Union Budget 2026 puts technology at the centre of India's growth story

The Union Budget 2026 has emerged as one of India’s most technology-focused fiscal roadmaps yet, with Finance Minister Nirmala Sitharaman unveiling a sweeping set of measures aimed at accelerating artificial intelligence (AI) adoption, strengthening semiconductor manufacturing, deepening electronics localisation and expanding digital infrastructure.

Presented in Parliament on February 1, the Budget signals a strategic shift from digital adoption to digital leadership, positioning technology as a core driver of economic growth and India’s long-term development agenda.

At the heart of the announcements is a renewed push to build domestic capabilities across critical technology value chains, from chips and cloud to batteries and content creation, as the government looks to lay the groundwork for India’s emergence as a global technology hub by 2047.

India Semiconductor Mission 2.0 

A key pillar of Budget 2026 is India Semiconductor Mission (ISM) 2.0, which expands India’s ambitions beyond chip assembly towards end-to-end semiconductor development.

The second phase of the mission focuses on building local capacity across chip design, fabrication inputs, equipment and raw materials, marking a shift towards full-stack semiconductor manufacturing. The government said the objective is to prioritise domestic production across the entire semiconductor ecosystem and reduce dependence on imports in strategic components.

Rs 40,000 crore push for electronics components

Reinforcing this thrust, the Centre has sharply raised the outlay for the Electronics Component Manufacturing Scheme (ECMS) to Rs 40,000 crore, signalling a major investment push in India’s electronics supply chain.

The enhanced allocation is aimed at strengthening domestic manufacturing of high-value components, moving the sector beyond final assembly and boosting local value addition across consumer electronics, industrial hardware and emerging technologies.

Tax holiday till 2047 for foreign cloud providers

In a move designed to attract global hyperscalers and accelerate data centre investments, Sitharaman announced a tax holiday until 2047 for foreign companies providing cloud services to customers worldwide using Indian data centres.

Under the proposal, such firms will not pay Indian income tax on revenue earned from international clients. The Budget also introduces a safe harbour provision allowing cloud service providers to earn up to 15% profit over costs without triggering transfer pricing disputes, offering long-term policy certainty for capital-intensive data centre projects.

Creator economy boost with AVGC labs

Budget 2026 also places new emphasis on the creator economy. The government proposed setting up dedicated content-creator labs for animation, visual effects, gaming and comics (AVGC) across 15,000 secondary schools and 500 colleges nationwide.

Global technology companies including Google, Meta, Adobe, NVIDIA and Microsoft are expected to partner with these labs to provide industry-grade tools, curriculam and internship opportunities, helping students gain hands-on exposure to creative technologies.

AI for agriculture: Bharat-VISTAAR

Taking artificial intelligence beyond urban enterprises, the Budget proposed launching Bharat-VISTAAR, a multilingual AI tool to be integrated with AgriStack.

The platform aims to offer farmers real-time, location-specific insights, including weather forecasts, soil health data, crop advisories, pest warnings and treatment recommendations, in a bid to improve productivity and reduce climate risks in agriculture.

Battery manufacturing gets customs duty relief

To support India’s electric mobility and energy storage ambitions, the government has exempted Basic Customs Duty on capital goods used for manufacturing lithium-ion cells until March 2028. It also added 35 additional capital goods eligible for duty-free imports for EV battery production, lowering entry barriers for domestic manufacturers.