India’s Union Budget Boosts Tech and Startups
The Union Budget has placed a strong emphasis on new and emerging technologies, signaling a commitment to innovation and growth in India. Finance Minister Nirmala Sitharaman unveiled several initiatives aimed at fostering a robust ecosystem for startups and enhancing the capabilities of Global Capability Centres (GCCs). Key announcements included a national framework for GCCs, a Rs 500-crore Centre of Excellence in Artificial Intelligence (AI) for education, and plans for a deep tech ‘Fund of Funds’ to support the next generation of startups. These measures are expected to catalyze growth in the technology sector and create a more conducive environment for innovation.
National Framework for Global Capability Centres
The Union Budget introduced a national framework designed to guide states in promoting Global Capability Centres (GCCs) in emerging Tier-2 cities. This framework aims to enhance talent availability and infrastructure, which are critical for the growth of these centres. It will suggest various measures, including byelaw reforms and collaboration mechanisms with industry stakeholders. The initiative is expected to unlock access to a wider talent pool, particularly professionals who prefer to remain in their hometowns. This will not only enhance workforce stability but also improve retention rates.
As the GCC landscape in India has been evolving, the total number of such centres has risen significantly, surpassing 1,700 in FY24. Experts believe that this expansion will drive inclusive growth and reduce regional disparities. Jaspreet Singh, Partner and GCC Industry Leader at Grant Thornton Bharat, emphasized that the focus on Tier-2 cities marks a significant step in strengthening India’s GCC ecosystem. He noted that improved infrastructure will make these cities attractive destinations for high-value global work, positioning India as a leader in digital and business services.
Centre of Excellence in AI for Education
Another significant announcement in the Union Budget was the establishment of a Centre of Excellence in Artificial Intelligence for education, with a total outlay of Rs 500 crore. This initiative builds on previous announcements regarding Centres of Excellence in AI for agriculture, health, and sustainable cities. The focus on education underscores the government’s commitment to integrating advanced technologies into the learning process, preparing students for a future driven by AI and other emerging technologies.
Experts believe that this Centre will play a crucial role in enhancing the quality of education and equipping students with the necessary skills to thrive in a technology-driven world. The initiative aims to foster a knowledge-driven economy, as highlighted by Gaja Capital Managing Partner Gopal Jain. By investing in AI education, the government is not only addressing current skill gaps but also preparing the workforce for future challenges. This strategic move is expected to create a more skilled talent pool, which is essential for driving innovation and economic growth.
New Fund of Funds for Startups
The Union Budget also announced a new ‘Fund of Funds’ aimed at supporting startups, with an additional contribution of Rs 10,000 crore. This fund will expand the scope of existing Alternate Investment Funds (AIFs) for startups, which have already received commitments exceeding Rs 91,000 crore. The government’s contribution of Rs 10,000 crore to the initial Fund of Funds has already made a significant impact, and the new fund is expected to further enhance access to capital for emerging businesses.
Bruce Keith, Co-founder and CEO of InvestorAi, noted that while details on the deep tech funds are still awaited, the potential for agile and creative teams to leverage small amounts of capital is promising. The enhanced credit guarantee cover for startups, increasing from Rs 10 crore to Rs 20 crore, will also facilitate easier access to funding. This initiative is particularly important for sectors that are crucial for Atmanirbhar Bharat, or self-reliant India. By improving access to capital, the government aims to stimulate innovation and entrepreneurship across the country.
Strengthening India’s Talent Pool
India is on track to achieve a skilled talent surplus by 2030, thanks to various initiatives aimed at expanding educational opportunities in emerging technologies. The expansion of Indian Institutes of Technology (IITs) and the establishment of AI Centres of Excellence will significantly strengthen the country’s talent pool. The PM Research Fellowship Scheme, which offers 10,000 fellowships over the next five years at prestigious institutions, is another step towards fostering innovation.
Prabhu Ram, VP of Industry Research Group at CyberMedia Research, highlighted that these measures will empower India’s deep-tech entrepreneurship and enhance its global competitiveness in the AI race. As the demand for skilled professionals continues to grow, these initiatives will ensure that India remains at the forefront of technological advancements. The government’s focus on education and skill development is crucial for building a workforce capable of meeting the challenges of the future, ultimately contributing to the nation’s economic growth and innovation landscape.
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