IT committee flags funding cuts, delays in MeitY’s AI, semiconductor push

The report was released on March 16

• MeitY's FY2026-27 budget cut by 17 percent to Rs 21,632.96 crore
• IndiaAI Mission funding cut, only 32% used in FY2025-26
• Panel cites delays, low R&D, and weak AI ecosystem

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The Parliamentary Standing Committee on Communications and Information Technology has flagged funding cuts, underutilisation of allocations, and execution gaps in the Ministry of Electronics and Information Technology’s (MeitY) push on artificial intelligence and semiconductors.

The panel noted that MeitY's overall allocation for FY2026-27 has been reduced to Rs 21,632.96 crore, a 17 per cent cut from Rs 26,026.25 crore in FY2025-26.

Within this, key programmes have seen sharp pruning.

The committee observed that "Semi Conductor laboratory (SCL)… India AI Mission… have shown massive pruning of funds… i.e., 16 per cent… [and] 50 per cent respectively", alongside a Rs 5,000 crore reduction in the Modified Programme for Development of Semiconductors and Display Manufacturing Ecosystem.

On the IndiaAI Mission, the panel flagged both funding and utilisation concerns. It noted that the Ministry "has been able to spend only 32 per cent of the fund allocated at RE stage in FY 2025-26", and that "the amount sanctioned at BE (Budget Estimate) stage in FY 2026-27 is only half the amount proposed by the MeitY."

Budget figures underscore the gap: against a proposed Rs 2,000 crore for 2026-27, only Rs 1,000 crore was allocated, while actual expenditure stood at Rs 256.86 crore as of December 2025 (32 per cent of RE).

The committee also raised broader concerns around execution and ecosystem readiness.

Members flagged the "dismal transition of Modified Programme for Semiconductors from project approval to actual disbursement", as well as delays such as the procurement of the promised 10,000 GPUs under the IndiaAI Mission.

Beyond funding and implementation, the report points to structural weaknesses in India’s deep-tech ecosystem. It highlights issues such as "lack of upfront support from the industry for sharing of domain knowledge, testing and commercialization" and "lack of Indian/International standards… is also a barrier."

The panel further noted that India’s "Gross Expenditure on R&D as a percentage of GDP stands at an abysmal 0.64 per cent… below the global average," raising concerns over the country’s long-term innovation capacity in AI and advanced electronics.

The committee's remarks come at a time when the government is doubling down on initiatives like the IndiaAI Mission and semiconductor incentives, even as global competition for technological leadership intensifies.