Budget FY25-26: What India’s Telecom, IT and Tech Industry Want from Nirmala Sitharaman

New Delhi: As India moves towards strengthening its position as a global technology powerhouse, industry experts anticipate that the Union Budget FY2025-26 will introduce policy and financial measures to drive innovation, boost employment and reinforce India’s digital infrastructure.

Experts from across the telecom, IT, and technology sectors emphasize the need for incentives in AI, deep tech, digital infrastructure and regulatory reforms to foster long-term growth.

AI and IT Workforce Development

Srividya Kannan, Founder and CEO of Avaali, emphasizes the critical role of AI in shaping India’s technology landscape.

“The 2025 Union Budget should focus on creating a robust ecosystem that incentivizes the adoption and development of AI across industries while empowering the tech workforce through structured learning initiatives,” she states.

She further highlights the importance of government support in AI research and development (R&D), which would help India secure a leadership position in global technology innovation.

Echoing similar sentiments, Kapil Joshi, CEO of Quess, points out that India’s IT-BPM sector is expected to grow at a CAGR of 10-12 per cent through 2026, creating a strong demand for skilled professionals in AI/ML, cybersecurity, and cloud computing.

“The hiring outlook in India’s IT sector remains exceptionally strong, driven by rapid technological advancements, digital transformation, and the government’s focus on ‘Digital India’,” he explains.

Joshi also expects a 15-20 per cent increase in budget allocation for IT sector hiring in response to the rising demand for specialized tech talent.

Telecom and Digital Infrastructure Expansion

Manoj Kumar Singh, Director General of the Digital Infrastructure Providers Association (DIPA), underscores the need for government intervention in telecom infrastructure development.

“Despite the telecom sector being recognized as an industry for over two decades, the disparity in electricity tariffs remains unresolved, creating an additional operational burden of approximately Rs 5,000 crore annually for infrastructure providers,” he notes.

DIPA urges the implementation of industrial electricity rates for telecom infrastructure across all states, alongside a reliable 24×7 power supply.

Additionally, Singh advocates for the classification of telecom towers under “Plant and Machinery” to enable better tax benefits, along with increased tax depreciation rates for batteries at telecom sites to support 5G and future 6G developments.

As per other experts, for the last two to three budgets, telecom service providers and the broader telecom industry—including manufacturing and service providers—have consistently requested tax concessions, which could be considered in the upcoming budget.

In terms of major budgetary requirements, it is understood that the Department of Telecommunications (DoT) already has the Universal Service Obligation Fund (USOF), now known as Digital Bharat Nidhi (DBN). A significant amount has already been collected under DBN, and funds must be allocated efficiently for ongoing projects.

Apart from this, more investment is required in R&D, especially in emerging areas such as AI, where numerous use cases can be explored. Systematic funding in innovation is essential, and some industry demands, such as tax reforms and revised tax brackets, also need attention.

Boosting Domestic Manufacturing and R&D

With the government’s focus on ‘Make in India’, Paritosh Prajapati, CEO of GX Group, expects the budget to prioritize sustainability, R&D, and ecosystem support for manufacturing in telecom, IT, and digitization.

“Incentives for eco-friendly manufacturing, R&D, and digital infrastructure expansion will drive innovation. Policies promoting the global competitiveness of Indian-made products and scaling exports will play a key role in contributing to India’s growth,” he states.

Prajapati also calls for increased attention towards developing the electronic components ecosystem, including manufacturing clusters and incentives for domestic production, to position India as a leader in AI and digital hardware.

Regulatory Reforms and Tax Incentives

Legal experts weigh in on regulatory measures that could ease business operations and encourage innovation. Alay Razvi, Managing Partner at Accord Juris, stresses the importance of tax benefits for startups, simplified GST structures, and investment in digital infrastructure, particularly data centres.

“A lot of companies fail in their initial stages due to tax burdens and compliance challenges. A supportive tax regime will help sustain the growth of Indian startups and established tech companies alike,” he argues.

Kartikay Trivedi, Associate at SKV Law Offices, highlights the industry’s expectation for a dedicated Deep Tech fund to support AI, blockchain, and cybersecurity startups.

He also points out the need for revising safe harbour regulations to create a streamlined regulatory framework that reduces compliance burdens and facilitates international collaboration.

“Investment in high-speed internet, advanced data centres, and testing labs is crucial for accelerating digital transformation across industries,” he adds. Additionally, Trivedi emphasizes the necessity of increased budget allocation for Data Protection Boards, which received only Rs 4 crore last year.

Raheel Patel, Partner at Gandhi Law Associates, outlines key expectations for the IT sector: “The budget must strike a balance between innovation and security by allocating financial incentives for cybersecurity, overseeing AI governance, and promoting responsible data management practices.”

He also underscores the importance of transparent taxation policies and enhanced data protection legislation in transforming India into a global IT powerhouse.

Incentives for AI, Deep Tech, and Digital Transformation

Industry experts also call for policy measures supporting deep tech and AI innovation. Diviay Chadha, Partner at Singhania & Co., advocates for incentives in AI, blockchain, cloud computing, and 5G to enhance job creation and cybersecurity.

“Strengthening cybersecurity and fraud detection with AI-driven solutions and investing in skill development are essential to tackling rising financial crimes,” he states.

Similarly, Nakul Batra, Partner at DSK Legal, suggests expanding the Production-Linked Incentive (PLI) scheme to cover a broader range of consumer electronics.

“Introducing tax incentives for deep-tech and AI-driven startups will align with India’s push for innovation and self-reliance,” he added.

Arya Tripathy, Partner at Cyril Amarchand Mangaldas, underscores the importance of incentivizing emerging technologies. “There is a clear expectation that the 2025 Budget will provide for significant allocations towards AI research & development, machine learning, and smart cities,” she states.

Additionally, she highlights industry hopes for reduced tax slabs for virtual digital assets and space technologies, as well as greater clarity on government-backed deep tech funds.

The Union Budget FY2025-26 is poised to play a crucial role in shaping India’s digital economy. As industry leaders and legal experts highlight, the key expectations revolve around AI and deep tech investments, IT workforce development, manufacturing incentives, regulatory reforms, and digital infrastructure expansion.

With India aiming to become a $5 trillion digital economy and a global leader in emerging technologies, the government’s budgetary decisions will significantly impact the nation’s technological and economic trajectory.

Stakeholders remain hopeful that Finance Minister Nirmala Sitharaman will address these critical concerns, setting the stage for sustained growth and innovation in the telecom, IT and technology sectors.

Also Read –

HDFC and Startup India Launch ‘Manufacturing Accelerator Program’ to Boost Innovation in the Sector