India’s technology sector has received a shot in the arm in the government’s latest Union Budget 2025-26, with key initiatives focused on artificial intelligence (AI), global capability centres (GCCs), education and digital public infrastructure.
In presenting this year’s Budget, India finance minister Nirmala Sitharaman underscored the government’s commitment to “Sabka Vikas”, stimulating balanced growth across all regions, noting India’s position as the fastest-growing major global economy.
A key highlight in this year’s Budget is the proposed Centre of Excellence in AI for education, backed by an allocation of 500 crore rupees (US$57.4m). The move follows the launch of three similar centres for agriculture, health and sustainable cities in 2023. The government believes that AI-driven education will empower youth, improve job readiness and ultimately bolster the digital economy.
Plans are also underway to capitalise on the growing prominence of GCCs in India – offshore units of global firms that provide support services – through a national framework that will guide states in promoting the development of GCCs, particularly in emerging tier-two cities.
The framework addresses areas such as talent acquisition, infrastructure development, by-law reforms and industry collaboration. This is expected to not only create skilled jobs, but also narrow the demographic divide by extending opportunities to regions not traditionally associated with tech hubs.
First highlighted in last year’s budget, research, development and innovation have also been identified as a key driver of growth. The 2025-26 budget proposes a “deep tech fund of funds” amounting to 20,000 crore rupees (US$2.3bn) to spearhead the next generation of startups and translate ideas into tangible outcomes.
Digital public infrastructure has also received considerable attention. The new BharatTradeNet (BTN), a unified platform for trade documentation and financing services, will complement the unified logistics interface platform and align with international best practices. A national geospatial mission will further bolster India’s digital infrastructure by granting the private sector access to critical data and maps.
The government is also focused on boosting domestic manufacturing to integrate with global supply chains. Support will be provided to key sectors, identified based on objective criteria, to develop domestic capacities. Recognising the opportunities presented by Industry 4.0, the government has pledged support for the domestic electronic equipment industry to leverage its potential and create jobs for young people.
New job opportunities, education and skills development are the key areas of focus for this year’s budget. Over the next five years, some 50,000 Atal Tinkering Labs will be established in government schools to cultivate scientific thinking and encourage student innovation. Broadband connectivity will also be expanded to government secondary schools.
Atul Gupta, partner and head of digital trust and cyber security services at KPMG India, said the tinkering labs will help India deliver innovative solutions in emerging areas such as AI, cyber security, financial technology, space technology and sustainability.
Tech education is also set to be boosted in the coming years. In the past decade, the number of students in the 23 Indian Institutes of Technology has grown from 65,000 to 135,000. Building on this growth, additional infrastructure will be provided to the five IITs that began after 2014 to enrol an extra 6,500 students. The goal is to leverage technology and education to drive economic growth, create employment opportunities and enhance India’s position in the global tech landscape.
With one of the largest gig economies in the world, India is also extending inclusive measures to gig workers. The government will provide identity cards and registration on the e-Shram portal for unorganised workers, along with healthcare coverage that is set to benefit an estimated 10 million gig workers.
Overall, the budget’s focus on AI, education, GCCs and digital public infrastructure is expected to accelerate the adoption of digital services, even in remote areas. These measures would go a long way to create a favourable investment climate and generate new-generation jobs across India, positioning the country for continued growth in the technology sector.
