India is a very important partner for the European Union in the semiconductor sector as the bloc seeks to work with trusted partners to strengthen its chip supply chains and build its own capacity, a senior European Commission leader said.

Speaking at a joint press conference after the third India-EU Trade and Technology Council (TTC) meeting in Brussels, European Commission Executive Vice-President for Tech Sovereignty, Security and Democracy Henna Virkkunen said India is an important partner for semiconductor research and development because of its vast pool of highly skilled talent.

“With semiconductors, we see that India is a very important partner for the European Union. Our Chips 2.0 was adopted in June. We are especially focusing on improving the resilience of our supply chains. We want to build up our own capacity in the European Union, but we also want to work with our trusted partners,” she said.

Describing the semiconductor industry as global with long and vulnerable supply chains, Ms. Virkkunen said it was important to diversify sources and reduce dependence on any single supplier.

“It’s important to build better resilience for these supply chains to make sure that we are not dependent on one source… That we have alternatives and we have our own capacity.”

“When it comes to research and development of new chips, of course, India is a very important partner for us because it has a very large pool of highly skilled talent,” she said.

Ms. Virkkunen was responding to a question on outcomes of the AI Impact Summit hosted by India and the launch of the Indian government’s Semicon 2.0 programme aimed at strengthening the country’s semiconductor ecosystem.

Calling the AI Impact Summit in New Delhi a success, she congratulated India for hosting the event.

“It was the first time discussions focused on ensuring that everyone has access to these technologies because AI is a crucial, critical technology of the future,” she said.

Her remarks came about a month after the CEO of U.S.-based AI safety and research company Anthropic, Dario Amodei, described the New Delhi summit as “extremely disorganised”.

Ms. Virkkunen said the EU shares India’s vision of making AI technologies accessible while ensuring that they are trustworthy and benefit economies, societies and citizens.

“I think this is something that we very much share with India… we want to have technologies that benefit our economies, societies, and population. Our citizens should be able to trust these technologies, and we are doing this in a sustainable manner,” she said.

A joint statement issued after the TTC meeting said India and the EU agreed to deepen cooperation in semiconductors, high-performance computing, quantum technologies, artificial intelligence (AI) and 6G.

Minister of State for Electronics and IT Jitin Prasada said the Union Cabinet has approved the Semicon 2.0 programme with an outlay of about $13.25 billion.

He said the programme will focus on chip design, semiconductor equipment and materials, research and development, chemicals and gases essential for chip manufacturing, and setting up more fabrication units.

“More manufacturing will come to India, further strengthening our ATMP and OSAT packaging networks. R&D in semiconductors and talent development will also be major thrust areas under the India Semiconductor Mission 2.0 (Semicon 2.0),” Mr. Prasada said.

Where Budget 2025 was largely dominated by the income-tax rate and slab relaxations, Budget 2026 has done away with Big Bang measures. Instead, its scattershot approach, through various sectoral and issue-based measures, when taken together, is aimed at propelling India’s growth over the medium term. Given the level of geoeconomic and geopolitical uncertainties that the Indian economy faces, this diffused approach is likely a more effective policy than targeted Big Bang announcements would be. This is not the time for further disruption. Budget 2026 contains announcements for the manufacturing sector, various services sectors, as well as particular provisions to help labour-intensive sectors such as textiles and leather. In terms of manufacturing, the Budget includes measures covering seven well thought-out areas: biopharma, semiconductors, electronics, rare earths, chemicals, capital goods and textiles. Semiconductor and electronics manufacturing are the few sectors that have gained from the government’s existing PLI schemes. The India Semiconductor Mission 2.0 and the increased allocation under the Electronics Component Manufacturing Scheme are appropriate follow-ups to this. These are sectors where India needs to become globally competitive. The Biopharma SHAKTI scheme is aimed at making India a global biopharma manufacturing hub with an allocation of ₹10,000 crore over the next five years. Pharmaceuticals, already a sector that India does well in, are exempt from the U.S.’s 50% tariffs. It is also important to support those sectors that are currently hit by those same tariffs. The National Export Promotion Mission announced in the last Budget was implemented only by December 2025, nine months into the financial year. The Centre should ensure that this Budget’s integrated programme for the textiles sector does not face similar delays. Also, the various measures aimed at creating ‘Champion MSMEs’, providing them equity, liquidity, and professional support, must be implemented quickly. MSMEs account for 48.6% of India’s exports, and the EU FTA, even if it is implemented soon, will not kick in quick enough to offset the ongoing pain caused by the U.S. tariffs. The services sector, too, stands to benefit from Budget 2026. The high-powered ‘education to employment and enterprise’ standing committee, announced by the Finance Minister, should get off the ground soon. The focus on health care and medical tourism, where India is already developing strengths, is a good start. In keeping with the Budget’s multipronged approach, the Centre has sought to cater to the election-bound States this year through several smaller announcements — such as dedicated rare earth corridors to benefit Odisha, Kerala, Andhra Pradesh and Tamil Nadu, a Coconut Promotion Scheme for Kerala, an integrated East Coast Industrial Corridor for West Bengal, and the first of the new national waterways to begin in Odisha — rather than through the consolidated packages of the past.

As for the Centre’s finances, Budget 2026 offers a mix of expenditure enthusiasm and revenue sobriety. The capital expenditure push, especially with regard to infrastructure creation, has continued, perhaps in reaction to the realisation that current conditions do not encourage private investment. Overall, capital expenditure is set to grow to ₹12.2 lakh crore in 2026-27, amounting to 4.4% of GDP, the highest in at least the last 10 years. This includes the announcement of dedicated freight corridors and training institutes for the manpower needed. These rail corridors are also to be supplemented by a Coastal Cargo Promotion Scheme to incentivise increasing the share of inland waterways and coastal shipping. It is noteworthy that the Centre has revised downwards its capital expenditure for 2025-26 to ₹10.9 lakh crore from the ₹11.2 lakh crore initially budgeted. It remains to be seen if this year’s target will be met, but even coming close will provide a substantial fillip to the economy. On the revenue front, the Centre did not announce any major tax cuts for individuals or corporations. In 2019 and 2025, respectively, corporations and individuals received substantial tax relief. To announce more would have put undue stress on central finances at a time when its expenditure commitments — known and anticipated — are substantial. However, while direct taxes have largely received procedural improvements, the Budget has included a slew of indirect tax relaxations for the promotion of marine, leather and textile products exports, and speeding up India’s energy transition. The tax revenue projections are largely sober. Corporate tax revenue is projected to grow nearly 14% over the Budget estimates of 2025-26. This is broadly in line with the revised estimates for 2025-26 coming in 12.4% higher than the actuals of the previous year. Income-tax revenue has been budgeted to grow 1.9% over the BE of 2025-26 — an expected outcome following last Budget’s substantial rate relaxations. Gross GST revenue has been projected to contract 13.5% in 2026-27, a reflection of the September 2025 rate rationalisation and the end of the Compensation Cess. Taken together, the Centre’s fiscal deficit has been projected at 4.3% of GDP in 2026-27, down from 4.4% estimated for 2025-26. While the Centre’s fiscal consolidation path since the COVID-19 pandemic has been admirable, continued aggression in reducing the deficit deserves some questioning. Even the Economic Survey argued for some fiscal flexibility for the Centre given the geoeconomic and geopolitical conditions. Overall, Budget 2026 may disappoint those looking for massive tax relief or subsidies, but is nevertheless a credible and creditable effort.