Budget 2026 May Focus On Stronger AI Infrastructure And Skilled Talent: Experts

The Union Budget is scheduled for presentation on February 1, 2026. As the government finalises its fiscal plan, experts S. Anjani Kumar, Debashish Banerjee and Shrenik Shah, partners of Deloitte India, anticipate what the industry of artificial intelligence expects to see in the upcoming Union Budget. Their views are based on the current environment, the progress made through recent national programmes and the gaps which still limit large-scale artificial intelligence (AI) development.

India has seen a rapid increase in its AI activity in recent years through initiatives to support the development of local models, create AI-ready datasets, and increase access to computing resources. The India AI Mission, approved in 2024, is an important step in that direction, with a five-year budget focused on enhancing access to GPUs and strengthening local innovation. There has also been an effort to encourage the adoption of digital services in regional languages with platforms like Bhashini. Meanwhile, AI tools have started supporting tax authorities to detect non-compliance and enhance policy analysis.

While this progress is indeed encouraging, the experts nevertheless point to challenges that range from limited private investment in compute capacity, a shortage of experienced AI professionals, to the need for domestic models that better reflect local languages and cultural settings.

Stronger AI Data Infrastructure

The first major expectation is large-scale data infrastructure support. That includes measures such as input-tax credits on GST for data-centre developers, tax holidays for qualifying projects and customs-duty waivers on essential imported equipment. They also propose a compute-credit scheme offering discounted GPU and TPU hours for start-ups, universities and research institutions.

These steps are expected to reduce the capital cost and improve access to computing power, therefore incentivising companies to train AI models within the country. According to experts, this can help strengthen data sovereignty, shorten the development cycles, and attract more private investment in large-scale digital infrastructure.

Sustainable Data-Centre Growth

The second expectation pertains to sustainability. There is a belief by experts that to ensure qualification for incentives, data centres should follow some defined targets on energy efficiency and renewable energy. Possible steps suggested include accelerated depreciation, GST benefits, interest-rate support, and grants for cooling and heat-recovery systems that reduce energy consumption.

Skills and Indigenous AI Models

The third expectation focuses on human capital and domestic innovation: while leading in AI skill penetration, experts note a shortage of professionals with experience in building large real-world AI systems. They expect the Budget to support project-based AI learning in schools, colleges, and research institutions so that a strong talent pipeline is built.

They further call for incentives that could help local companies and startups develop large language models suited for local needs, easier access to hardware, and supportive policy measures. They believe this can lead to more innovation, wider availability of regionally relevant tools, and reduced dependence on foreign AI systems.