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India Budget 2026: Tech Sector Awaits Semiconductor & AI Boost

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  Published in Science and Technology on Friday, January 9th 2026 at 3:20 GMT by Business Today

New Delhi, January 9th, 2026 - As India gears up for the Union Budget 2026, the technology sector is keenly awaiting announcements expected to further propel the nation's ambitions in semiconductors and Artificial Intelligence (AI). Experts predict a significant allocation of resources towards these critical areas, building on existing initiatives and addressing key infrastructural challenges.

The Indian government has increasingly recognized technology as a cornerstone of economic growth and a driver of innovation. The upcoming budget is anticipated to reflect this commitment, with a particular emphasis on establishing a self-reliant and globally competitive tech landscape. This strategy is largely centered around two core pillars: strengthening the semiconductor supply chain and accelerating the adoption and development of Artificial Intelligence.

Semiconductor Manufacturing: Sustaining the Momentum

India's aspirations to become a semiconductor manufacturing hub received a boost with the introduction of the Production Linked Incentive (PLI) scheme. The industry universally expects the continuation of this vital program in Budget 2026. However, financial support alone isn't enough. Industry stakeholders are urging the government to proactively address critical infrastructure gaps that currently hinder the establishment of large-scale semiconductor fabrication facilities (fabs). Reliable and consistent access to power and water, both essential for the complex manufacturing processes involved, remains a significant concern.

Beyond infrastructure, incentives to bolster domestic manufacturing of not just semiconductors themselves, but also the crucial components and equipment needed for their production, are considered essential. Reducing reliance on imports in this supply chain will be critical for achieving true self-sufficiency and mitigating potential geopolitical risks. The budget may include provisions for research and development grants specifically targeted at advancing domestic capabilities in semiconductor design and manufacturing.

IndiaAI: Expanding the Horizon

The IndiaAI program, launched in 2023, has laid a foundational framework for AI innovation. Budget 2026 is expected to build on this momentum with a significant expansion of the program's scope and investment. The goal is to foster AI-driven solutions across a broad spectrum of sectors including healthcare, agriculture, education, and potentially even defense and national security.

Investment isn't limited to software and algorithms; a robust AI infrastructure - encompassing high-performance computing power and scalable data storage solutions - is paramount. This requires substantial budgetary allocation to create and maintain state-of-the-art computing facilities accessible to researchers, startups, and established companies alike. Crucially, the budget must also prioritize the development of a comprehensive and robust data governance framework. This framework is essential to ensure data privacy, security, and ethical considerations are at the forefront of AI development and deployment.

The AI Ecosystem: Nurturing Talent and Innovation

Perhaps the most pressing need is a skilled workforce capable of driving the AI revolution. The budget is expected to announce increased funding for skill development initiatives, including specialized training programs, fellowships, and partnerships between academic institutions and the private sector. This isn't just about creating AI specialists; it's about equipping the broader workforce with the skills to effectively utilize and integrate AI tools into their respective fields.

Furthermore, a National AI Innovation Centre, fostering collaboration between academia, industry, and government, is a widely anticipated announcement. Such a centre would serve as a hub for research, development, and the commercialization of AI technologies. Incentives for companies to adopt AI solutions - particularly small and medium-sized enterprises (SMEs) - will also be crucial for widespread AI integration. This may include tax breaks, grants, or access to subsidized AI platforms.

Finally, promoting AI ethics and responsible AI development will be a key theme. The budget could include provisions for establishing ethical guidelines, promoting transparency in AI algorithms, and addressing potential biases in AI systems. India aims to be a leader not just in AI innovation, but also in responsible AI deployment.

By prioritizing these areas, the government hopes to position India as a global leader in the rapidly evolving landscape of artificial intelligence and secure its place as a key player in the future of technology.