India’s digital transformation is fueled by its ever-increasing data consumption. (Image source: Freepik)
By Anjani Kumar
Budget 2025 expectations: The Union Budget 2025-26 arrives at a pivotal moment for India, as we are poised to fully harness the transformative potential of AI in fueling economic growth, innovation, and technological leadership. As global economies race to develop advanced technologies, India can emerge as a global hub for AI development and adoption. To achieve this vision, the budget must adopt a strategic and long-term approach, addressing systematic challenges while also seizing opportunities to strengthen India’s AI ecosystem.
- Scaling compute capacity and infrastructure
- India’s digital transformation is fueled by its ever-increasing data consumption, yet the country lags in global data center and GPU capacities
- The government’s initial investment in 10,000 GPUs under the IndiaAI Mission is a good start
- The upcoming budget must significantly increase allocations for AI infrastructure to support hyperscale computing and advanced research, particularly focusing on:
- Shared infrastructure models: Creating shared access to high-performance GPUs and specialised AI hardware for startups and academic institutions
- AI industrial zones: Establishing dedicated zones with financial incentives, streamlined land acquisition, and interest subvention to attract investments from cloud providers and tech companies
- Sustainable growth: Aligning investments in green energy and efficient power distribution to support environmentally sustainable data centers
- Reducing import duties on AI hardware and offering tax benefits for technology-related expenditures will further stimulate infrastructure growth, enabling India to compete on the global stage
- Fostering innovation with balanced regulation
- Rapid adoption of generative AI technologies raises complex questions around intellectual property, copyright, and responsible and ethical use
- To ensure innovation acceleration without compromising ethical standards, the government must adopt a forward-thinking regulatory framework. Key measures include:
- AI content governance: Establishing guidelines to address ownership and copyright issues for AI-generated content while promoting innovation
- Support for AI model training: Developing an enabling framework for secure access to non-personal, high-quality datasets essential for training AI models
- Public-private partnerships (PPPs): Encouraging collaboration between government agencies, academic institutions, and private players to fund and develop groundbreaking AI applications
- Addressing data concerns
- Access to high quality data remains a critical requirement for AI development. The budget must address systemic challenges related to data access, sharing, and protection, including initiatives such as:
- National data repository: Creating a centralised platform for high-quality, non-personal datasets sourced from government agencies and industry players
- Revised data policies: Amending the Public Records Act to facilitate the secure use of public datasets for AI model training
- Clarity on data protection laws: Addressing ambiguities in the Digital Personal Data Protection Act 2023, particularly concerning liability in data breaches, consent withdrawal, and localisation mandates
- Access to high quality data remains a critical requirement for AI development. The budget must address systemic challenges related to data access, sharing, and protection, including initiatives such as:
- Expanding AI applications across sectors
- AI’s potential to revolutionise sectors like healthcare, agriculture, education, and finance is immense. The government should incentivise the development and deployment of AI-driven solutions by:
- Providing tax breaks for companies investing in AI projects
- Increasing funding for sector-specific AI applications through PPPs and innovation grants
- Expanding research and development grants for startups focused on AI
- AI’s potential to revolutionise sectors like healthcare, agriculture, education, and finance is immense. The government should incentivise the development and deployment of AI-driven solutions by:
- Preparing the workforce for the AI era
- Workforce development must be a key focus area. The budget should prioritise:
- AI Centers of Excellence: Establishing state-of-the-art training centers in collaboration with industry leaders
- Scholarships and incentives: Promoting STEM education and providing financial incentives for underrepresented groups, particularly women in technology
- AI in curriculum: Partnering with educational institutions to embed AI and emerging technology programs in academic curriculum
- Workforce development must be a key focus area. The budget should prioritise:
- Nurturing the startup ecosystem
- India’s vibrant startup ecosystem has been a catalyst for innovation and economic growth. To support AI-focused startups, the budget should:
- Introduce relaxed compliance norms and targeted tax reliefs
- Expand startup-focused funding programs and low-interest loan schemes
- Create
AI innovation zones offering mentorship, access to infrastructure, and funding support
- India’s vibrant startup ecosystem has been a catalyst for innovation and economic growth. To support AI-focused startups, the budget should:
- Strengthening cybersecurity and increasing trust
- As digital adoption accelerates, the need for robust cybersecurity frameworks becomes increasingly critical. The government must invest in:
- Advanced cybersecurity research: Funding the development of cutting-edge cybersecurity tools to safeguard critical infrastructure
- Ethical AI guidelines: Establishing norms to ensure AI technologies are used responsibly and transparently
- Incentives for cybersecurity adoption: Providing tax benefits for companies implementing advanced security measures
- As digital adoption accelerates, the need for robust cybersecurity frameworks becomes increasingly critical. The government must invest in:
The Union Budget 2025-26 is an opportunity for India to set the stage for its emergence as a global AI powerhouse. By scaling compute capacity, fostering innovation through balanced regulation, addressing data challenges, expanding AI applications, preparing the workforce, nurturing startups, and strengthening cybersecurity, India can create an ecosystem that drives sustainable economic growth and technological leadership.
(The author is Partner, Deloitte India)
