Budget 2026: Industry welcomes measures to nurture local AI, IT, data centre ecosystem

Presenting her ninth union budget on Sunday, finance minister Nirmala Sitharaman made a slew of announcements for various tech sectors, including electronics, semiconductors, and data centres. The response to these has been positive, with technology industry body Nasscom praising the budget, especially the increase in the safe harbour turnover threshold for transfer pricing.

“We thank the FM for enhancing the safe harbour turnover threshold for IT services from ₹300 crore to ₹2,000 crore, along with a uniform 15.5% margin. This has been a key ask from Nasscom, and will provide much‑needed clarity, predictability, and competitiveness for India’s IT services sector,” Nasscom said in a post on X.



Deloitte India partner S Anjani Kumar echoed Nasscom’s comments, and said the policy initiative will make the country more attractive to global players for data centre investments.

“We welcome the finance minister’s announcement introducing a tax holiday for the cloud services of local data centres. This is a landmark policy that could do for India’s cloud and data centre ecosystem what the IT services incentives did in the early 2000s — catalyse large-scale global investment, expand export revenues, and lead to long-term job and capability creation. India already has a structural advantage: a report by Deloitte shows that it is among the most cost-competitive locations for setting up data centres. With this, India can accelerate data localisation, strengthen digital sovereignty, and position itself as a global hub for cloud, data services, and AI infrastructure,” Kumar added.

Ganesh Gopalan, cofounder and CEO, Gnani.ai, said that the significance accorded to artificial intelligence (AI) in this budget will have a multiplier effect on the economy.

"AI will have a strong multiplier effect. The focus on assessing the impact of emerging technologies like AI on jobs and skills reinforces the need to prepare for this. The adoption of AI and rapid tech advancement is essential for inclusive national progress, enhanced productivity, and new economic opportunities. Taxation benefits for data centres and the increased safe harbour threshold will enable large-scale AI model training and infrastructure growth," Gopalan said. Gnani.ai is one of the four startups selected in the first phase of the India AI mission to develop indigenous models.

Further, the government proposed the launch of a multilingual AI tool to foster risk reduction for farmers. “The FM’s proposal to launch Bharat Vistaar... reflects a strong push towards tech‑enabled risk reduction for farmers. By offering customised advisory support, this initiative underscores the government’s focus on digital and AI‑driven solutions to strengthen productivity and resilience in the agricultural sector,” Nasscom added.

“The combination of real-time data from satellites and the use of AI can help farmers make informed decisions to improve farm productivity and also its produce mix,” said Anil Joshi, managing partner, Unicorn India Ventures.

The government’s decision to virtually double the incentives for the Electronics and Components Manufacturing Scheme (ECMS) has also been received well. Joshi added that the move will help create more resilient supply chains for the electronics industry. Sitharaman also confirmed that ISM (Indian Semiconductor Mission) 2.0, aimed at building the local semiconductor ecosystem, is expected to be rolled out soon. However, she did not disclose the budgetary outlay for the same.

“Indian semicon is at a nascent stage and needs a lot of hand-holding and policy support. ISM 2.0 will help nurture semicon use cases and make India self reliant. Additionally, ₹40,000 crore to support the development of electronic components will help resolve supply chain issues. Both the initiatives (ECMS and ISM) will help the industry a lot,” Joshi added.

“By significantly expanding support for domestic semiconductor equipment, materials, design, and supply-chain capabilities, ISM 2.0 will accelerate India’s journey towards self-reliance in advanced chips and position the country as a globally competitive semiconductor hub. Coupled with the strategic decision to establish dedicated rare earth corridors across mineral-rich states — strengthening mining, processing, research and manufacturing of critical minerals — this budget not only deepens the foundation for high-tech growth but also enhances supply-chain resilience in sectors from electronics to defence and clean energy. Together, these initiatives will drive innovation, high-skill employment, and India’s role in global value chains,” said Manu Iyer, general partner and co-founder, Bluehill.VC.