In the Union Budget 2026-27, the Government of India has outlined a series of fiscal proposals aimed at bolstering domestic energy security, rationalizing customs duties, and significantly expanding the country’s technology and digital infrastructure capabilities.
The announcements focus on energy transition, personal import tariffs, semiconductor manufacturing, and new tax incentives for the data center and cloud services sectors.
Energy Transition and Security
A primary focus of the budget proposals is the promotion of renewable energy infrastructure and the domestic manufacturing of energy storage solutions. To support the nation’s energy transition goals, the government has proposed extending the basic customs duty exemption on capital goods used in the manufacturing of Lithium-Ion cells for batteries, announced in last year’s budget. This measure is intended to lower production costs for battery storage systems, a key component in renewable energy adoption.
Additionally, to further incentivize the solar energy sector, the budget proposes to exempt basic customs duty on the import of sodium antimonate, a critical raw material used in the manufacture of solar glass.
In the consumer electronics segment, the budget includes a proposal to exempt basic customs duty on specified parts used in the manufacturing of microwave ovens. This move aligns with broader efforts to encourage value addition within the domestic appliances sector.
Incentives for Data Centers and Cloud Services
To position India as a global hub for digital services, the budget introduces significant tax concessions for the cloud and data center industry.
- Tax Holidays for Foreign Companies: The government has proposed tax holidays valid until 2047 for foreign companies that provide cloud services to global customers through India-based data centers. This long-term incentive is designed to attract foreign investment into India’s digital infrastructure.
- Safe-Harbour Norms: To provide tax certainty, related entities providing data center services from India will now be eligible for a “safe-harbour” margin of 15 percent on cost. This move aims to reduce transfer pricing disputes and streamline compliance for multinational tech entities operating in India.
Ease of Living: Customs Duty Rationalization
Under the “Ease of Living” initiative, the budget proposes a significant rationalization of the customs duty structure for individuals. The tariff rate on all dutiable goods imported for personal use is set to be reduced from the current 20 percent to 10 percent.
This reduction aims to simplify the tax structure and lower the cost for individuals importing goods for personal consumption.
India Semiconductor Mission (ISM) 2.0
Building on the foundation laid by the first phase of the India Semiconductor Mission (ISM 1.0), which focused on establishing initial capabilities in the sector, the government has announced the launch of ISM 2.0.
The second phase of the mission aims to broaden the scope of the ecosystem by focusing on three key pillars:
- Production of Equipment and Materials: Encouraging the domestic manufacturing of the specialized machinery and raw materials required for semiconductor fabrication.
- IP Design: Developing “full-stack” Indian Intellectual Property (IP) to move up the value chain from assembly to design.
- Supply Chain Fortification: Strengthening the resilience of local supply chains.
To support these goals, ISM 2.0 will also emphasize the establishment of industry-led research and training centers to develop proprietary technology and a skilled workforce capable of meeting the sector’s growing demands.
Electronics Components Manufacturing Scheme
The Finance Minister highlighted the strong industry response to the Electronics Components Manufacturing Scheme, which was launched in April 2025 with an initial outlay of ₹22,919 crore. According to the budget speech, the scheme has already secured investment commitments that are double the original targets.
In response to this momentum, the government has proposed increasing the scheme’s financial outlay to ₹40,000 crore. This increased funding is expected to further accelerate the domestic production of electronic components, reducing import dependence and supporting the larger electronics ecosystem.
Tech Industry’s reaction
Arijeet Talapatra, CEO, TECNO India, said
This budget reinforces India’s shift from scale to substance in electronics manufacturing. As the country deepens its semiconductor and electronics capabilities, it opens the door to large-scale, future-ready employment, especially for young engineers, technicians and skilled workers who will drive the next phase of growth.
The focus on semiconductors, advanced manufacturing and stronger supply chains gives the smartphone industry exactly what it needs to build long-term value, not just volume. At TECNO, we see Semiconductor Mission 2.0 as a long-term enabler for affordable innovation and our commitment to Make in India is for the long run. These measures create the right foundation for us to localise deeper, innovate faster, and design technology that is truly made for Indian users to lead globally.
Ritesh Goenka, Managing Director, Damson Technologies, said:
The Union Budget 2026, presented by Hon’ble Union Finance Minister Nirmala Sitharaman, sends a strong and reassuring signal to India’s manufacturing and electronics ecosystem. The expansion of the India Semiconductor Mission 2.0, with a substantial ₹40,000-crore outlay, along with enhanced support for the Electronics Components Manufacturing Scheme, clearly affirms the government’s commitment to building deep, resilient supply chains and strengthening indigenous IP capabilities in high-tech sectors. This focused push on scale, technology-led growth and supply-chain resilience will accelerate India’s emergence as a globally trusted manufacturing hub. At Damson Technologies and JUST CORSECA, we appreciate the government’s sustained commitment to ‘Make in India’ and ‘Atmanirbhar Bharat’, which provides long-term policy clarity and confidence for investments in advanced manufacturing, innovation and talent.
Paresh Vij, Director, U&i, said:
The Union Budget 2026, presented by Hon’ble Union Finance Minister Nirmala Sitharaman, reinforces India’s long-term vision of becoming a global electronics manufacturing powerhouse. The expansion of the India Semiconductor Mission 2.0 with a ₹40,000-crore outlay, along with enhanced support for the Electronics Components Manufacturing Scheme, will significantly strengthen domestic value chains and reduce import dependence. These measures will enable faster innovation, better cost efficiencies, and improved supply-chain resilience for consumer electronics brands. At U&i, we see this as a decisive step towards empowering Indian manufacturers to compete globally while delivering high-quality, affordable products to consumers. The budget provides much-needed policy stability and confidence for sustained investments in manufacturing, technology, and talent.
Rajeev Singh, Managing Director, BenQ India and South Asia, said:
The Union Budget 2026 makes a clear statement on reimagining education as a direct driver of employability and economic growth. The proposed Education-to-Employment Standing Committee acknowledges the urgent need to align learning with industry demand and the accelerating impact of technologies such as artificial intelligence.
Initiatives such as Content Creator Labs in 15,000 schools and the development of university townships near industry corridors mark an important shift towards hands-on, technology-enabled, and industry-connected learning environments. These measures will encourage creativity, collaboration, and real-world skill development across K-12 and higher education.
Together with continued support for domestic manufacturing and the semiconductor ecosystem, the Budget creates a strong foundation for modern digital classrooms and future-ready campuses. It enables education and enterprise technology providers to play a meaningful role in building skills, improving learning outcomes, and preparing India’s talent base for global competitiveness. It will be good to see how these initiatives take shape in the coming days, and we will support them to the best of our ability.
Ravi Agarwal, Co-Founder and Managing Director, Cellecor, said:
The Union Budget 2026 reflects a steady and constructive approach toward strengthening India’s consumer electronics and technology manufacturing ecosystem. The near doubling of the Electronics Components Manufacturing Scheme outlay from ₹22,919 crore to ₹40,000 crore is a meaningful step toward building a stronger domestic component supply chain. Alongside the expansion of the India Semiconductor Mission (ISM) 2.0 into a broader, full-stack programme covering materials, equipment, design, and R&D, this signals strong momentum toward positioning India higher on the global electronics value chain.
The parallel focus on employment generation and large-scale skilling in electronics manufacturing and emerging technologies will help create a future-ready workforce across factories, assembly lines, and service ecosystems.
Overall, the Budget creates a supportive environment for consumer electronics brands to invest with confidence. We look forward to contributing to this growth journey through innovation, localisation, and product development.
Pankaj Rana, CEO, Hisense India, said:
The Union Budget 2026 outlines a forward-looking technology roadmap that strengthens India’s position as a global electronics and innovation hub. The sustained focus on semiconductor manufacturing, electronics components, and AI-led innovation reflects a strong policy commitment to building a resilient domestic ecosystem. Initiatives like India Semiconductor Mission 2.0 and the enhanced outlay for electronics manufacturing are expected to deepen local value creation and strengthen supply chains. For the consumer electronics industry, this creates a stable, growth-oriented environment that encourages long-term investments, innovation, and localisation.
Aditya Khemka, Founder & Managing Director, CP PLUS, said:
The Union Budget 2026 signals a decisive shift in India’s technology and security journey, with a clear focus on building capability at home. The strengthened push under the India Semiconductor Mission 2.0 is not only about self-reliance, but about ensuring that the intelligence, computing power, and hardware powering next-generation AI systems are designed and manufactured in India.
The government’s emphasis on artificial intelligence reflects a move from experimentation to real-world, mission-critical deployment. As AI becomes central to public safety, surveillance, and smart infrastructure, this Budget lays the foundation for scalable, secure, and responsible adoption across the country.
For homegrown technology companies, this policy clarity creates long-term confidence to invest locally, innovate for Indian needs, and build globally competitive solutions. It positions India not just as a consumer of advanced technologies, but as a trusted creator of AI-led security and infrastructure solutions aligned with the vision of Make in India.
Rahul Garg, Founder-CEO, Moglix ,said:
The Budget’s emphasis on artificial intelligence, quantum research and innovation-led missions strengthens India’s technology backbone. These investments enable enterprises to deploy AI across manufacturing optimisation, procurement automation and supply chain forecasting. When combined with sectoral programmes such as textile modernisation and industrial cluster rejuvenation, emerging technologies will play a critical role in improving productivity, quality control and operational efficiency across traditional and advanced industries.
Murali Mantravadi, Joint Managing Director, Energy Bots – Flosenso, said:
Reading the Union Budget 2026, what becomes clear is a steady shift in how technology is being viewed. The push through India Semiconductor Mission 2.0 and higher investment in electronic components suggests the government wants India to build deeper capability, not just scale services. That is an important signal. Sustainable advantage comes from owning design, supply chains and execution, not only distribution. The continued emphasis on AI, industry-linked research and creative skills points to an understanding that technology outcomes depend as much on people and process as on policy. The real test now is execution, but the intent feels more structural than symbolic.
Amit Kumar Tyagi, CEO, TrueReach AI, said:
The Union Budget 2026 is a clarion call for the ‘Intelligence-First’ era. By proposing a tax holiday until 2047 for cloud services using Indian data centers and utilizing the ₹10,300 crore IndiaAI Mission to provide compute at a subsidized rate, the government has eliminated the cost barriers to high-end innovation.
At TrueReach AI, we are particularly energized by the Economic Survey’s shift toward a bottom-up, sector-specific AI strategy. This aligns perfectly with our ‘Entropy’ platform, which already automates 90% of the SDLC. With the government targeting a 10% share of global services by 2047, we are no longer just an outsourcing hub; we are becoming an ‘AI Factory’ hub. The FM’s focus on Sovereign LMMs and the 38,000-GPU strong compute base ensures that Indian startups can now build production-grade, autonomous software 10x faster, allowing us to take ‘Made in India’ intelligence to the global stage with unprecedented scale.
Srikanth Chakkilam, CEO and Executive Director, Covasant Technologies, said:
The Union Budget 2026 is a definitive roadmap for India’s transition from a digital-first to an intelligence-first nation. By targeting a 10% share of the global services market by 2047, the Finance Minister has rightly identified AI as the ‘growth multiplier’ for our economy. At Covasant, we believe the expansion of the IndiaAI Mission, which has already deployed 38,000 GPUs, provides the critical infrastructure needed to move beyond experiments to large-scale, sovereign AI deployment.
The announcement of the ‘Bharat Vistar’ multilingual AI tool and the Education to Employment Standing Committee is particularly significant. It shows a dual commitment to innovation and inclusive growth, ensuring that as AI scales, our workforce remains future-ready. With the ₹1 lakh crore RDI corpus now accessible for deep-tech, and a goal to add $1.7 trillion to the economy by 2035 through AI, the stage is set for Indian enterprises to lead the global wave of agentic automation and trusted AI governance.
Shashank Karincheti, Co-founder & CPO, Redacto.ai, said:
The data center tax holiday till 2047 is a watershed moment for India’s digital economy. By incentivizing foreign cloud providers to process data onshore with a 15% safe harbour for related-party services, the government has effectively removed the biggest barrier to DPDP Act compliance. Until now, enterprises faced an impossible trade-off between global-scale cloud infrastructure and data localization requirements. This budget resolves that tension—more onshore data processing means consent management becomes enforceable, data principal rights become actionable, and cross-border transfer headaches reduce significantly. For privacy-conscious enterprises, especially in regulated sectors, this is the infrastructure foundation they’ve been waiting for.
However, data localization alone doesn’t equal privacy. The real work begins after data lands in India—robust consent management, third-party risk governance, and demonstrable accountability remain non-negotiable. Enterprises that treat onshore hosting as a checkbox will find themselves exposed when DPDP enforcement begins in earnest. The budget creates the infrastructure opportunity; building genuine privacy operations capability is what will separate compliant organizations from vulnerable ones.
Abhinav Arora, CEO & MD, EOSGlobe, said:
Budget 2026 clearly positions India as a global hub for cloud and data services. Long-term tax certainty, a practical safe-harbour framework, and the requirement for local reseller participation make India far more attractive for global business. For the BPM sector, this strengthens our ability to scale delivery from India, expand beyond metros, and bring global work closer to skilled local talent.
Keshava Murthy, CEO & Co-founder, Matters.AI, said:
Budget 2026 clearly signals the government’s intent to mainstream AI across governance, education, and agriculture—through the AI Mission, the Education-to-Employment Standing Committee, and platforms like Bharat-VISTAAR. As AI moves from experimentation into everyday workflows across public systems, enterprises will mirror this adoption internally. That shift brings a new challenge: organisations must gain visibility into how AI systems interact with sensitive data. The next phase of AI adoption will be defined not just by capability, but by oversight.
Sanjeev Agarwal, Executive Director & Chief Manufacturing Officer, Lava International Limited, said:
The expansion of the Electronics Components Manufacturing Scheme to ₹40,000 crore is an encouraging move to strengthen India’s electronics manufacturing ecosystem. For ECMS to deliver its intended impact, it will be important to ensure that the necessary infrastructural enablers are set up, along with timely and effective implementation. This will be key to translating the policy intent into outcomes.
Rohit Kumar, Founding Partner at the public policy firm The Quantum Hub (TQH), said:
The Budget clearly prioritises building domestic capability and reducing strategic dependencies, while positioning AI as a governance and productivity multiplier. The focus on compute, semiconductors, and data infrastructure is directionally right and the taxation measures – tax holidays for investments in data centres, customs duty exemptions for capital goods for nuclear power and critical minerals, and expanded safe harbour provisions – are especially promising. Together, these signal a shift towards a more trust-based regulatory regime, where the government places greater faith in businesses rather than defaulting to bad faith assumptions. If implemented well, this approach could reduce litigation, improve investor confidence, and mark a meaningful change in how the state engages with business – ultimately supporting stronger economic growth.
NS Satish, President, Haier Appliances India, said:
The Union Budget 2026 reflects a strategic step forward for India’s manufacturing ecosystem. The ₹40,000 crore allocation towards electronics components and manufacturing is a landmark announcement that will strengthen the domestic supply chain, accelerate localization, and enhance India’s competitiveness in the global electronics landscape.
Coupled with the recently concluded India-EU Free Trade Agreement, which opens new avenues for technology collaboration and exports, this Budget reinforces India’s position as an increasingly preferred manufacturing hub. For the consumer durables sector, these measures will drive cost efficiencies, improve affordability, and expand appliance penetration across emerging markets.
At Haier Appliances India, we strongly support the government’s vision and are accelerating our investments in local manufacturing and value addition, contributing to India’s emergence as a world-class hub for consumer durables. The Budget’s emphasis on AI adoption and inclusive growth further aligns with this transformative agenda.
Hitesh Garg, Vice President and India Managing Director, NXP Semiconductors, said:
The Union Budget 2026 presents a clear and structured framework for strengthening India’s semiconductor and electronics manufacturing ecosystem. The announcement of India Semiconductor Mission 2.0, together with the enhanced ₹40,000 crore outlay for the Electronics Components Manufacturing Scheme, signals a strong commitment to strengthening chip design, advanced research, electronics systems design, manufacturing, and talent development.
The emphasis on research infrastructure, design enablement, and skill-building will be critical in positioning India as a global hub for electronic systems R&D and full-stack design excellence. NXP welcomes this direction and remains committed to working closely with stakeholders to support the development of world-class design capabilities, cutting-edge research, and a robust innovation ecosystem, helping India to become an ESDM product nation.
Nxtra by Airtel Spokesperson said:
It is welcoming to see the efforts by the Indian Govt to boost the country’s data center market in the Union Budget 2026. These measures will be a game-changer that will accelerate India’s digital ambitions and position us as a global hub for AI and cloud innovation.
At Nxtra, we promise to stay committed to scaling sustainably and delivering secure, low-latency infrastructure in this growth journey of India’s digital economy.
Manoj Nair, Head of Applications at Fujitsu, said:
The Hon’ble Finance Minister has presented a forward-looking Union Budget that strongly reinforces India’s Viksit Bharat ambition, and conducive policies to make India a global technology hub. There is a huge focus on AI by positioning it as a force multiplier, combined with robust policies to support the growth of data centres. The launch of the India Semiconductor Mission 2.0 will accelerate the development of a resilient semiconductor ecosystem, spanning materials, equipment, full-stack IP design, and enhancing supply chains.
The move to approve Safe Harbour for IT services through an automated, rule-based mechanism is a significant reform that enhances ease of doing business and provides certainty in taxation for the industry. Equally encouraging is the focus on positioning data centres as critical infrastructure, along with the proposal to extend tax holidays till 2047 for global cloud service providers operating from India.
Together, these measures will help in boosting investor confidence, enhance innovation, create long-term growth opportunities for semiconductor and IT services companies, including data centre players, while further strengthening India’s role in the global technology value chain.