EY on Thursday said the government should consider extending Production Linked Incentive (PLI) scheme to new technology segments such as AI, space, among others in the upcoming Budget.

 “To stimulate private investments, the existing Production-Linked Incentive (PLI) scheme may be extended to cover new technology sectors such as AI, space, and robotics,” said Sameer Gupta, national tax leader, EY India.

“Additionally, public infrastructure investments in futuristic areas, including AI, GenAI, robotics, and space technology, may induce growth of private investment in these sectors,” Gupta said.

“Targeted incentives for the emerging industries will be crucial in driving innovation and attracting both domestic and foreign investors. On the tax front, businesses look for a strong commitment to tax certainty and streamlined compliance processes,” he added.

It may be noted that in the Budget last year, PLI allocations were increased in some key sectors, with a aim of providing a strong push to accelerate industrial growth.

Several sectors saw substantial hikes in allocations in last year's Budget

In the Budget last year, several sectors witnessed substantial hikes, with allocations for electronics and IT hardware soaring from ₹5,777 crore (revised estimate for 2024-25) to ₹9,000 crore, and automobiles and auto components seeing a remarkable jump from ₹346.87 crore to ₹2,818.85 crore. The textile sector also received a major boost last year, with its allocation surging from ₹45 crore to ₹1,148 crore.

PLI scheme was launched in 2020 and aligns with the government’s policy self-reliance. By November 2024, committed investments under the PLI scheme had reached ₹1.61 lakh crore, according to data from the government.

EY said in a pre-Budget note that amidst a global economic landscape characterized by volatility, EY India emphasises the critical role of the upcoming Union Budget 2026 in shaping India’s economic trajectory.

“With a keen focus on sustaining robust growth, enhancing tax certainty, and driving sector-specific investments, EY India suggests adopting a forward-thinking approach that reinforces investor confidence and catalyses private sector participation,” it added.

“At a time when the economy is positioned for further growth, the Budget must serve as a strategic blueprint that aligns fiscal discipline with ambitious growth objectives, ensuring that India remains a competitive player on the global stage,” it added.