Union Budget 2024: Can India’s enormous tech appetite get a fillip?

India continues to experience significant demand on digital infrastructure, primarily driven by fibre, data centre, and cloud needs. Emerging technologies such as generative artificial intelligence, industrial metaverse, and deep-tech are similarly expected to drive future consumption and demand. As such, India’s budgetary allocations and investment/sector promotion strategies are expected to be geared towards these priorities.

The technology industry is keenly anticipating several themes in this year’s budget. Deep technology is one such theme, where the intersection of STEM faculties with design and engineering is resulting in pioneering innovations. This area is expected to transform aerospace, defence, synthetic biology, robotic applications, quantum computing, future mobility, agri-tech, and many others. The interim budget hinted at the government's thinking on deep technology, accelerating the shaping of the National Deep Tech Startup Policy (NDTSP). A key budget expectation is to see this policy set in motion, with incentives to promote R&D, motivate long-term patient capital, and provide resources including infrastructure access and incubation support.

Hi technology is another focus area, with the government having taken bold measures towards seizing the ‘China plus one’ opportunity. While there has been significant progress in handsets and semiconductors, other areas like consumer electronics, computer and networking, industrial electronics, aerospace, and medical devices need to catch up. Sustaining the policy regime to promote hi-tech and electronics manufacturing in India, along with potential new incentives for these subsectors, is expected.

India’s R&D spend as a percentage of GDP has historically been below the global average (1.8%). Countries at the forefront of innovation, such as Israel (5.5%), South Korea (4.93%), the United States (3.46%), Japan (3.30%), and Germany (3.13%), earmark much higher percentages. One of the most exciting announcements in the interim budget was the INR 1 trillion fund and 50-year interest-free loans to scale research, development, and innovation. The tech industry will be closely watching for specifics on how this will be orchestrated.

With the government’s overall thrust on Digital India, bridging the digital divide between urban and rural markets is paramount. There is an expectation for some focus on uplifting India’s hinterland digital infrastructure.

The government has envisioned the IndiaAI Mission with the objective of ‘Making AI in India and Making AI Work for India’. To make AI adoption pervasive, several avenues are expected to be focused on. Public-Private Partnerships (PPP) could be promoted as AI requires rarefied skills and the ability to work with high velocity. Partnering with tech enterprises is a natural course, and the budget may outline key benefits to promote PPP models. Infrastructure development is also critical, with the allocation towards building AI infrastructure, including strategic partnerships with key global suppliers to enable access for India’s AI developer community.

There may be increased focus on building handshakes with academia to promote pioneering ideas from India. Budget earmarks towards supporting academic institutions and researchers could be expected, similar to other nations like Israel, the USA, China, Japan, and Korea, which have been at the forefront of technology-enabled innovation.

Views are personal. The author is partner, Deloitte.