BVR Mohan Reddy, Founder Chairman, Cyient Ltd & Former Chairman, Nasscom
| Photo Credit:
BIJOY GHOSH
They are often judged by what they announce; their deeper impact, however, lies in what they quietly enable. Seen through this lens, the Union Budget 2026 represents a meaningful step in India’s evolving technology journey. At a time of rapid technological change, fragile global supply chains, and strategic competition among nations, the Budget signals a shift away from short-term fixes towards building durable capabilities. Its emphasis on depth— across manufacturing, digital infrastructure, innovation, and services — suggests growing policy confidence in India’s ability to compete meaningfully in global technology value chains over the long term.
In the semiconductor sector, the Budget underlines India’s determination to build a globally relevant ecosystem by moving beyond basic assembly towards design-led innovation, advanced manufacturing, and deeper integration across the value chain. Strengthened support under the Semiconductor Mission, including incentives for fabless design, advanced packaging, materials, and equipment, reflects a recognition that technology sovereignty cannot be achieved through isolated interventions. This direction aligns with global efforts to diversify chip supply chains and reduce concentration risks. By explicitly linking semiconductors with artificial intelligence, electronics manufacturing, and critical infrastructure, the Budget places the sector at the centre of India’s economic, technological, and strategic priorities.
Data centres, increasingly central to digital economies worldwide, are increasingly recognised as critical infrastructure. The Budget provides greater certainty on data localisation norms, long-term tax treatment, and facilitation for global cloud service providers, strengthening India’s attractiveness as a destination for large-scale digital infrastructure. Measures that address reliable power supply, renewable energy use, and high-quality connectivity improve the commercial viability of such investments. Encouraging hyperscalers and enterprise players to locate data centres in India ensures the country is not merely an end market for digital services but also an active host for the infrastructure that supports cloud computing, AI applications, cybersecurity, and digital public platforms.
The Budget also reflects an evolution in how India views its start-up ecosystem. The emphasis shifts from the early years of formation to the more demanding phase of scaling, sustainability, and leadership in deep-technology domains such as AI, semiconductors, climate technology, and advanced manufacturing. Continued policy support, alongside improvements in tax certainty, compliance simplicity, and access to growth capital, is likely to strengthen confidence across the start-up value chain. Increasingly, start-ups are being recognised not as peripheral experiments, but as integral contributors to innovation, employment creation, and productivity growth.
Supporting these sectoral initiatives are important reforms aimed at enhancing the competitiveness of India’s IT and technology services industry. The expansion of the safe harbour threshold, the move towards a uniform profit margin across IT service categories, and the commitment to faster resolution of advance pricing agreements collectively address long-standing concerns around tax uncertainty and disputes. These steps improve predictability for multinational clients and investors, reinforcing India’s standing as a reliable and long-term base for global IT and engineering services.
Ultimately, the value of Budget 2026 will be shaped less by the size of individual incentives and more by the consistency of execution and policy continuity. By strengthening foundational technologies, supporting innovation as it scales, and reducing long-standing frictions in taxation and compliance, the Budget reflects a more confident and durable approach to technology policy. If sustained over the coming years, these measures can help India steadily move up global technology value chains — an essential requirement if the country is to realise its economic and technological ambitions as it approaches 2047.
BVR Mohan Reddy, Founder Chairman, Cyient Ltd & Former Chairman, Nasscom
Published on February 1, 2026