India is at the forefront of driving growth and profitability through Innovation, Research and Development. The Indian Budget 2025-26, presented by Finance Minister Nirmala Sitharaman, has outlined a comprehensive approach to fostering innovation, research, and technological advancement as a key pillar of the country’s growth and global competitiveness. The budget focuses on driving India’s innovation ecosystem forward, placing particular emphasis on sectors such as artificial intelligence, deep-tech, quantum technology, and research & development. Several initiatives have been proposed to create a robust research infrastructure, stimulate private sector participation, and encourage collaboration between academia, industry, and the government.
Boosting Private Sector Innovation
A significant highlight in the 2025 budget is the allocation of ₹20,000 crore to stimulate private sector-driven research and innovation. This allocation is aimed at ensuring that the Indian private sector plays a leading role in the development of cutting-edge technologies, products, and services. In recent years, private sector involvement in research and development has become increasingly important, particularly in industries such as pharmaceuticals, biotechnology, and high-tech engineering. This budget allocation is seen as a direct effort to foster a culture of innovation in India’s corporate sector.
The funds will be used to support research projects that are aligned with India’s broader goals, including sustainability, digital transformation, and healthcare innovation. By incentivizing private investments in R&D, the government hopes to promote collaboration between startups, academic institutions, and established industries. Such public-private partnerships can lead to breakthrough innovations and accelerate the commercialization of new technologies.
The Deep Tech Fund
A groundbreaking move in the 2025 budget is the announcement of a dedicated Deep Tech Fund aimed at supporting the growth of high-tech startups. Deep-tech companies focus on disruptive innovations in fields like artificial intelligence (AI), machine learning, quantum computing, robotics, and space technology. These technologies often require substantial upfront investment in research and long timelines to bring products to market.
With the establishment of the Deep Tech Fund, India aims to cultivate a startup ecosystem that can compete on a global scale. This fund will provide financial support for deep-tech ventures at different stages of their development. Startups working on emerging technologies will now have access to capital that was previously limited or difficult to obtain. The creation of this fund is particularly crucial as it addresses the unique challenges that deep-tech entrepreneurs face, such as long gestation periods and the need for specialized talent and infrastructure.
Moreover, this initiative aligns with India’s aspirations to become a leader in areas like AI, quantum computing, and space exploration. The Deep Tech Fund is expected to attract foreign investment and provide Indian innovators with the resources they need to scale up their operations and create world-class technologies.
Artificial Intelligence (AI) and Education
India’s focus on artificial intelligence as a key enabler of innovation is evident in the budget’s emphasis on AI research and education. The government has announced the creation of an AI Centre of Excellence for Education, with an investment of ₹500 crore. This center will focus on nurturing talent and research in AI, preparing India’s future workforce for the challenges and opportunities posed by the rapidly evolving field of AI.
The Centre will collaborate with leading global institutions and local universities to develop curriculum and training programs that will provide students with the skills required to excel in AI-related fields. In addition to academic programs, the Centre will foster research initiatives that aim to push the boundaries of AI technology and its applications across various industries. From healthcare and agriculture to finance and manufacturing, AI has the potential to revolutionize multiple sectors, and India wants to be at the forefront of this transformation.
This initiative is part of the broader Digital India program, which aims to harness the power of technology to drive economic growth and improve public services. The AI Centre of Excellence will act as a hub for cutting-edge research, attracting both national and international talent, and promoting India as a global AI research leader.
National Quantum Mission
The National Quantum Mission, which has been allocated ₹6,003.65 crore for the period 2023-2031, is another major initiative outlined in the budget. This ambitious project aims to accelerate research in quantum technologies, which are expected to have transformative effects on fields such as cryptography, communications, and computing. The mission will provide the necessary infrastructure and funding to support both fundamental and applied research in quantum science and engineering.
India’s investment in quantum research is an indication of the country’s recognition of the importance of quantum technologies in shaping the future. As global competition intensifies in this field, the National Quantum Mission aims to position India as a leading player in the development of quantum technologies. The focus will be on creating a vibrant quantum research ecosystem that can generate world-class innovations and applications for industries ranging from cybersecurity to pharmaceuticals.
This mission also ties in with India’s broader vision of becoming a global leader in science and technology. With a strong emphasis on research, collaboration, and innovation, the National Quantum Mission aims to lay the foundation for groundbreaking advancements that will drive India’s technological capabilities forward.
Strengthening Research Infrastructure
The 2025 budget has also made provisions to strengthen India’s research infrastructure across various domains. A significant portion of the funds will be directed towards the development of new research labs, innovation hubs, and technology parks that will facilitate the growth of research activities. The government is keen on building state-of-the-art facilities that can support cutting-edge research in emerging technologies like AI, quantum computing, biotechnology, and material sciences.
Furthermore, India’s academic institutions, particularly its IITs (Indian Institutes of Technology) and IISERs (Indian Institutes of Science Education and Research), are expected to benefit from increased funding to enhance their research capabilities. By equipping these institutions with the necessary resources, the government aims to create an environment conducive to world-class research and innovation.
Gene Bank for Crops Germplasm
The government in a move to bolster agricultural productivity and future food security announced setting up of National Gene Bank. This announcement comes almost 3 decades after first such Gene Bank was established in the country. The establishment of a second such bank comprising a million germplasm lines will be set up for future food and nutritional security and provide conservation support to both public and private sectors for genetic resources.14 India’s first gene bank was set up in 1996 by the Indian Council of Agricultural Research-National Bureau of Plant Genetic Resources (ICAR-NBPGR) in New Delhi. This bank is comprised of 12 regional stations across the country for collection and storage of vital crop germplasms. These germplasms are the genetic constituents of plants or animals that is used in research, conservation and crop breeding.15
National Geospatial Mission
In the Union Budget of 2025-26 the government launched its ambitious National Geospatial Mission. Geospatial refers to data or information that is associated with a specific location on the Earth’s surface. The mission will be aimed at modernizing land records and enhancing urban planning across India. This initiative will leverage the existing PM Gati Shakti framework to develop foundational geospatial infrastructure and data, facilitating improved design and execution of infrastructure projects.16 This mission aims to enhance foundational geospatial infrastructure and data, leveraging the PM Gati Shakti initiative, which was launched in 2021. In the long run government plans to consolidate all geospatial data for better planning and delivery of other welfare schemes. Although this is seen as a positive step there has been concerns regarding allocation of budget for this ambitious project. ₹100 Cr. has been announced by the government for this project which is seen by many to be too low.17
Tax Benefits for Start Ups
- The government in order to address the growing discontent within the startup ecosystem with regards to the taxation policy, has in the Union Budget 2025-26 announced tax benefits for 5 more years i.e., startups which are incorporated before April 1, 2030. Previously, startups incorporated between April 1, 2016 and March 31, 2024 were eligible for tax benefits under the Startup India program. The budget 2024 extended this deadline to March 2025, before extending it again in the current Union Budget 2025-26. The benefits available to all startups who will be incorporated till April 1, 2030 includes a three-year tax holiday, exemption from long-term capital gains tax, and exemption from tax on investments. To avail the benefits, startups must be recognized by the Department for Promotion of Industry and Internal Trade (DPIIT) and have annual turnover of over ₹ 100 crore, among other criteria.25
- In order to boost ease of doing business for startups, the government has announced extending the benefit of tax exemption as provided u/s 80-IAC of the Income Tax Act, 1961 for startups for another period of five years. Hence, the benefit will be available to eligible start-ups incorporated before April 1, 2030. Under the benefits, it gives a 100% tax exemption on the incurred profits that the startup made in any three consecutive assessment years out of 10 years beginning from the year in which the eligible startup is incorporated.26 The government believes that this exemption will provide the Indian startup ecosystem with a much needed push, enabling them to retain more capital for growth and innovation. This move will not only attract more investment but also contribute to this government’s vision to make India a leader in next-gen technology.
Conclusion
India’s Budget 2025-26 highlights the government’s commitment to innovation, research, and technology as vital drivers of economic growth. The proposed measures, including the establishment of the Deep Tech Fund, the AI Centre of Excellence, and the National Quantum Mission, are designed to position India as a global leader in emerging technologies. By fostering a dynamic innovation ecosystem and encouraging private sector participation in research, the government hopes to ensure that India remains at the cutting edge of global technological advancements.
These initiatives represent a strategic shift towards creating an environment that supports long-term, high-impact research and development. By investing in education, infrastructure, and collaboration, India is poised to become a hub for innovation that will fuel future growth, create jobs, and enhance the country’s global competitiveness.
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