New Delhi: “It is a matter of concern that the Ministry of Electronics and Information Technology (MeitY) has not been able to convince the Ministry of Finance about getting the requisite amount of funds at the budget estimates stage,” a parliamentary standing committee has said in a report tabled in Parliament Monday.
The report—’Twenty-Fourth Report of the Standing Committee on Communications and Information Technology’—examines the 2026–27 demands for grants by the Ministry of Electronics and Information Technology (MeitY). It highlights funding gaps and slow spending across key technology initiatives, including the government’s flagship IndiaAI Mission and semiconductor manufacturing incentives under the India Semiconductor Mission.
For 2026–27, MeitY proposed Rs 28,169 crore but received Rs 21,632 crore at the budget estimates stage—a reduction of nearly Rs 6,500 crore. Compared to last year’s allocation of Rs 26,026 crore, the ministry’s budget represents a decline of roughly 17 per cent.
The committee also pointed to persistent gaps between allocations and actual spending in major schemes.
AI mission sees slow early spending
The government’s flagship artificial intelligence programme, the IndiaAI Mission, has recorded low spending in its first two years despite ambitious targets.
Approved by the Union Cabinet in March 2024 with a total outlay of Rs 10,371 crore over five years, the mission aims to create a national AI ecosystem through initiatives including a shared compute infrastructure of 10,000 GPUs, foundational models trained on Indian language datasets, an AI marketplace and scholarships for students.
Budget data reviewed by the committee shows that in 2024–25—the mission’s first year—expenditure stood at Rs 19.24 crore against a revised estimate of Rs 173 crore, translating to an utilisation rate of about 11 per cent.
In 2025–26, spending reached Rs 256.86 crore as of December 2025 against a revised estimate of Rs 800 crore, or roughly 32 per cent utilisation.
For the upcoming financial year, the ministry proposed Rs 2,000 crore for the programme but was allocated Rs 1,000 crore in the Union Budget.
Members of the committee led by BJP MP Nishikant Dubey also raised concerns over delays in procuring the 10,000 GPUs promised under the mission’s compute infrastructure component. Ministry officials attributed the slow spending to the time taken for institutional setup, stakeholder consultations and the finalisation of operational guidelines.
The ministry told the committee that implementation had “accelerated in recent months”, adding that the India AI Impact Summit held in New Delhi earlier this year had influenced adjustments in expenditure planning.
The committee also highlighted broader structural challenges in building AI infrastructure in India, including the high cost of GPU hardware, global supply constraints and the power and water requirements of large-scale data centres. It noted that India’s gross expenditure on research and development remains at 0.64 per cent of GDP—a level it described as “abysmal”.
Semiconductor incentive scheme faces delays
India’s semiconductor manufacturing push has also seen consistent underspending over the past three years.
Under the Modified Programme for Development of Semiconductors and Display Manufacturing Ecosystem—part of the broader India Semiconductor Mission—the government has approved semiconductor and related manufacturing projects proposed by companies including Tata Electronics, CG Power and Industrial Solutions and Micron Technology.
However, spending has lagged behind allocations across multiple years. In 2023–24, actual expenditure was Rs 681 crore against a revised estimate of Rs 1,503 crore. In 2024–25, expenditure stood at Rs 638 crore against Rs 3,816 crore. In 2025–26, spending reached Rs 2,885 crore against a revised estimate of Rs 4,300 crore.
According to MeitY, the underspending reflects the structure of the scheme itself. Fiscal support is released only after companies complete certain procedural requirements and sign agreements such as Fiscal Support Agreements and Trust Retention Agreements.
The ministry explained that semiconductor fabrication projects involve complex legal and technical arrangements, and that approved companies are still in the process of meeting the conditions required before these agreements can be executed. Since government incentives are disbursed on a pari-passu basis—alongside verified private investment—funds are released only once project spending begins.
For 2026–27, the ministry proposed Rs 13,000 crore for the semiconductor programme but received Rs 8,000 crore at the budget estimates stage, a shortfall of Rs 5,000 crore that the committee flagged.
Across both programmes, the panel said, there is the need for more realistic budgeting and stronger coordination between ministries as India attempts to scale up investments in emerging technologies such as artificial intelligence and semiconductor manufacturing.
(Edited by Viny Mishra)