Budget Wishlist: Digital industry seeks govt backing for AI, regional content & innovation

The Indian digital advertising industry is at a pivotal juncture, poised for exponential growth while navigating the complexities of a rapidly evolving technological and economic landscape. As the sector prepares for Union Budget 2025, industry leaders are calling for policies that not only sustain this momentum but also foster innovation, inclusivity, and global competitiveness.

The digital advertising market in India has been experiencing significant growth, with its size reaching approximately Rs 60,000 crores (USD 7.13 billion) as of 2024. By 2025, the market is projected to grow further to around Rs 62,045 crores (approximately USD 7.39 billion), reflecting a compound annual growth rate (CAGR) of 23.49%.

AI and Regional Content: Catalysts for growth

Artificial intelligence (AI) has emerged as a transformative force in Indian enterprises, driving efficiency and innovation across industries. Shrenik Gandhi, Co-founder and CEO of White Rivers Media, emphasizes that AI is no longer just a tool but the “nervous system powering Indian enterprises.” He highlights the need for the budget to incentivize sector-specific AI innovations in agriculture, healthcare, and education while scaling AI-driven solutions. “This is India’s moment to influence the global AI value chain, not just as an adopter but as an innovator,” he asserts.

The growth of digital is part of the broader Indian advertising market, which is expected to reach Rs 1.12 lakh crore (USD 13.5 billion) by the end of 2025, encompassing both digital and traditional media spending. Digital advertising is anticipated to account for about 55% of total ad expenditures by then, driven by increasing internet penetration, mobile usage, and a growing demand for regional content.

Indeed, regional content is another critical area where India can lead globally. Gandhi underscores the importance of prioritizing vernacular creator programs and supporting regional film hubs to cater to the growing demand for value-driven, localized content. “The world is consuming Indian entertainment—now it’s time to lead,” he says, advocating for tax benefits for creative entrepreneurs and infrastructure development in Tier 2 and Tier 3 cities.

Ajay Verma, Managing Partner at 0101.Today, echoes this sentiment, urging the government to reduce GST rates for IT companies focusing on AI from the current 18%. He believes such measures would accelerate India's AI ecosystem, enabling it to compete on a global scale.

Similarly, Gandharv Sachdeva, Country Head of Hybrid India, calls for investments in AI-driven education and skill training to make India’s workforce more competitive. “Creating AI solutions in regional languages could help make technology more accessible to a wider audience,” he notes.

Empowering digital marketers through policy support

The digital marketing sector is increasingly reliant on cutting-edge technologies like programmatic advertising, influencer marketing platforms, and AI-powered tools. Ajay Kulkarni, Business Head at Ykone Barcode, stresses the need for rationalizing GST on digital marketing services to encourage brands—especially startups and MSMEs—to allocate larger budgets toward digital initiatives. He also advocates for structured government programs aimed at upskilling talent in areas like analytics and content creation to address current skill gaps.

Kunal Vora, Founder-Partner at ABND, highlights the importance of creative research grants to enable agencies to explore untapped markets through data-driven insights. “The government should encourage the adoption of AI tools through subsidies or tax benefits for agencies investing in AI-driven design and campaign optimization,” he suggests. Such measures would not only push the industry toward tech-enabled creativity but also enhance its global competitiveness.

Gandhi further points out that trust and transparency are critical as digital advertising grows more sophisticated. He calls for clear rules around monetization and data privacy to empower creators and businesses alike. “India’s digital growth demands a budget that fosters trust and fuels innovation,” he asserts.

Infrastructure Expansion: Unlocking new markets

As digital penetration deepens across rural India, expanding high-speed internet infrastructure and promoting digital literacy are essential to unlocking untapped consumer bases. Kulkarni emphasizes that increased investments in these areas could significantly expand market potential for brands operating in Tier 2 and Tier 3 cities. This aligns with broader industry trends showing that regional campaigns are expected to constitute nearly 40% of total ad efforts by 2025.

Sectors such as e-commerce, fintech, and over-the-top (OTT) platforms are expected to contribute significantly to this growth, collectively accounting for nearly 60% of digital ad spending.

Sachdeva also underscores the role of IoT and automation in improving infrastructure while supporting sustainability goals. These advancements could enable marketers to reach previously inaccessible audiences while ensuring responsible growth.

Looking Ahead

The Union Budget 2025 represents a critical opportunity to shape the future of India’s digital advertising landscape. By addressing industry demands—ranging from tax reforms and AI incentives to infrastructure expansion and skill development—the government can catalyze growth across sectors while positioning India as a global leader in digital innovation. As Gandhi puts it, “India’s digital priorities for 2025 must go beyond technology—they are about shaping how the nation creates, consumes, and connects in ways that define our economic future.”