MC EXCLUSIVE Budget 2026 may offer incentives to attract more global investment in AI

• FY27 budget may focus on AI and data centres to attract global investment
• Industry seeks tax holidays, duty waivers, and incentives for data centre growth
• Govt aims to boost AI innovation, access, and responsible adoption nationwide

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The budget for the financial year 2026-27 is likely to prioritise artificial intelligence and data centres, as the government is keen to attract "far more" global investment in the AI-ecosystem, sources have told Moneycontrol.

"There is an immense opportunity in India for investors. We saw that in 2025, with the announcement of $15 billion investment by Google for its AI hub (data centre and fibre-optic network) in Andhra Pradesh," a senior government official told Moneycontrol.

The Economic Survey 2025-26 has proposed an “AI Economic Council” to adjust the pace and sequencing of artificial intelligence (AI) adoption in India, with focus on employment outcomes, skilling readiness and broader socio-economic stability.

The survey said the proposed body should be be separate from an AI Governance Council and function as a coordinating authority rather than a technology regulator.

It has reckoned  that the Council work closely with the private sector to draw up a 10-year roadmap for AI deployment. This should include mapping out the profile of jobs affected, geographies where displacement may be concentrated, and the scale of jobs likely to be automated or augmented.

"We want to attract many such investments in the coming years…the Union Budget for FY27 could pronounce such policies which will be attractive for global tech companies to build their AI stack in India."

The industry has sought a conditional tax holidays for some data-centre developers, with eligibility tied to capacity thresholds, employment and green energy targets, according to sources.

They also want customs duty waivers on critical imported equipment for an initial 5–10 year window and input tax credit refunds on procuring data centre capital assets.

In December, American tech giants Microsoft and Amazon pledged more than $50 billion toward India’s cloud and AI infrastructure. Intel announced plans to make chips in collaboration with Tata Electronics to cater to rising domestic demand.

"We have a large consumption market and a huge working population. The global tech companies and other investors are aware of it. That’s why they don’t want to miss any opportunity. The government is willing to provide incentives or tweak policies to encourage development of AI stack," the official quoted above said.

In March 2024, the government had approved a Rs 10,372- crore India AI mission. The goal is to build a comprehensive ecosystem that drives innovation, supports start-ups, strengthens data access and ensures the responsible use of AI for public good. There are seven pillars of the mission, ranging from building GPUS to foundational large language models, in the next five years.

A white paper released in December also outlined a detailed policy vision for democratising access to artificial intelligence infrastructure, positioning it as a critical priority for India’s digital and economic future.

It also talked about how wider and more affordable access to compute power, datasets and AI models can enable innovation beyond large corporations and major technology hubs, while supporting responsible and inclusive AI adoption nationwide.

According to Deloitte, the government in the budget can consider policy guidelines defining time-bound procurement milestones for companies pledging to acquire GPUs on a phased schedule. "Fiscal incentives, such as import duty benefits on these phased approaches, should be provided to encourage these companies to procure GPUs on committed time and deploy," the company said in a note.

The government may also consider a few measures to relax the mandate of procuring a minimum of 1000 GPUs per bidder,42 to encourage smaller players, such as start-ups and MSMEs, to buy GPUs easily, Deloitte said.