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India Urges Budget Focus on AI Innovation

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  Published in Business and Finance on Thursday, January 29th 2026 at 0:32 GMT by Business Today
      Locale: N/A, INDIA

New Delhi, January 29th, 2026 - As India gears up to present its Union Budget for 2026, a chorus of voices from the technology sector are urging the government to prioritize policies fostering innovation, specifically through strategic tax breaks and a significant push for research and development (R&D) within the burgeoning field of Artificial Intelligence (AI). Paramdeep Singh, CEO of Shorthills AI, a leading AI solutions provider, is at the forefront of this call, emphasizing the urgent need for supportive government measures to solidify India's position as a global AI leader.

Singh argues that while India possesses immense potential in AI - fueled by a large skilled workforce and a rapidly growing digital infrastructure - realizing this potential hinges on creating a conducive ecosystem for startups and attracting sustained foreign investment. "India has the potential to be a global leader in AI, but we need supportive government policies to realize this potential," Singh explained in a recent statement. "Tax breaks for AI startups and increased funding for R&D will encourage innovation and create a more favorable environment for the growth of the tech sector."

The timing of this appeal is particularly significant. The 2026 budget is widely anticipated to outline the government's economic priorities for the coming year, and the tech sector is keenly observing whether these priorities will adequately address the specific needs of the AI industry. Currently, several challenges hinder the rapid expansion of AI development in India. These include high initial investment costs, limited access to specialized talent, and a relatively complex regulatory landscape.

Tax incentives, as proposed by Singh, could significantly alleviate the financial burden on AI startups, allowing them to reinvest resources into crucial areas like talent acquisition and infrastructure development. This would not only stimulate domestic innovation but also make India a more attractive destination for international investors seeking to capitalize on the AI boom. A reduced tax burden could also encourage larger corporations to allocate more resources to internal AI research initiatives.

However, tax breaks alone are insufficient. Singh stresses the vital importance of increased government funding for R&D. AI is a rapidly evolving field, and sustained investment in basic and applied research is essential for maintaining a competitive edge. This funding could be directed towards universities and research institutions conducting groundbreaking AI research, as well as towards collaborative projects between academia and industry. Targeted funding for areas like machine learning, natural language processing, and computer vision could accelerate innovation and address specific societal challenges.

The potential economic benefits of a thriving AI sector are substantial. AI can drive productivity gains across various industries, from manufacturing and agriculture to healthcare and finance. It can also create new jobs and opportunities, contributing to overall economic growth and improved living standards. Shorthills AI, having established itself as a key player in the Indian AI landscape, believes that AI's transformative power extends beyond economic considerations; it has the potential to improve the lives of millions of Indians through advancements in areas like healthcare, education, and infrastructure.

Industry analysts predict that the global AI market will continue to experience exponential growth in the coming years. Countries that proactively invest in AI research and development are poised to reap significant economic rewards. India risks falling behind if it fails to prioritize AI in its budgetary allocations.

The upcoming budget presents a critical juncture for India. A strategic commitment to tax incentives and R&D funding will not only stimulate the growth of the AI sector but also signal to the world that India is serious about becoming a global leader in this transformative technology. The eyes of the tech community - and the global market - are now fixed on the finance ministry as the 2026 Union Budget is finalized.