Indian Tech Leaders Look to Budget 2026 to Ease Scaling Hurdles

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As Finance Minister Nirmala Sitharaman prepares to present the Union Budget 2026 on Sunday, 1 February, India Inc. is urging a shift from headline spending to deeper structural reforms that can sustain growth amid global uncertainties, tariff risks, and rising digital demand. 

Industry stakeholders said the upcoming Budget could push supply-side measures and provide tax clarity to help sectors from manufacturing to digital technologies compete globally.

For the technology sector, the stakes are high. As India targets a $7 trillion economy by 2030, tech is expected to play an outsized role, contributing close to $1 trillion to gross domestic product (GDP), driven by information technology services, software exports, and the growing use of artificial intelligence, automation, and data-driven workflows.

India’s information technology services industry, currently valued at $264 billion, is projected to reach $400 billion by 2030, according to a report by global venture capital firm Bessemer Venture Partners. Between fiscal years 2022 and 2025, the sector grew at a compound annual growth rate (CAGR) of 8.1% and is expected to expand at 8.7% annually through fiscal 2030.

In last year’s Budget, the government pegged total expenditure at ₹50.65 trillion, or about $560 billion at current exchange rates. Within that overall outlay, ₹20,000 crore was allocated to launch a new Research, Development and Innovation scheme, the first tranche of a six-year ₹1 trillion program focused on deep-technology areas such as artificial intelligence, robotics, and quantum computing.

In the FY26 Budget, the government also significantly boosted technology allocations. The Ministry of Electronics and Information Technology was allocated around ₹26,026 crore, and the IndiaAI Mission received over ₹10,300 crore to support artificial intelligence research, computing infrastructure and startups, including plans for expanded graphics processing unit (GPU) compute capacity. Cybersecurity funding also increased to more than ₹1,900 crore, up from about ₹1,600 crore in the previous year.

Even with these allocations, founders and executives say the constraint has shifted. Capital is increasingly available, but execution is not.

Ajai Chowdhry, co-founder of IT services firm HCL Technologies Ltd and chairman of the technology entrepreneurship nonprofit EPIC Foundation, said long-standing structural issues continue to weigh on startup growth.

“India’s Employee Stock Ownership Plan taxation framework is a real challenge,” Chowdhry said. “Dual taxation discourages talent retention and pushes startups to consider overseas structures. Simplifying this is essential for a healthy startup ecosystem.”

Chowdhry also pointed to government procurement as an underused lever. Referring to the defense ministry’s Innovation for Defense Excellence program, which works with startups and micro, small and medium enterprises on defense innovation, he said similar models across ministries could help young companies scale faster by providing reference customers and clearer demand signals.

Cybersecurity has emerged as another pressure point as India’s digital footprint widens. Rajesh Chhabra, general manager for India and South Asia at cybersecurity and data protection firm Acronis, said India faced nearly 265 million cyberattacks in 2025 alone.

“Artificial intelligence-driven ransomware has lowered the barrier for attackers, especially for small and mid-sized enterprises,” Chhabra said, calling for cybersecurity data centers to be recognized as critical national infrastructure.

On artificial intelligence, Pratik Pandey, chief executive of AI-driven astrology platform AstroSage AI, said India needs sustained investment in research and development to keep pace globally.

“The United States and China are moving very fast in artificial intelligence. Without long-term focus, India risks falling behind,” Pandey said, adding that startups also need easier access to credit and faster regulatory approvals.

From the enterprise side, Krupesh Bhat, founder and chief executive of AI workflow automation firm Melento, said many artificial intelligence initiatives struggle to move beyond pilot projects.

“The challenge today is not innovation but scaling,” Bhat said. “Policy, capital and enterprise readiness are not moving at the same pace as technology.”

Infrastructure and skills will shape how far India’s artificial intelligence ambitions go, according to Sachin Panicker, chief artificial intelligence officer at digital transformation firm Fulcrum Digital.

“Investments in data centers, cloud ecosystems and high-performance computing are essential if India wants to move from consuming artificial intelligence to creating it,” Panicker said.

Cybersecurity software company Sophos echoed concerns around digital trust. Sunil Kr Sharma, managing director for India and South Asia, said cybersecurity must be treated as foundational as the digital economy expands.

“Support for artificial intelligence-based threat detection, secure cloud adoption and skills development will be key,” Sharma said.

Trust and accountability will also shape the next phase of growth in regulated sectors, according to Ashok Hariharan, chief executive and co-founder of digital identity verification firm IDfy.

“Trust-led execution is non-negotiable,” Hariharan said, adding that funding for the Data Protection Board of India would signal how seriously privacy law enforcement will be taken.

Whether policy changes ease frictions in hiring, procurement, compliance, and deployment will be a key test for Budget 2026. For technology companies, that will decide how effectively investment turns into scale.