New Delhi: The Union Budget 2026 underscores the government’s intent to strengthen India’s tech growth engine, laying out capital and policy support for semiconductor manufacturing, data infrastructure and digital public platforms, even as startup founders and investors press for clearer, startup-friendly tax and capital measures.
A flagship highlight for the deep-tech and hardware ecosystem is the launch of India Semiconductor Mission 2.0, backed by a substantial outlay to support chip design, materials and equipment manufacturing, and broader supply chain resilience. This move is expected to benefit hardware-centric startups and attract upstream investment into a segment critical for India’s tech sovereignty.
In the cloud and software domain, the budget extended a tax holiday for foreign cloud companies until 2047 on income derived from Indian data centres. Industry analysts say this could lower infrastructure costs for domestic SaaS and enterprise tech startups while boosting India’s cloud ecosystem.
The government also continued its emphasis on digital public infrastructure and AI platforms, including initiatives like Bharat-VISTAAR, a multilingual AI tool integrating agricultural and advisory data — a potential demand signal for agritech and AI-solution providers.
On the skills front, proposals to set up over 15,000 AVGC labs across schools and colleges aim to widen the talent pipeline for gaming, animation and creative technologies — sectors where Indian startups have seen rapid growth.
Despite these sectoral support measures, the budget drew mixed reactions from the startup ecosystem. Founders and venture capitalists had looked for startup-specific tax reforms, including eased ESOP taxation, capital gains relief and provisions that better align tax events with exit timing — but such calls were only partially met, if at all.