Union Budget 2026 bets big on AI as IndiaAI Mission gets Rs 1,000 crore push

Union Budget 2026 has put artificial intelligence firmly at the centre of India’s growth blueprint, with the government allocating Rs 1,000 crore to the IndiaAI Mission, one of the largest outlays under its emerging technology agenda. Presenting the Budget, Finance Minister Nirmala Sitharaman underlined AI’s potential as a powerful economic multiplier, signalling a long-term commitment to making India a globally competitive hub for AI-led innovation.

Beyond headline allocations, the Budget adopts a structural approach to embedding AI across sectors. From agriculture and manufacturing to services and education. Multilingual, AI-based tools for agriculture are among the initiatives aimed at ensuring technology-led gains reach the grassroots, improving productivity and decision-making for farmers while narrowing the digital divide.

The government has also sought to strengthen the underlying digital infrastructure needed to support large-scale AI deployment. A proposed tax holiday for foreign cloud service providers until 2047 is expected to boost India’s attractiveness as a destination for global capital, while expanded data centre capacity will help meet the rising demand for compute-intensive AI workloads. “Strengthened data centre infrastructure will be key to supporting large-scale AI workloads,” says Ganesh Gopalan, CEO of Gnani.ai, talking to Business Today, adding that the Budget positions India as a globally competitive yet inclusive AI ecosystem with sustainable long-term growth potential.

Industry experts see workforce readiness as the other critical pillar of the AI push. “What makes this moment especially powerful is the opportunity to simultaneously build an AI-literate workforce that can fully leverage these investments,” says Jaspreet Bindra, founder of AI&Beyond. As manufacturing and services become increasingly data-driven, AI is expected to be embedded across design, production, quality control and supply chains, reshaping job roles and skill requirements.

To address this transition, Budget 2026 proposes the establishment of 15,000 AI labs in schools and the launch of 10,000 new technology fellowships at premier institutions such as the IITs. These initiatives are aimed at creating a strong pipeline of AI-ready talent through personalised learning, modern curricula and early exposure to emerging technologies.

Equally significant is the government’s decision to set up a high-powered panel to review the impact of AI and other emerging technologies on jobs, skills and the services sector. Announced by Sitharaman during her Budget speech, the move signals policy intent to proactively manage disruption while maximising economic gains.

Taken together, the Rs 1,000-crore IndiaAI Mission outlay, infrastructure incentives and talent-building measures mark a decisive step in India’s ambition to harness AI not just for growth, but for broad-based economic transformation.