Venkatraman Narayanan, Managing Director, Happiest Minds Technologies

Every Union Budget reflects the priorities and choices of its time. Budget 2026 offers a clear view of how India is thinking about long-term economic strength in an economy where technology, talent, and services increasingly shape outcomes.

The big focus is using AI for real-world results, not just tests. It’s about building reliable systems that work across industries to boost productivity, help more people join in, and make businesses competitive. AI is now a core part of big companies and government services — not just side projects.

This fits perfectly with India’s services sector. Tech services aren’t just installing tools; they’re helping businesses, small companies, and public systems change for the better. As small businesses use AI software, cloud tools, and digital apps every day, tech helps more people grow the economy.

Budget 2026 sets the context for the next phase of India’s technology journey, grounded in execution, inclusive in intent, and aligned with long-term economic outcomes.

Technology as an enabler

One of the best parts of Budget 2026 is how it connects technology with helping everyone. It focuses on giving farmers digital tools, getting more women into science and tech fields, and teaching young people skills for the future. This shows smart thinking about how to grow progress for all.

The announcement of 15,000 creator labs across schools and colleges reinforces this intent, connecting education to employment and enterprise. The work of the Education to Employment and Enterprise Committee further underscores the role of services as a growth engine, while explicitly assessing how AI will reshape jobs and skills. Digital platforms are no longer peripheral, they are becoming the bridge between learning, livelihoods, and participation in the formal economy.

Sustained push towards emerging tech

The continued focus on emerging technologies such as artificial intelligence and quantum computing is another strong signal. The allocation of around ₹2,000 crore to the IndiaAI Mission, alongside sustained backing for the National Quantum Mission, reflects a commitment to moving these technologies from research environments into real-world adoption.

From a business view, this is huge. Demand for AI, cloud, data, and engineering solutions has moved beyond tests, it’s now driving real results and baked into main strategies. This isn’t just for big companies. Small and medium businesses (MSMEs) are becoming key users and partners in innovation. AI tools, online software, cloud services, and digital platforms are helping them grow fast, setting India up to have the world’s most tech-savvy small business network.

An integrated technology ecosystem

The renewed emphasis on the services sector reflects a clear reading of India’s demographic and economic reality. With services contributing over 55 per cent of GDP, areas such as IT services, digital transformation, product engineering, and contract R&D will continue to play a central role in job creation and value generation for a young and ambitious workforce.

It is encouraging to see the Budget particularly recognise software development, IT-enabled services, and contract R&D as part of a single, interconnected technology ecosystem. The proposal to bring multiple IT and IT-enabled services under a unified Information Technology Services category reflects this thinking, reducing artificial distinctions between digital, engineering, and services work.

This mirrors how technology delivery actually operates today. Digital, data, cloud, and engineering capabilities increasingly come together to solve complex, end-to-end problems. For organisations with integrated portfolios, this signals a closer alignment between policy thinking and industry realities.

Greater tax certainty

From a business perspective, the regulatory simplifications announced in Budget 2026 are particularly meaningful. Bringing multiple services under a single classification should materially reduce ambiguity and compliance complexity.

The increase in the Safe Harbour threshold from ₹300 crore to ₹2,000 crore, along with a uniform margin of 15.5 percent, is a significant step toward tax certainty and scalability. For IT services companies operating globally, such predictability enables more confident long-term planning and investment.

India as a global data and cloud hub

The proposals aimed at strengthening India’s position as a global data centre and cloud services hub are among the most forward-looking announcements this year. The proposed tax holiday until 2047 for foreign companies providing global cloud services from India, along with a 15 percent Safe Harbour on cost for related data centre services, enhances India’s attractiveness as a base for global digital infrastructure.

These measures have positive ripple effects across cloud transformation, managed services, cybersecurity, and digital infrastructure engineering, reinforcing India’s role as a trusted digital partner in a world where data governance and digital trust are becoming critical.

(The author is Managing Director, Happiest Minds Technologies)

Published on February 2, 2026