How Budget 2026 could reshape India’s AI and creative industries

The Union Budget 2026, presented in Parliament on 1 February by Finance Minister Nirmala Sitharaman, sends a clear message to India’s technology, media and digital economy. Artificial intelligence and emerging technologies are no longer peripheral enablers; they are being positioned as central drivers of productivity, competitiveness and long-term growth. At the same time, the explicit focus on animation, visual effects, gaming and comics has brought creative industries firmly into the economic mainstream.

For industry, the Budget represents more than a list of allocations; it signals a shift in mindset. Policy intent is now focused on scale, execution and value creation, rather than on experimentation and incremental adoption.

AI Moves From Promise to Production

The clearest signal from Budget 2026 is the government’s intent to move AI from pilot projects into real economic infrastructure. Srikanth Chakkilam, CEO and Executive Director of Covasant Technologies, says the impact will be felt first in how work itself is defined. “At Covasant, we view AI not as a replacement but as a massive role-evolution engine. Current industry projections from NASSCOM suggest that 80 percent of digital roles will be AI integrated by 2030, requiring a workforce that moves beyond digital fluency to AI-native problem solving.”

Chakkilam highlights the macroeconomic implications of this shift. “The Budgetary focus on the IndiaAI Mission signals a transformative era where AI-led sectors are estimated by NITI Aayog to add 500 billion to 600 billion dollars to India’s GDP by 2030. The government is tracking this growth using the digital economy’s share of the GVA, which stood at 11.74 percent in 2023 and is officially projected to reach 20 percent of national income by 2029-30.”

For AI-first companies, the Budget lowers long-standing barriers. Amit Kumar Tyagi, CEO of TrueReach AI, describes it as a structural reset. “The Union Budget 2026 is a clarion call for the intelligence-first era. By proposing a tax holiday until 2047 for cloud services using Indian data centers and utilising the 10,300 crore rupee IndiaAI Mission to provide compute at a subsidised rate, the government has eliminated the cost barriers to high-end innovation.”

Tyagi adds that the shift is strategic rather than cosmetic. “With the government targeting a 10 percent share of global services by 2047, we are no longer just an outsourcing hub. We are becoming an AI factory hub. The focus on sovereign LMMs and the 38,000 GPU strong compute base ensures that Indian startups can now build production-grade, autonomous software much faster and take Made in India intelligence to the global stage.”

A Realistic View of India’s AI Advantage

Despite the ambition, industry leaders are candid about where India stands today. Deepankar Das, Co-Founder and CEO of ButtonShift, believes the country must play to its strengths. “Honestly, at this time I think India’s best bet is doubling down on being an application innovator and a talent supplier. Building sovereign platforms from scratch is a massive, slow grind. While there are some niche areas doing great things from scratch, largely we’re a bit behind on the sovereignty front.”

Das argues that economic impact should guide priorities. “Our huge talent pool and our knack for solving messy, real-world problems with clever apps is our biggest edge. We can actually move the needle for both the Indian and global economies. The goal should not be to just build the engine but to build the most useful things that run on it.”

Others see this pragmatism coexisting with longer-term ambition. Chakkilam notes that India already accounts for nearly 19.9 percent of global AI GitHub projects and leads global AI hiring with a 33 percent rate. “This developer depth allows us to build sovereign AI platforms that solve population-scale challenges in vernacular contexts, even as application innovation drives near-term value.”

AVGC Steps into the Growth Narrative

Alongside AI, the Budget’s explicit focus on AVGC has been welcomed as overdue recognition of the creative economy’s economic potential. Rohit Agarwal, Founder and Director of Alpha Zegus, says the sector is entering a new phase. “The AVGC sector is poised to be one of the fastest-growing segments of India’s creative economy. Current estimates suggest the Indian AVGC market could exceed 25 to 40 billion dollars by 2030.”

In GDP terms, Agarwal says this represents a step change. “That would represent a significant uplift from the sector’s current valuation of just a few billion dollars, moving from a marginal contributor to a meaningful share of the services and creative industries, especially if linked with export earnings and digital exports.”

He adds that the policy push is rooted in growth realism. “The government’s momentum around AVGC, including skilling pipelines, labs in schools and the National Centre of Excellence, is built around the understanding that the sector can sustain 20 to 30 percent annual growth over the next five years if domestic capacity and export orientation are both strengthened.”

Bhavesh Talreja, Founder and CEO of Globale Media, sees long-term talent creation as a defining feature. “Initiatives like AVGC creator labs in 15,000 schools and 500 colleges will nurture the next generation of digital creators and storytellers, strengthening India’s position in the global digital economy.” He also points to regulatory clarity as a key enabler. “Bringing IT services under a unified category with a 15.5 percent safe harbour margin signals greater ease of compliance for technology and innovation-driven firms.”

Infrastructure and Compliance Shape Business Confidence

Beyond technology, industry leaders underline that Budget 2026 is fundamentally about enabling scale. Somdutta Singh, Founder and CEO of Assiduus Global, describes the approach as deliberate and grounded. “What I appreciate most is that the Budget is honest about global volatility, tariff pressures and geopolitical uncertainty. Instead of reacting to it, it stays focused on productivity, competitiveness and execution. The message is clear. Growth will come from building strength, not from shortcuts.”

She highlights the rise in public capital expenditure to 12.2 lakh crore rupees for FY 2026-27 as a foundation for long-term confidence. “For e-commerce and cross-border trade, export margins are often decided by how predictable logistics are. Freight corridors, national waterways and support for container manufacturing make it easier for operators and lenders to commit for the long term.”

On AI, Singh frames it as an operational tool rather than a buzzword. “AI in this Budget is being treated as a broad productivity tool, not just a tech story. The Capacity Building AI Mission targeting 25 crore people aims to raise the baseline across operations and services. As AI becomes common, the advantage shifts from just using it to having strong workflows, clean data and distribution.”

From a financial systems perspective, Dr Raj P Narayanam, Founder and Executive Chairman of Zaggle, says the Budget strengthens predictability. “The strong focus on technology-led and AI-driven financial systems reinforces the role of digital innovation in making enterprise finance more efficient, transparent and scalable. Simplified tax processes further enhance ease of doing business.”

Services, Skills and the Value Shift

For services-led sectors, the Budget reinforces a move away from cost arbitrage. Satish Sureddi, CFO of QualiZeal, calls the 1 lakh crore rupee research, development and innovation corpus a turning point. “By providing long-term, low-cost financing, the government is incentivizing the private sector to move up the value chain toward IP-led services.”

Advertising and marketing leaders echo this sentiment. Senthil Kumar Hariram, MD and Founder of FTA Global, notes that AI is already reshaping the industry. “AI is redefining how insights are generated, content is created, media is optimised and campaigns are measured. The next step is ensuring AI adoption goes hand in hand with upskilling, enabling long-term, sustainable growth.”

Atul Rai, CEO and Co-Founder of Staqu Technologies, sees the Budget as a transition moment. “The emphasis on AI missions, research funding and capacity building reflects a shift from experimentation to deployment at scale. As AI becomes embedded across sectors, solutions that translate advanced research into real-world applications will drive productivity and efficiency.”

Execution Will Define the Outcome

Across sectors, industry consensus converges on one point: Budget 2026 sets the direction, but execution will determine the impact. The focus on AI and AVGC reflects an ambition to move India up the value chain, from services and outsourcing towards intelligence, creativity and intellectual property ownership.

For businesses, the signal is clear. The next phase of growth will reward those that align technology with execution, talent with scale, and innovation with market realities. As the industry recalibrates investment and strategy, Budget 2026 emerges as a moment when India’s digital economy narrative shifted decisively from adoption to leadership.