The Government of India has officially announced the Union Budget 2025. While the highlight has been the massive relief of zero income tax up to 12 lakhs, the budget also brings huge incentives for the tech industry. A total of Rs 95,298 crores has been allocated to the IT and Telecom sectors, along with multiple tax exemptions for the manufacturing of TV units and battery cells. Here are the details.
Union Budget 2025: Top 5 Incentives for Tech Industry in India
The Union Budget 2025 emphasizes skill development to boost the IT and technology sector in India. The government has announced multiple schemes to nurture new talent and create employment opportunities. This will create a positive ripple effect on electronics manufacturing under the Make-in-India program.
New Incentives for Semiconductor Manufacturing
The government has brought incentives worth Rs 10,000 crores to push semiconductor manufacturing in India. These benefits will be rolled out under the PLI (Production Linked Incentive Scheme) where a company receives higher benefits and subsidies for producing more goods locally in the country.
Last year, chip giant Micron started setting up a new plant in Gujarat. It is among the first semiconductor plants in the country that will produce storage chips for electronic devices.
Proposed Tax Relief for TV and Battery Production
The Union Budget 2025 has proposed an exemption of taxes for local manufacturing of open-cells used in LCD and LED TVs. A local cell is the core component used to make the display panel. This will lower the manufacturing cost of TV units in India, and attract more companies to set up new production facilities in the country.
Similar benefits will also be extended to the manufacturing of lithium-ion battery packs for smartphones. It is worth noting that Tata Technologies has already started a new battery plant in India, especially for smartphones. More companies are expected to enter the sector after the latest tax reforms.
India’s Quantum Computing Mission
The budget also introduces funding for AI startups in India to promote the research and development of artificial intelligence and quantum computing. The government will directly partner with IIT, IISc, ISRO, BARC, and other agencies to develop AI in India.
More details on this are expected to be announced in the upcoming settings from the IT and Electronics Ministry. To recall, Reliance Industries recently announced a new partnership with Nvidia to develop AI for the country. It was the first instance of an Indian company joining hands with Nvidia, which is currently the world leader in manufacturing GPUs and other AI technology.
Insightful discussion between Jensen Huang and Mukesh Ambani. pic.twitter.com/D2gmCYA6aK
— Chinmay Dhumal (@ChinmayDhumal) October 24, 2024
Establishing New Global Capability Centres in India
The Government of India is partnering with multiple Global Capability Centres (GCC) to create a robust IT infrastructure in Tier 2 cities. It aims to attract major global companies to set up training facilities in the country in hot sectors such as AI, software development, and manufacturing.
The tech industry will benefit from GCCs in three ways. The biggest advantage will be that talented individuals can conduct research and development of AI in India while maintaining the high-quality standards of the Western tech world. It will also encourage global IT and AI giants to set up new facilities in India, which currently have not entered the country. Since the technology will be developed locally, these institutes will receive tax exemptions, making India a hub for affordable AI services.
Nuclear Energy Development
The government has announced Rs 20,000 to develop Small Modular Reactors (SMR) for Nuclear Energy. Five of these SMRs are expected to be ready by 2033. It will help to improve the adoption of nuclear technology in India.
Since clean energy nature of nuclear power will also help to reduce pollution in the country, as India heavily relies on coal to meet its electricity needs. Power is one of the biggest requirements to set up any industry, whether it be IT or manufacturing.
Union Budget 2025: Massive Push For Indian Tech
The Union Budget 2025 appears to have a positive impact on boosting the IT, AI, and manufacturing sectors. The newly announced incentives and benefits will come into effect in the upcoming fiscal year. We can expect to witness the on-ground effects of these policies by the end of 2026.
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