India at a digital turning point: Will Budget 2026 deliver the big push we need?

India is approaching Budget 2026 at a moment of rare technological possibility. Over the past decade, the country has built one of the world’s most impressive digital public infrastructures, expanded high-speed connectivity to millions, and nurtured a thriving innovation ecosystem. However, global competition has evolved rapidly, with nations investing heavily in artificial intelligence, sovereign computing, advanced digital infrastructure, cybersecurity, and deep technology. Against this backdrop, Budget 2026 is not just a fiscal event; it is India’s chance to define whether it can convert its digital scale into digital leadership. Stakeholders across industry, startups, academia, and government see this Budget as the decisive pivot between incremental progress and a full national commitment to becoming a global digital superpower. 

India’s digital transformation so far has been defined by scale—more users, more services, more access. But global leadership is not determined by scale alone; it is decided by depth—of compute, innovation, research, cybersecurity, and human capital. Three shifts now define India’s transition to ‘Digital Economy 2.0’: first, companies across sectors are accelerating AI-led transformation, embedding intelligent workflows, automation, and data engineering into operations; second, cloud adoption is reaching a point where domestic compute and data-centre capacity must scale faster to meet AI workloads; and third, India is making its first serious push into deep tech and frontier R&D, areas traditionally dominated by a handful of advanced economies. The decisions made in Budget 2026 will determine whether these transitions become competitive advantages or missed opportunities. 

In late 2025, the central government approved the Research, Development and Innovation (RDI) Scheme, one of the most significant policy commitments to advanced technology in the country’s history. Backed by a ₹1-lakh-crore corpus, the RDI Scheme provides long-term, low-cost financing to private-sector R&D and innovation in sunrise domains such as AI, quantum technologies, clean energy, advanced materials, medical innovation, and future mobility. According to the Department of Science & Technology, the intention is not merely to fund research—it is to catalyse up to ₹10 lakh crore in private deep tech investment and enable the emergence of 5-10 globally competitive deep tech companies over the next 10-15 years. For India, this marks a shift from grant-based support to a full-fledged innovation financing architecture. But a fund, no matter how large, cannot act alone. Budget 2026 must supply the policy backbone—fiscal incentives, regulatory clarity, and infrastructure readiness—that allows RDI to translate into world-leading innovation. 

India has strong research depth but historically weaker pathways to commercialisation. Budget 2026 can change this by creating an environment where innovators can move from prototype to product to global scale. Key enablers include stronger R&D tax incentives and deductions for software product engineering, AI development, and advanced digital technologies; IP commercialisation pathways—from prototype grants to patent-linked incentives and support for global market entry; and institutionalising Deep Tech Fund of Funds mechanisms that can co-invest alongside the RDI Scheme and venture capital. If crafted well, the Budget could lay the foundation for a decade in which Indian companies build not just digital platforms, but world-class deep tech products and solutions. 

In the decade ahead, computing power will matter as much as physical infrastructure did in the last. AI models, cybersecurity systems, engineering design, and scientific computing all demand high-performance infrastructure. India’s cloud and data-centre ecosystem is expanding, but not at the pace required to support global ambitions. Budget 2026 can accelerate readiness by supporting high-performance computing clusters for AI training and advanced modelling; encouraging green data-centre expansion through energy-access clarity and incentive structures; rationalising compute hardware import duties to reduce cost barriers; and creating digital infrastructure zones with fast-track approvals for land, fibre connectivity, and power. For India to compete globally, compute capacity must be treated as a strategic national utility. 

India’s talent remains one of its greatest strengths, but the next 10 years will require entirely new skillsets—cloud engineering, AI/ML development, cybersecurity operations, product engineering, and research engineering. Budget 2026 can build this workforce by launching a multi-year national skilling programme in emerging technologies; supporting mid-career reskilling pathways as traditional delivery models become AI-augmented; and incentivising industry-academia research partnerships and engineering apprenticeships. Global leadership will belong not to the country with the largest workforce, but to the one with the most future-ready workforce. 

A digital superpower must also be a trusted digital superpower. With DPDP Act implementation guidelines now rolling out, and ongoing updates to CERT-In norms and cross-border data frameworks, businesses are looking for stability in privacy operations, data storage, cloud compliance, and digital export taxation. Budget 2026 can provide this by simplifying GST norms for SaaS, cloud, and digital exports; clarifying data-residency and cross-border data rules in line with global best practices; and introducing innovation-cluster benefits similar to SEZ regimes for product engineering and deep tech. Regulation must not slow innovation; it must guide and enable it. 

To truly become a global digital leader, India must strengthen its internal market. Incentivising AI, cloud, and cybersecurity adoption among MSMEs, regulated sectors, and public systems will accelerate domestic digital transformation and stimulate demand for homegrown technology. Expanding digital public infrastructure into new domains such as logistics, health, education, and skilling will further position India as a country where digital solutions reach population scale. 

Across the world, countries are racing to strengthen AI capabilities, build sovereign digital infrastructure, and secure strategic technologies. India has the advantage of scale, innovation, energy, and now, through the RDI Scheme, serious long-term capital. Budget 2026 is the opportunity to bind these elements together. If the Budget delivers on infrastructure, incentives, skills, and trust, India will not merely participate in the global digital economy; it will help shape it. The question will no longer be whether India can become a digital superpower, but how quickly it gets there. 

(The author is partner and technology industry leader at Grant Thornton Bharat LLP. Views are personal.)