India’s Union Budget 2025 boosts AI, semiconductors, and rural broadband

India’s Union Minister of Finance and Corporate Affairs, Nirmala Sitharaman, presented the Union Budget 2025-26 in Parliament today, marking her eighth consecutive budget since the BJP government came to power in 2014. This is also the the first full fiscal budget of Modi 3.0 government. 

The Budget 2025 prioritises digital transformation, communication infrastructure, semiconductor manufacturing, Artificial Intelligence (AI), and Research and Development (R&D), with substantial increases in funding for key technology-driven initiatives. This was in line with the Voice&Data’s report on budget expectations.

The Union Budget, however, falls short is several areas, including a 34.9% decline in the Department of Telecommunications (DoT) budget, from Rs 1,24,408.71 crore to Rs 81,005.24 crore, indicating reduced capital infusion into state-owned telecom firms. Voice&Data had earlier reported that with the state-run BSNL showing improved financial stability and higher revenue generation, the government might reallocate its support to other sectors.

Here is a quick snapshot of what the Union Budget 2025-26 offers to the ICT sector.

Communication and Telecom Sector

The Finance Minister has increased budget allocation for Universal Service Obligation Fund (USOF) by 8.1%, up from Rs 18,500 crore to Rs 20,000 crore. This indicates the government’s commitment to increasing the footprint of rural telecom connectivity. 

To drive rural broadband expansion, the budget indicates a massive 238% increase in allocations for BharatNet, up from Rs 6,500 crore to Rs 22,000 crore. This highlights the government’s aggressive push for last-mile connectivity. Sitharama in her budget speech also announced that, “Broadband connectivity will be provided to all government secondary schools and primary health centres in rural areas under the Bharatnet project.” 

To accelerate domestic manufacturing of lithium-ion batteries for mobile phones, Sitharama has proposed that 28 capital goods for mobile phone battery manufacturing be added to the list of exempted capital goods. This move aims to strengthen India’s battery ecosystem and reduce dependence on imports.

The budget also proposed a reduction in Basic Custom Duty (BCD) on Carrier Grade ethernet switches from 20% to 10% to prevent classification disputes and to make it at par with Non-Carrier Grade ethernet switches.

Digital Technology and ICT Development

Under the Budget 2025, the Ministry of Electronics and IT (MeitY) saw a 48.2% increase in allocation, rising from Rs 17,566.31 crore (Revised 2024-25) to Rs 26,026.25 crore in 2025-26. However, the Digital India Program received Rs 4,071 crore, a modest increase of 1.8%, indicating a focus on maintaining digital infrastructure momentum. Similarly, investments in cybersecurity has been increased by 142.9%, from Rs 322 crore to Rs 782 crore, reflecting a stronger commitment to securing India’s digital assets.

Deep Tech and AI continue to be the focus area of the government’s initiative to lead the technology space. Accordingly, the budget allocated Rs 2,000 crore for IndiaAI Mission, part of the budgetary outlay of Rs 10,372 crore that the government had announced in March 2024. 

The finance minister also announced that the government will be setting up a Centre of Excellence (CoE) in AI for education with a total outlay of Rs 500 crore.  The government had earlier announced three CoEs in AI for agriculture, health, and sustainable cities in 2023. 

Sitharaman also announced that the government will start a National Geospatial Mission to develop foundational geospatial infrastructure and data. “Using PM Gati Shakti, this mission will facilitate modernisation of land records, urban planning, and design of infrastructure projects,” she said. Towards this, the government has allocated Rs 500 crore to support AI-driven broadcasting, digital mapping, and satellite communications.

The semiconductor and display manufacturing was allocated Rs 7,000 crore, an 83.4% increase from Rs 3,816.47 crore in the previous year, reflecting India’s ambition to strengthen its chip manufacturing ecosystem. Similarly, the Production Linked Incentive (PLI) for electronics and IT hardware has been increased by 55.8%, from Rs 5,777 crore to Rs 9,000 crore, indicating continued support for domestic electronics manufacturing.