As India stands on the threshold of an AI-led transformation, the Union Budget must move beyond treating artificial intelligence as a niche software vertical and instead recognize it as strategic national infrastructure—on par with power, roads, and telecom. Doing so is essential if India is to transition from being an AI consumer to becoming a global innovation hub.
A critical first step is bridging the R&D investment gap. India’s current R&D spend of 0.7% of GDP lags far behind the global average of 1.93%. Restoring the 200% weighted tax deduction for R&D would provide much-needed relief to deep-tech startups grappling with long gestation cycles and high upfront costs. Complementing this, democratizing AI access requires a national Compute Credit Scheme and a 3–5 year customs duty holiday on critical hardware such as GPUs and TPUs. Without affordable access to this physical backbone, Indian innovators will continue to face structural disadvantages.
Capital forms the third pillar of this ecosystem. Fast-tracking the ₹20,000 crore Deep Tech Fund of Funds can unlock patient, long-term capital required to build foundational AI models. Extending the PLI scheme to AI and robotics would further encourage domestic intellectual property creation over foreign licensing.
Equally vital are data and talent. A structured India Dataset Platform for anonymized, high-quality data, alongside tax incentives for corporate upskilling, is essential to meet the projected demand for one million AI professionals by 2026. Finally, a single-window compliance system would allow founders to focus on building world-class technology rather than navigating regulatory complexity.
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