New Delhi: The Union Budget 2026, presented on Sunday, has allocated Rs 1,000 crore for the government’s much-celebrated IndiaAI Mission, down from Rs 2,000 crore last year.
While Rs 2,000 crore was allotted for the programme last year, the allocation was revised downwards, with actual utilisation reported to be significantly lower at around Rs 800 crore.
The government has also proposed setting up a high-powered ‘Education to Employment and Enterprise’ Standing Committee, which would, among other things, assess the impact of emerging technologies, including AI, on jobs and skill requirements, and propose measures on the issue.
The committee’s terms of reference include proposals for embedding AI in school curricula and upgrading State Councils of Educational Research and Training institutes for teacher training.
The committee will also suggest measures for upskilling and reskilling of technology professionals/engineers in AI and emerging technologies. Additionally, it will propose measures for AI-enabled matching of workers, jobs and training opportunities.
Finance Minister Nirmala Sitharaman also proposed AI integration in several sectors—from agriculture to the manufacture of assistive devices for Divyangjan or people with disabilities.
Additionally, the government has announced a tax holiday up to 2047 for any foreign company that provides services to any part of the world outside India by procuring data centre services in India. A tax holiday is a temporary reduction or exemption from taxes to encourage investment.
Professor B. Ravindran, head of the Wadhwani School of Data Science and Artificial Intelligence (WSAI) at IIT Madras, welcomed the announcements.
“It is heartening to note that the budget has identified certain key areas such as agri-tech, logistics and prosthetics, and encourages building of indigenous solutions in these sectors. Further, the budget recognises the need for building world-class compute infrastructure to enable world-beating AI development and has provisioned for the same,” he told ThePrint.
“The high-powered committee proposed to be set up will give a national push to deep tech-based entrepreneurship, something that IIT-M has already taken the lead for the past decade. Again, I welcome this much-needed national focus on building indigenously to achieve a Viksit Bharat,” he added.
Rohit Kumar, founding partner at public policy firm The Quantum Hub (TQH), referred to the various budgetary allocations that would function as AI enablers. For instance, he said that the announcement on data centres signals that they are being treated as a strategic business sector rather than just backend infrastructure.
“The announcement on data centres signals that they are being treated as a strategic business sector rather than just backend infrastructure. Tax incentives, customs duty exemptions on imports for nuclear power and critical minerals, and the broader push on compute underscore their role as enablers of AI and national competitiveness. This is likely to attract greater private investment and strengthen India’s position as a regional data and compute hub,” Kumar told ThePrint.
However, he added that the execution of these initiatives— particularly around power availability, land access, and state-level clearances—“will determine how scalable this opportunity ultimately becomes”.
The reduced allocation
Commenting on the budgetary allocation to the IndiaAI Mission, Kumar told ThePrint, “The IndiaAI Mission remains underpowered in execution. Of the Rs 2,000 crore allocated last year, only about Rs 800 crore was spent, and this year’s allocation has been reduced to Rs 1,000 crore.”
Kumar says that this is “concerning”, especially when the mission was originally envisioned as a Rs 10,370 crore, five-year push to build domestic AI capability and expand the provision of subsidised compute.
“Mid-year signals of expanding this to Rs 20,000 crore have instead given way to a contraction, which risks slowing momentum at a critical stage,” Kumar said, referring to the reports that claimed that there were talks to increase the funding for the mission to Rs 20,000 crore.
Asia Pacific Policy Director and Senior International Counsel at Access Now, Raman Jit Singh Chima, said that the current budgetary allocation is still an increase compared to the revised budget estimates from last year.
“Whether this is due to different fiscal priorities of the government or because there are fundamental implementation issues, those are important questions for the MPs to ask the government and the Ministry of Electronics and IT,” he told ThePrint.
The slashing of the budgetary allocation, Chima says, also indicates that the ambitions of the IndiaAI Mission are going through a “reality check”.
“It is also not clear from the budget numbers what is covered in this expenditure. For example, India had proposed to set up an AI Safety Institute, which would be housed under the IndiaAI Mission. Then they said it will be a virtual institute, but it is unclear how much we spent on this body,” he said, adding that it is unclear what the expenditure is under the IndiaAI Mission.
Force multiplier for better governance
In her speech, Sitharaman declared that cutting-edge technologies, including AI applications, can serve as “force multipliers for better governance”.
“The 21st century is technology driven. Adoption of technology is for the benefit of all people—farmers in the field, women in STEM, youth keen to upskill and Divyangjan to access newer opportunities. The government has taken several steps to support new technologies through the AI Mission, National Quantum Mission, Anusandhan National Research Fund, and Research, Development and Innovation Fund,” Sitharaman said.
Among other things, the government also proposes to launch Bharat-VISTAAR, a multilingual AI tool that will integrate AgriStack portals and the Indian Council of Agricultural Research (ICAR) package on agricultural practices with AI systems.
“This will enhance farm productivity, enable better decisions for farmers and reduce risk by providing customised advisory support,” Sitharaman said in her speech.
Pledging its support to Divyangjan, the government also proposes to support the Artificial Limbs Manufacturing Corporation of India (ALIMCO) to scale up production of assistive devices, invest in R&D and AI integration.
The government wants to integrate AI to utilise non-intrusive scanning with advanced imaging and AI technology for risk assessment to scan every container across all the major ports.
(Edited by Sugita Katyal)
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