption, R&D, and data infrastructure can assist startups scale impact while enhancing Digital India and the foresight of a healthier Viksit Bharat 2047. Encouraging policies, digital infrastructure and funding can aid startups in supporting AI for customised nutrition and preventive care, driving inclusive growth," Agarwal said.
Union Budget 2026 will be presented by Finance Minister Nirmala Sitharaman on Sunday, February 1, 2026, at 11:00 AM in Parliament.
Track live Budget updates, breaking news, expert opinions and in-depth analysis only on BusinessToday.in