India should become a “major AI hub” in coming years, and Indian IT sector’s pivot towards artificial intelligence will be crucial towards this, Union IT and Electronics Minister Ashwini Vaishnaw said on Sunday, hours after the Budget 2026-27 unveiled the launch of India Semiconductor Mission (ISM) 2.0.
The ISM 2.0 has been launched to produce equipment and materials, design full stack Indian IP, and fortify supply chains. The focus will be on industry led research and training centres to develop technology and skilled workforce, as per the budget. A provisional allocation of Rs 1,000 crore has been made towards this for financial year 2026-27.
Vaishnaw also lauded Finance Minister Nirmala Sitharaman’s announcement of providing “tax holiday till 2047” to any foreign company that provides cloud services to customers globally by using data centre services from India. These companies, however, need to provide services to Indian customers through an Indian reseller entity.
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According to Vaishnaw, the Budget announcements will trigger more AI-related investments in India, with total commitments possibly crossing the $200-billion mark. Investors are looking at India due to its “talent pipeline, stable policy regime, and the Indian IT sector that has very nicely pivoted to provide AI services”.
“People want to manufacture AI server components in India, and in the coming years, people want to bring manufacturing of AI chips here,” Vaishnaw added.
Notably, to further enhance India’s AI talent pool, the FY27 Budget has proposed the formation of a high-powered ‘Education to Employment and Enterprise’ standing committee to recommend measures that focus on the Services Sector as a core driver of Viksit Bharat. The committee will also assess the impact of emerging technologies, including Al, on jobs and skill requirements and propose measures thereof.
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