India’s Union Budget 2026 has drawn broad support from technology founders and investors for its focus on AI, semiconductors, digital infrastructure, and education. However, sharp increases in derivatives taxes have raised concerns around liquidity and unintended market consequences.
India’s Union Budget 2026 has largely been received positively by technology leaders, investors, and operators, particularly for its emphasis on artificial intelligence, semiconductor self-reliance, digital infrastructure, and long-term capability building. At the same time, sharp increases in Securities Transaction Tax (STT) on derivatives trading have emerged as a notable point of contention.
Taken together, the reactions suggest a Budget that is directionally aligned with India’s long-term ambitions — but one that may introduce short-term friction in capital markets.
AI, talent, and long-term competitiveness
A recurring theme across industry feedback is approval of the government’s sustained focus on artificial intelligence, education, and research.
Bruce Keith, CEO and Co-Founder of InvestorAi, welcomed the broader fiscal discipline and tax harmonisation, noting that increased emphasis on education is necessary “in a world where AI is changing the rules.” Similarly, Ankur Mittal, Co-Founder of Inflection Point Ventures, framed AI as central to protecting India’s service-led growth model from disruption.
The view across investors is that positioning India as a global AI talent hub could attract capital from global technology companies while simultaneously strengthening the domestic startup ecosystem. This dual benefit — inward capital and local innovation — is seen as critical to sustaining India’s growth trajectory in a rapidly automating global economy.
Semiconductor and electronics push seen as foundational
The Budget’s semiconductor-focused announcements have drawn strong support from venture investors active in deep tech and manufacturing.
Anil Joshi, Managing Partner at Unicorn India Ventures, described India’s semiconductor ecosystem as “very nascent” and in need of sustained policy hand-holding. From this perspective, the launch of India Semiconductor Mission (ISM) 2.0 and the ₹40,000 crore allocation for electronics components manufacturing are viewed as complementary steps that address both capability creation and supply-chain gaps.
Manu Iyer, General Partner at Bluehill.VC, went further, calling ISM 2.0 a “watershed moment” that could position India as a globally competitive semiconductor hub. He also highlighted the strategic importance of dedicated rare-earth corridors, which strengthen supply-chain resilience across electronics, defence, and clean energy — sectors increasingly shaped by geopolitics.
The consensus view is that these initiatives will not deliver quick wins, but are essential to building industrial depth and reducing long-term import dependence.
AI beyond tech: agriculture, legal, and space
Several leaders pointed to the Budget’s attempt to deploy AI beyond core technology sectors.
Joshi highlighted the launch of Bharat Vistaar as particularly impactful for agriculture, where real-time satellite data combined with AI could help farmers improve productivity and crop planning. He also pointed to the announcement of four telescope centres as an important step toward self-reliance in astrophysics and space research.
In legal technology, Hitesh Jirawla, Founder and CEO of Cubictree, framed the convergence of the India AI Mission and R&D funding as an inflection point. He argued that legal AI can address the long-standing “iron triangle” of cost, speed, and accuracy in India’s justice system, positioning it as core infrastructure rather than a niche application.
Cybersecurity, IT services, and digital sovereignty
From a cybersecurity and IT services perspective, Pankit Desai, Co-Founder and CEO of Sequretek, highlighted the Budget’s focus on strengthening India’s digital economy and attracting capital.
Key measures such as raising the safe harbour limit to ₹2,000 crore for IT and ITES companies and expanding thresholds for overseas transactions were seen as reducing transfer-pricing disputes and compliance risk. The proposed tax holiday for foreign cloud companies setting up data centres in India was also viewed as a strong signal supporting India’s ambition to become a global GCC and cloud infrastructure hub — with implications for technological sovereignty.
The STT flashpoint
Despite broad alignment on long-term goals, the sharp increase in STT on futures and options — 150% on futures premium and 50% on options premium — has emerged as the most controversial measure.
Keith warned that while the government’s intent to curb retail losses in derivatives markets is understandable, raising transaction costs may be the wrong lever. Higher costs risk driving away large volume players, shrinking liquidity, and impairing overall market functioning.
The concern is not speculative excess alone, but collateral damage to market depth — an outcome that could ultimately hurt retail participants as well.
A Budget built for the long game
Overall, industry reaction suggests that Union Budget 2026 is architected for long-term capability building rather than short-term stimulus. Its success will depend less on announcements and more on execution — and on whether market-side frictions introduced along the way can be corrected without undermining confidence.
