India’s Union Budget 2025-26: A Mixed Bag for the Digital Economy

The Union Budget 2025-26 has taken significant steps to encourage the technology space, aiming to boost innovation, digital infrastructure, and self-reliance across multiple sectors. The provisions outlined in the budget are expected to have a substantial impact on India’s technology landscape, driving economic growth and enhancing global competitiveness.

However, the digital landscape has mixed reactions to the Budget. While there are several good initiatives for the digital economy, concerns have been raised about the implementation of these initiatives. "Overall, several good initiatives for the digital economy. It looks to strengthen the digital and technology sectors, fostering innovation, and enhancing India’s position in the global technology order. My worry is how much they will actually implement eventually," notes Abhijit Majumdar, Partner – Digital Strategy, PwC.

Key Features of the Budget for the Digital Ecosystem

The Budget has outlined several salient features for the digital ecosystem, including:

• Fintech and Digital Payments Support: A ₹1,000 Cr fintech fund, incentives for startups, and enhanced cybersecurity measures for digital payment infrastructure.
• Incentives for Electronics Manufacturing: Removal of import duties on smartphone components, improving India’s attractiveness and position in the global mobile supply chain.
• Support for Startups and Deep Tech: A new Fund of Funds for Startups with an additional ₹10,000 Cr and a Deep Tech Fund of Funds (being explored) to catalyze next-generation startups.
• Promotion of Research and Development: An allocation of ₹20,000 Cr for a private sector-driven R&D and innovation.
• India AI Mission: An AI CoE for education to integrate AI into dated educational frameworks, ingraining innovation from early stages in a student’s life.

What’s Missing in the India Budget 2025?

While the Budget signals a strong push towards self-reliance, innovation, and digital transformation, there are areas that are missing focus. According to Dr. Yusuf Hashmi, technology leader and CISO, Jubilant Bhartia Group, the following areas are missing focus:

• Direct Incentives for AI Startups or Semiconductor Fabs: Despite global trends, there are no direct incentives for AI startups or semiconductor fabs.
• Cybersecurity Funding: Cybersecurity funding is not explicitly highlighted, even as threats increase in critical infrastructure.
• Cloud and SaaS Industry Incentives: Cloud and SaaS industry incentives are absent, while countries like the US and EU offer tax breaks for cloud investments.

Execution Will Be Key

The government’s focus on self-reliance, digital infrastructure, and R&D is promising, but execution will be key. "The Budget is a strong enabler of tech-driven growth, but cybersecurity, AI, and semiconductor manufacturing need more structured incentives to compete with global leaders," remarks Dr. Hashmi.

Published On Feb 4, 2025 at 10:46 AM IST

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