Top 7 tech and AI takeaways from Budget 2026: Big boost for AI, semiconductors and more

Finance Minister Nirmala Sitharaman presented her ninth consecutive budget on Sunday, highlighting several key developments and proposals for the technological sector. This includes semiconductor, artificial intelligence (AI), electronics and more.

Here are seven key announcements under the technology and AI segment you must know.

Push for electronics component manufacturing

The FM announced that the centre government will allocate ₹40,000 crore in the budget 2026 to the electronic component manufacturing scheme (ECMS). To recall, this plan was initially allocated an amount of ₹22,919 crore last year.

FM announces ISM 2.0

Notably, the government will begin the second phase of the Indian Semiconductor Mission (ISM). Building on the ISM 2.0, the government will produce equipment and materials, design full-stack Indian IP, and fortify supply chains. The FM said, “We will also focus on industry-led research and training centres to develop technology and skilled workforce”.

15000 Content Labs announced

Sitharaman also announced that the centre will offer support to India’s AVGC (Animation, Visual Effects, Gaming and Comics) sector. According to the FM, the Indian Institute of Creative Technologies, Mumbai, will setup 15000 content labs across secondary schools and colleges.

Tax holiday for data centres

To boost the data centre sector, the government has announced a tax holiday until 2047 for foreign companies offering cloud services, as long as these services are delivered through Indian sellers.

Increased threshold for IT services

For the IT sector, the government announced an increased threshold for the IT services to ₹2,000 crore from ₹300 crore. The budget mentions clubbing of digital services under a single category of information technology services with a common safe harbour margin of 15.5%.

AI developments for various sectors

The government has also announced a couple of benefits for everyone, from farmers using smart tools in the field and women entering STEM careers to youth seeking new skills and Divyangjan accessing greater opportunities. To accelerate this push, the Budget announced support for emerging technologies through initiatives such as the AI Mission, National Quantum Mission, Anusandhan National Research Fund, and the Research, Development and Innovation Fund. Additionally, the government has proposed to launch Bharat-VISTAAR, a multilingual AI tool that could integrate the AgriStack portals and the ICAR package on agricultural practices with AI systems. This is claimed to enhance farm productivity, enable better decisions for farmers and reduce risk by providing customised advisory support.

Unified digital knowledge

A national destination digital knowledge grid will be established to digitally document all places of significance: cultural, spiritual and heritage. This initiative will create a new ecosystem of jobs for local researchers, historians, content creators and technology partners.