Union Budget 2026 decoded: expectations vs outcomes for India’s tech sector

For India’s technology and manufacturing ecosystem, the Union Budget 2025 was about expectation-setting. Union Budget 2026–27, presented by Finance Minister Nirmala Sitharaman, is about execution. A year ago, industry leaders spoke about what India needed to prepare for: cybersecurity resilience, AI readiness, semiconductor ambition, MSME support, and manufacturing scale. This year, the Budget has responded with clearer policy intent, larger financial commitments, and a sharper focus on moving Indian industry up the value chain.

From a Rs 40,000 crore push for Semiconductor Mission 2.0 to a Rs 10,000 crore MSME Growth Fund, Budget 2026 reflects how last year’s expectations have evolved into structured delivery.

What the technology industry expected from the Union Budget

Cybersecurity, data, and AI readiness

In the run-up to Budget 2025, the technology sector’s expectations were anchored in future preparedness.

Sunil Sapra highlighted the urgent need to strengthen India’s cybersecurity framework through higher infrastructure investments, public–private collaboration, and skill development. The emphasis was on building resilience before threats escalated further.

At the same time, Puneet Gupta spoke about intelligent data infrastructure as the backbone of AI adoption. Cloud incentives, data localisation, and scalable platforms were seen as essential for India’s digital economy to mature.

The common thread across these expectations was clear. The industry was asking the government to lay the foundations.

Manufacturing and electronics: scaling domestic capability

Manufacturing voices in 2025 were focused on capacity expansion and incentives.

Kishan Jain and Rajesh Jain called for stronger infrastructure investment, expanded PLI schemes, tariff rationalisation, and support for energy-efficient technologies. The goal was to reduce import dependence while boosting domestic production.

In parallel, the semiconductor ecosystem framed its expectations as a long-term journey.

Ajit Manocha emphasised sustained policy commitment, export incentives, and collaboration with IITs and NITs to build a skilled workforce, warning that semiconductor leadership could not be achieved through short-term policy cycles.

MSMEs, startups, and affordability

For MSMEs and startups, Budget 2025 expectations were rooted in access and affordability.

Chitranshu Mahant highlighted the need for reduced GST on educational devices, affordable connectivity in rural and semi-urban India, and easier access to credit. The emphasis was on democratising technology adoption and supporting domestic manufacturing tied to education.

Across the board, the industry’s 2025 message was consistent: create enabling conditions, reduce friction, and prepare India for the next phase of growth.

What the Union Budget 2026 delivered

Union Budget 2026–27 takes many of those expectations and converts them into structured policy actions.

Manufacturing and MSMEs at the core

The government identified six focus areas for holistic growth, with manufacturing and MSMEs at the centre. A Rs 10,000 crore MSME Growth Fund was announced to create future champions, directly addressing long-standing industry demands for patient capital.

Leaders like Rahul Sharma described this as a practical step that supports sustainable MSME growth rather than short-term relief.

Semiconductor Mission 2.0: from intent to execution

The most consequential announcement was the Rs 40,000 crore enhanced outlay for Semiconductor Mission 2.0, marking a clear shift from ambition to execution.

Industry reactions underline how closely this aligns with earlier expectations.

Gokul NA said ISM 2.0 moves beyond fabrication to building capabilities across equipment, materials, design, and Indian intellectual property, exactly the ecosystem-level approach that industry leaders had sought.

Madhav Sheth described Budget 2026 as a signal that India is now playing for depth, not just scale, in electronics manufacturing.

From an execution lens, Paritosh Prajapati pointed to the jump in the Electronics Components Manufacturing Scheme outlay from Rs 22,919 crore to Rs 40,000 crore as proof that policy has moved from intent to delivery.

Adding further perspective, Pankaj Shah said the renewed focus on semiconductor and component manufacturing, coupled with customs duty exemptions, will reduce import dependence and strengthen focused manufacturing sectors.

From a technical standpoint, Kshitij M Kotak cautioned that fabrication is only one part of the ecosystem, stressing the importance of manufacturing a broader range of integrated circuits to unlock higher value creation.

Skills, AI, and workforce readiness: continuity with sharper focus

While skill development featured prominently in 2025 expectations, Budget 2026 elevates it as a structural requirement.

The proposal to establish an Education to Employment and Enterprise (E2E) standing committee directly links education, applied research, and employability.

Yuvraj Shidhaye warned that AI-driven scale must be balanced with workforce resilience, a concern echoed by Dr Ramya Chatterjee, who noted that advanced manufacturing depends as much on skilled talent as on capital investment.

At the innovation layer, Vikram Labhe welcomed the decentralisation of innovation, saying that bringing research closer to emerging talent pools will strengthen India’s applied intelligence pipeline.

Inclusivity also finds a place in the 2026 narrative. Sujata Seshadrinathan highlighted the importance of addressing AI’s impact across youth, farmers, women in STEM, and Divyang communities, reinforcing the Budget’s broader social lens.

From expectations to outcomes: what changed between 2025 and 2026

The contrast between the two Budget cycles is telling.

• 2025 was about building readiness, frameworks, incentives, and foundational capacity.

• 2026 is about depth, ecosystem building, execution certainty, and long-term stability.

Expectations around cybersecurity, AI, Cloud, semiconductors, MSMEs, and skills have not disappeared. What has changed is the maturity of policy response. Budget 2026 shows an alignment between what the industry asked for and what has been delivered.

The emphasis is not on quick wins. However, it is a wait-and-watch game to see how this budget, with a bigger picture in focus, would roll out. In the long run, by 2047, how this budget actually delivers, we should keep an eye on.