India's tech sector is keenly anticipating the Union Budget 2026, with expectations centered on policies that foster innovation, strengthen cybersecurity, and promote digital inclusion. As the budget approaches, the technology, media, and telecom (TMT) sectors are preparing for a policy reset shaped by global trade tensions, regulatory changes, and the increasing adoption of artificial intelligence. The budget is expected to be presented in February 2026 and will be closely watched for signals regarding trade competitiveness, tax certainty, digital infrastructure, and cybersecurity.
Cybersecurity Enhancements
Cybersecurity is a paramount concern, driven by the acceleration of digital adoption across government and industry. The industry is advocating for the creation of a national-level cybersecurity command to establish unified standards and coordinate threat responses. Other proposals include developing India-specific cybersecurity certification frameworks to address skill shortages and standardize professional competencies. Investment in advanced threat intelligence and AI-based cybersecurity platforms is also expected to be a priority in Budget 2026. Furthermore, there's a call for updates to India's National Cyber Security Policy (2013) and National Cyber Security Strategy (2020) to reflect the current threat landscape. Expanding the PLI framework to include cybersecurity data centers would strengthen India's cyber sovereignty and reduce reliance on offshore infrastructure. The life sciences sector is also seeking dedicated funds for cybersecurity.
Artificial Intelligence Advancements
India's AI ambitions are a central theme in the Budget expectations for 2026-27. The industry anticipates targeted fiscal support for domestic AI data center infrastructure to reduce dependence on offshore computing and ensure data sovereignty. Proposed measures include GST input tax credits on capital assets, conditional tax holidays for qualifying developers, and customs duty waivers on critical equipment. Extending fiscal incentives to AI hardware manufacturing, data infrastructure, and high-performance computing could position India as a global AI and deep-tech hub. Emphasis will be placed on policies that encourage corporate India to invest in employee reskilling, along with tax incentives for individuals investing in professional upskilling programs. Also expected is a boost in funding for the IndiaAI mission, including plans for AI systems with a large number of GPUs, which could ease the compute crunch for Indian startups.
Tax Benefits and Policy Support
The technology sector is seeking clarity on tax matters, with specific proposals including GST input tax credits on capital assets and conditional tax holidays for qualifying developers. The industry is also asking for the operationalization of voluntary post-clearance revisions under Section 18A of the Customs Act to allow importers and exporters to revise customs declarations voluntarily. Startups are urging the government to simplify compliance and improve access to credit, as regulatory complexities and funding delays are stifling growth. It is also anticipated that the concessional 15% corporate tax rate for new manufacturing units may be extended to AI and other futuristic sectors. Rationalizing import tariffs on critical raw materials, coupled with targeted incentives for value-added formulations and APIs, will be crucial to offset rising input and compliance costs.
Digital Public Infrastructure (DPI)
Digital Public Infrastructure is expected to remain a strategic policy asset, supporting productivity growth, platform-led innovation, and the integration of technology into every major sector of the economy. Industry expects continued capital allocations for payments, connectivity, identity, and e-governance platforms, as well as deeper integration of DPI across healthcare, logistics, education, and public service delivery. Expanded roles are foreseen for fintech, SaaS, and AI startups in extending DPI capabilities, particularly in digital payments, credit access, interoperable data systems, and multilingual services. A strong push under Digital India 2.0 could significantly improve access to loans and insurance.
Budget 2026 is expected to reinforce DPI as a foundational policy asset. For businesses, DPI reduces transaction friction, accelerates compliance processes, and expands market reach. For policymakers, it enhances fiscal targeting, service monitoring, and economic formalization.
