The technology sector, now the undisputed engine of India's economy, holds immense expectations from the Union Budget 2026. Presented on February 1st, this financial statement is expected to be more than just a balance sheet of income and expenditure; experts view it as a technological roadmap for the next five years. With digital technology playing a central role in shaping India into a five trillion-dollar economy, the budget is likely to introduce policies that sustain growth momentum and position India as a global leader in innovation.
All eyes are primarily focused on the semiconductor manufacturing sector. India has successfully attracted global giants through its Semiconductor Mission. However, establishing fabrication units is not enough; ensuring a robust ecosystem—including the supply of raw materials, specialty chemicals, and gases—is crucial. The budget is expected to allocate funds to incentivize the production of semiconductor components, thereby creating a complete indigenous supply chain from chip design to the final product. This step is vital for reducing import dependency and securing India's place in the global electronics value chain.
The startup ecosystem has been navigating a challenging "funding winter" due to global economic headwinds. To counter this, the government is expected to tweak the Long Term Capital Gains (LTCG) tax structure to encourage domestic investors to back home-grown companies. Key industry demands include extending tax holidays for registered startups and simplifying tax rules regarding Employee Stock Ownership Plans (ESOPs). Such measures would empower young entrepreneurs to innovate, take risks, and generate employment without being weighed down by fiscal pressures.
The Digital India campaign has already garnered global attention through the success of UPI and Aadhaar. The next phase involves expanding Digital Public Infrastructure (DPI) into critical sectors like agriculture, education, and healthcare. Increased allocation is anticipated for technologies such as drone usage in farming, AI-based soil testing, and digital market linkages. These steps aim to decentralize technology, ensuring it reaches the remotest villages rather than being confined to urban centers, thus truly bridging the digital divide.
Artificial Intelligence is no longer a luxury but a strategic necessity. However, AI research and training Large Language Models (LLMs) require expensive computing power. The government is expected to bolster the "India AI Mission" by funding the establishment of GPU clusters in state-owned data centers. This infrastructure would allow startups and researchers to conduct AI experiments at a significantly lower cost, which is essential for securing India's technological sovereignty in the age of intelligence.
In the realm of electronics hardware, particularly laptops and servers, India aims to compete with manufacturing hubs like China and Vietnam. The budget is likely to expand the Production Linked Incentive (PLI) scheme for IT hardware. Rationalizing import duties on electronic components to lower local production costs and providing export incentives for "Make in India" products will likely be key focus areas to boost domestic manufacturing capabilities.
As digitization accelerates, so do cyber threats. Therefore, strengthening national cybersecurity infrastructure is imperative. A significant allocation is needed to build a secure internet environment and deploy advanced technologies to prevent cybercrimes. This is vital for maintaining public trust in the banking and financial sectors, which are increasingly becoming digital-first.
Skill development remains a cornerstone of the tech sector's growth. The government may announce new programs under "Skill India" to train youth in emerging technologies like AI, Blockchain, and Robotics. Financial aid for setting up coding and data science labs at the school and college levels is expected to bridge the industry-academia gap, ensuring that the workforce is future-ready.
Green technology is set to be another highlight of this budget. Incentives for Electric Vehicle (EV) battery swapping infrastructure, hydrogen fuel research, and e-waste management startups are anticipated. Similarly, the private space sector, facilitated by IN-SPACe, expects GST exemptions or low-interest loans to boost satellite manufacturing and launch services, propelling India's standing in the global commercial space market.
In conclusion, the Budget 2026 is expected to script the prologue for India's tech-driven development. Beyond promoting research, innovation, and domestic manufacturing, the budget must adopt a holistic view to ensure the benefits of technology reach the last mile. A balanced growth in both hardware and software sectors will determine India's emergence as a digital superpower in the coming decade.
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