Budget 2026 technology highlights: Semiconductors, cloud and AVGC sector

The Union Budget was announced on Sunday, 1 February 2026 by the Finance Minister Nirmala Sitharaman in the Lok Sabha, and relates to the financial year 2026-27. The Union Budget 2026 technology roadmap signals a shift towards long-term digital and manufacturing growth through major Budget 2026 tech announcements. Instead of gadgets, this year’s Budget focused on building India’s tech future. It was focussed on long term technological infrastructure, semiconductor manufacturing, innovative industries and digital services with the view of enhancing India in the global technology front.

India Semiconductor Mission 2.0

The India Semiconductor Mission 2.0 aims to strengthen semiconductor manufacturing in India by supporting chip design, equipment production and local supply chains. Among the biggest developments was the release of India Semiconductor Mission (ISM) 2.0 that is the development and expansion of the semiconductor policy originally announced in 2021. The initial mission was made to establish semiconductor fabrication potential in India. The government will under the new phase contribute to the manufacture of semiconductor equipment, materials and designing abilities, and reinforce the supply chain. It further stressed industry based research and training facilities that were aimed at creating a talented workforce in the industry.

Under this effort, the Budget raised the expenditure on the Electronics Components Manufacturing Scheme to Rs40,000 crore, which is to further expand the Indian domestic electronic and chip design ecosystem.

The government has also proposed special Rare Earth Corridors in Odisha, Kerala, Andhra Pradesh and Tamil Nadu in addition to semiconductor support. The proposed rare earth corridors in India will ensure steady access to critical materials needed for chip production and high-tech manufacturing. The corridors aim to support the local supply chain of the rare earth materials which are essential raw materials to the high-technology industries such as chip production. According to industry expert Prabhu Ram, Head of Industry Intelligence, CyberMedia Research, “India Semiconductor Mission 2.0 is a strategic move to reduce dependence on imports and strengthen domestic electronics manufacturing over the next decade.”

Supporting India’s creative and digital content economy

The government’s focus on the AVGC sector in India reflects its ambition to turn creative technologies into a major employment engine by 2030. The Union Budget put a strong focus on the Animation, Visual Effects, Gaming and Comics (AVGC) industry in the country as it is a booming business that can create millions of jobs. Rajeev Chandrasekhar, former Minister of State for Electronics and IT (industry commentator), said “The AVGC sector combines creativity with technology and can become a major job creator if India builds strong education and production ecosystems.”

The government declared to support the Indian Institute of Creative Technologies in Mumbai that will serve as an industry collaboration and training hub. It also intends to open AVGC content creator labs in 15,000 high schools and 500 colleges nationwide as a pathway to the creative economy pipeline of skilled professionals.

This move was celebrated by industry leaders, and they pointed out that the content economy of India such as the animation and game industry will gain the advantage of formalised training and infrastructure.

Budget 2026 cloud tax holiday

The Budget 2026 cloud tax holiday is expected to accelerate cloud services investment in India and expand the network of data centres in India. The Finance Minister also declared a tax holiday of up to 2047 on foreign providers of cloud services through the use of data centres in India as an extremely significant boost to digital infrastructure investment. The policy will focus on attracting international cloud service offerings to invest more in local data centres and turn India into a cloud and digital services hub.

The measure also mandates these firms to sell to the Indian consumers through the Indian entities or resellers so as to be entitled to the tax benefit. Another provision in the Budget is a safe harbour rate of 15%  on the expenses upon which costs of data services are supplied by related parties in order to ease tax compliance and create regulatory certainty.

Government officials and analysts termed the move as more than a fiscal incentive, this place as a strategic move in entrenching global cloud infrastructure in India and enhancing its competitiveness as a digital investment destination.

AI tools for agriculture

The multilingual chatbot marks a major step in deploying AI for farmers in India, especially for weather alerts, crop guidance and market advice. Technology was also brought on board by the Budget in order to assist the agriculture sector. Sitharaman declared the creation of a multilingual artificial intelligence (AI) chatbot to support farmers and other workers in the agriculture field. This AI application is aimed at supplying information and assistance in various languages to assist in the farming styles, climate forecasts and additional farming endeavors as the government strives to utilise technology to empower the rural and agricultural communities.

Customs duty exemptions for technology

These customs duty exemptions for technology will lower manufacturing costs across electronics, aviation and renewable energy sectors. Special exemptions on custom duty were also announced on inputs that are specified in the manufacture of goods and high-tech projects. These are exemptions on components on microwave ovens, input materials on aviation manufacturing, and critical minerals on production of solar glasses as well as imports on nuclear power projects until 2035. Such measures will reduce the expenses among major industrial and technology supply chains.

A long term vision for tech growth

Although Budget 2026 did not announce consumer gadget relief or device-specific subsidies, the focus on semiconductor capability, cloud infrastructure, creative industries and digital tools can be considered a strategic outlook in the context of the intention to enhance the technological base in India. These steps should have a certain impact on the next decade of the tech ecosystem in the country, as it will attract investments, stimulate innovation and develop local capacity in the field of manufacturing, as well as in terms of digital services.