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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 INR 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 INR 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.
This article first appeared in the Fortune India on 8 January 2026.
