After DPDP and RMG ban, adtech looks to Union Budget 2026 for growth

India’s adtech industry is approaching the Union Budget at a moment of structural transition rather than regulatory anxiety. The sector is no longer seeking diluted data rules or softer enforcement. Instead, it is calling for economic clarity, fiscal recognition of compliance costs, and policy-backed growth pathways that allow privacy and scale to coexist. This shift reflects the combined impact of the Digital Personal Data Protection Act and the Real Money Gaming advertising ban, which together have reshaped both the supply and demand sides of the digital advertising economy.

The DPDP framework has tightened consent-led data usage, pushing compliance from theory into everyday operations. Simultaneously, the RMG ban has abruptly removed one of digital advertising’s largest spending categories, creating a dual shock. Data access has become narrower and more expensive, while advertiser demand has contracted, highlighting the ecosystem’s dependence on a handful of high-spend verticals. Against this backdrop, the Budget has become a litmus test of how India perceives adtech’s role in its digital economy.

When Compliance Competes With Innovation

For adtech firms, compliance is no longer a marginal cost; it has become a significant line item that directly influences growth decisions. Rajiv Dingra, Founder and CEO of ReBid, notes that privacy and data governance now consume a substantial share of operating budgets. “Across mid-to-large adtech firms, privacy compliance and data governance typically consumes around eight to fifteen percent of operating budgets, spanning legal work, audits, consent plumbing, data mapping, security, and engineering time,” he says.

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Dingra emphasises that how these costs are treated matters as much as the regulation itself. “If the Budget treated this like infrastructure through capex-friendly treatment and fiscal support, it could realistically free up three to seven percent of annual revenue for product innovation, which is often twenty to forty percent of the build budget in a given year,” he adds. The key shift, he notes, would be that “compliance stops competing with innovation for the same rupee, which is especially important now that DPDP has moved from principles to operational rules.”

Meher Patel, Founder of Hector, echoes this view, noting that consent systems, audits, and governance processes have become recurring, scale-linked requirements. “These costs rise with advertiser volume, user data exposure, and regulatory expectations, directly competing with product development and market expansion for capital allocation,” he says. Patel estimates that if a portion of these expenses were reclassified or incentivised as infrastructure investment, firms could unlock around half to two percent of annual revenue equivalent cash capacity. “For a platform generating one hundred to three hundred crore rupees in revenue, this would free several crores annually for AI optimisation, retail media capabilities, or international expansion,” he says.

Fixing Unit Economics Without Diluting Privacy

Beyond capital allocation, adtech firms are closely watching whether the Budget addresses the cash-flow pressures arising from privacy-safe technology investments. Accelerated depreciation and GST rationalisation for AI and data infrastructure are being viewed as practical levers.

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Dingra explains that accelerated depreciation on clean rooms, consent systems, secure data environments, and measurement stacks could materially boost margins. “For most firms, that can translate to a two to five percent improvement in gross margin or campaign service margins because compliance overhead gets amortised faster and is less punishing on cash flows,” he says. He adds that clarity on GST input credits for privacy and measurement infrastructure could further enhance unit economics by one to three per cent. “Net net, a realistic headline is a three to eight percent improvement in campaign unit economics, not because ads get more invasive, but because measurement, identity resolution, and fraud controls get cleaner in a consent-led way,” Dingra says.

Patel frames the impact slightly differently, focusing on cash efficiency rather than headline costs. “Eligible platforms could see a half to one and a half percent reduction in cost to serve in the first year,” he says. “When passed through or reinvested, this would translate into roughly one to two percent ROAS equivalent uplift for advertisers without increasing media budgets, while giving platforms modest margin headroom to expand MSME participation.”

How To Judge Whether Policy Works

Industry leaders stress that Budget announcements alone are insufficient; what matters is how outcomes are measured over time. Dingra emphasises that the government should track both privacy outcomes and market health. “The government should look at consent throughput and quality, median compliance spend as a percentage of revenue, and breach and grievance resolution metrics,” he says. On the demand side, he highlights advertiser breadth, MSME participation, effective CPM and CAC trends, and the proportion of spend that remains measurable within privacy-safe frameworks.

“This becomes especially important because RMG being removed as an advertiser category creates a genuine demand-side shock for the ecosystem,” Dingra adds.

Patel agrees, stressing the importance of advertiser participation metrics. “Net new advertiser additions, churn rates, median campaign size, and MSME participation should be tracked alongside campaign survival beyond the first sixty to ninety days,” he says. “A sustained decline in small ticket campaigns would indicate unintended demand suppression, while stable participation alongside higher compliance adoption would show that privacy first policies are enabling growth.”

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The Larger Digital Infrastructure Question

The adtech debate is unfolding alongside India’s broader ambitions in AI and enterprise productivity. Atul Arya, Founder and CEO of Blackstraw.ai, cites Union Minister Ashwini Vaishnaw’s recent statement at Davos on India becoming the largest supplier of AI services at the application layer. “To achieve this ambition, a clear shift in focus from tax-driven incentives to supporting the ecosystem is required,” Arya says. He adds that compute credit schemes, public private partnerships under the IndiaAI mission, and easier access to shared GPU resources are essential to move from aspiration to execution.

From an enterprise perspective, Alok Nigam, Managing Director at Brother India International, believes the Budget can reinforce productivity and structured operations. “As businesses continue to focus on productivity, cost optimisation, and operational continuity, printing remains a critical enabler of day-to-day enterprise functions,” he says. Nigam expects policy emphasis on digital workflows, supply chain efficiency, and standardisation to strengthen demand for reliable printing and labelling solutions across sectors.

From Survival Mode to Building Mode

Looking ahead one year after the Budget, Dingra says success should be measured through clear year-on-year deltas. “I would look at sector revenue growth versus the prior year, growth in total and MSME advertiser counts, and a reduction in median compliance cost as a share of revenue by at least twenty to thirty percent,” he says. He also highlights measurement quality and innovation signals. “If we do not see higher attributable conversions, lower unattributed spend, and increased R and D investment, the risk is clear. The ecosystem becomes more concentrated, with smaller firms and MSMEs priced out.”

Patel adds that success should also be visible at the market level. “Digital advertising should continue delivering low to mid double-digit growth, with performance led and retail media channels maintaining momentum,” he says. He expects high single-digit to low double-digit growth in active advertisers and double-digit growth in MSME participation without a decline in share as indicators that policy relief is translating into real competitiveness.

Together, these perspectives underline why this Budget matters so deeply for adtech. The industry is not asking for rollbacks. It is asking whether fiscal policy recognises privacy, compliance, and trust frameworks as growth enabling infrastructure. The answer will determine whether adtech remains stuck in regulatory survival mode or emerges as a scalable, privacy-first engine of India’s digital economy.