As India seeks to consolidate its $3.7 trillion economy, drive sustainable growth across sectors, accelerate its digital transformation and become an artificial intelligence (AI)-first economy, finance minister Nirmala Sitharaman is expected to provide in the upcoming budget strategic policies that will drive innovation, strengthen local manufacturing, and equip the workforce for emerging opportunities.
The hope is that by investing in cutting-edge technologies like AI, semiconductors, quantum computing, 5G, and blockchain alongside fostering deeptech startups and modernising critical sectors, the budget will help position Viksit Bharat (developed India) as a global leader in technology and make the nation self-reliant (Atmanirbhar).
India’s AI market, currently pegged at $7-8 billion, is expected to play a big role in the digitization drive. Experts expect this year’s budget policies to enhance research and development (R&D), provide tax incentives, and strengthen public-private partnerships. Investments in semiconductor manufacturing, high-performance computing, and green technologies, for instance, can bolster India’s status as a global technology hub while reducing dependency on imports.
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The government’s IndiaAI Mission has a budget outlay of ₹10,371.92 crore, but it pales in comparison with the plan of China or that of the US’s $500 billion joint venture with tech companies to build AI-focused infrastructure and data centres in the next four years.
Support for startups is another major theme, with a growing emphasis on fostering deeptech enterprises. The defence and aerospace sectors, key pillars of India’s Atmanirbhar Bharat initiative, are also likely to see strategic budgetary support. With projections of 15-20% growth, measures to enhance private sector participation, streamline procurement, and incentivize R&D in advanced technologies like unmanned aerial vehicles (UAVs), space tech, and cyber security are anticipated. These efforts aim to modernize the armed forces and drive innovation, creating opportunities for both large enterprises and medium-, small-, and micro-enterprises (MSMEs).
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In the innovation space, India’s fintech ecosystem holds immense potential to bridge financial inclusion gaps, particularly in rural areas. Hence, fintech leaders are advocating for GST waivers on services provided at Business Correspondent (BC) outlets and reduced GST rates for startups empowering underserved communities.
Education and skilling are equally critical. Edtech platforms have seen rapid growth, yet the 18% GST rate on online education services remains a barrier. Reducing this tax and offering exemptions on upskilling course fees could make education more accessible.
In rural development, strengthening Bharat’s economy, which comprises over 65% of India’s population, is vital. Last-mile delivery of financial and digital services could benefit from GST relief and targeted infrastructure investments. Sitharaman is also expected to accelerate the agritech revolution with drones, AI, IoT, and satellite data coupled with policies that develop irrigation systems, improve storage facilities, and increase farm-to-market supply chains.
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Manufacturing is expected to remain central to the government’s agenda, particularly in mobile and electronics production. Strengthening the Production Linked Incentive (PLI) scheme to boost local value-addition and component manufacturing could help establish a robust supply chain and deepen India’s manufacturing footprint.
Last but not the least, workforce development is a critical area, with skilling initiatives expected to prepare the country for a rapidly evolving job market. With an estimated 33.89 million workforce expansion and 2.73 million new tech jobs projected by 2028, bridging the digital skills gap is crucial. Policies that support training frameworks, digital healthcare education, and public-private collaborations could empower India’s workforce and create a thriving tech ecosystem.