Union Budget 2026: Expectations from the telecom and digital infrastructure industry

With the union budget 2026 around the corner, telecom operators, technology vendors, digital infrastructure providers and industry bodies are setting out clear expectations from the government. From policy reforms and fiscal relief to support for artificial intelligence (AI), cybersecurity and next-generation digital infrastructure, industry leaders share their perspectives ahead of the budget…

 

 

Company’s perspective

Krishanu Acharya, Co-Founder & Chief Executive Officer, Suhora Technologies

“As India prepares for union budget 2026-27, we expect targeted measures to accelerate the downstream space economy, particularly in converting satellite data into actionable insights for defense, agriculture, disaster management and climate resilience, and now we need the budget to bridge the gap from pilots to scale. The budget allocations should unlock government procurement in ministries like agriculture, disaster management and urban development, with dedicated lines for EO analytics, faster small-ticket contracts and multi-year programs earmarking private spacetech solutions over legacy pilots. We also expect the budget to expand central VC/innovation funds and institutional capital earmarked for space, building on the Rs 10 billion space-startup fund announced earlier with co-investments and R&D grants tailored to AI/ML geospatial applications, subsidised national EO data lakes and ISRO-shared cloud infrastructure to slash capex for analytics firms. With increasing adoption and demand of geospatial intelligence among the government and defence agencies, we also want to propose a specialised fund for skilling talent pipelines and academia on priority use cases. We also expect the budget to significantly increase defence sector allocations for satellite data analytics, powering ISR, terrain surveillance and maritime domain awareness. driving greater integration of Made-in-India private solutions into defence operations for strategic superiority.”

 

 

 

 

 

Salil Ahuja, Chief Strategy Officer, Shaurrya Teleservices

“As India prepares for the union budget 2026, strengthening digital infrastructure will be critical to supporting the next phase of startup- and enterprise-led growth. At Shaurrya Teleservices, we are actively building neutral, carrier-agnostic digital infrastructure across offices, campuses, and emerging business hubs, enabling enterprises and startups to access enterprise-grade connectivity without heavy upfront investment. As businesses become increasingly cloud-first and data-intensive, policy measures that accelerate infrastructure approvals, promote sharing models, and support 5G-ready networks can significantly reduce the cost and complexity of scaling, especially across Tier 2 and Tier 3 markets. Continued focus on resilient, shared digital infrastructure will be essential for driving productivity, employment generation, and India’s long-term global competitiveness.”

 

 

 

 

 

 

Kunal Bajaj, Chief Executive Officer & Co-Founder, CloudExtel

“India’s digital economy is no longer limited by ambition, it is limited by infrastructure readiness. As we approach the union budget 2026, the real opportunity lies in enabling shared, secure, and scalable digital infrastructure that enterprises can adopt faster and at lower cost. At CloudExtel, we see cloud-first policies, infrastructure sharing, and support for next-generation connectivity as critical enablers that will decide how quickly Indian enterprises can compete globally. The next phase of growth will belong to economies that build digital infrastructure as a utility, not a luxury.”

 

 

 

Dr Ajai Chowdhry, Founder, HCL & Chairman, EPIC Foundation

“India stands at a critical juncture in its journey to become a global innovation hub and employee stock option plans (ESOPs) framework of a country plays a critical role in supporting the growth of the startup ecosystem. In sharp contrast to other mature startup ecosystems, India’s dual taxation model on ESOPs—taxing employees at exercise and again at sale—creates significant friction that is actively pushing Indian startups and founders toward offshore relocation. I am hoping to see a simplified ESOP taxation for startups during this budget that will be critical for the country’s growing startup ecosystem.

Also, government procurement is the strongest catalyst for startup growth. India’s Rs 37 trillion annual government spend reaches less than 1 per cent of innovative startups. By engaging with 400 plus startups and with 74 active projects with Indian Army alone, IDEX has demonstrated that structured government procurement plus funding can scale startups 10x faster. Other ministries operate fragmented schemes without direct startup engagement.

A Cross-Ministry Startup Procurement Framework is urgently needed to unlock promising ventures serving critical national demands. I strongly feel that it is time to replicate IDEX’s success across ministries for sustained start up growth and would urge the government to consider this during this budget.”

 

Bimal Khandelwal, Chief Executive Officer, STT GDC India

“As India accelerates its digital and AI ambitions, we are expecting  the upcoming Union Budget to focus on three critical enablers: (1) elevating data centres from infrastructure  status to actually treating them as an end-to-end national digital infrastructure  with coherent policies on power access, renewable integration, land availability and faster time-bound approvals across central, state and local authorities (2) strengthening the country’s power transmission backbone, and (3) providing policy certainty for renewable energy adoption at scale. Given the central role of digital infrastructure in India’s economic and strategic ambitions, these enablers will be critical to sustaining long-term growth and strengthening India’s global competitiveness.”

 

 

 

Pinkesh Kotecha, Chairman and Managing Director, Ishan Technologies

“As budget 2026 approaches, there is a clear opportunity to reinforce the digital foundations that will underpin India’s AI, cloud and data-driven growth over the next decade. Cybersecurity and sovereign cloud infrastructure need to be treated as strategic assets, not just technology enablers. Higher allocations towards secure, sovereign cloud environments, stronger security standards, and structured public-private collaboration for cyber readiness would be timely, particularly as sensitive workloads in banking, government and critical infrastructure move to the cloud. Supporting Indian service providers that are building compliant, sovereign infrastructure will be key to reducing external dependencies while strengthening national digital resilience. 

Equally important is expanding enterprise-grade connectivity beyond major metros so that manufacturing clusters, healthcare institutions, financial services and government offices across Tier 2 and Tier 3 regions can participate fully in the digital economy. Measures that improve viability for regional ISPs, accelerate last-mile fibre deployments and enable sustainable network expansion can help close persistent access gaps. With AI workloads driving higher energy consumption in data centres, targeted fiscal support for renewable power adoption, efficient cooling technologies and green ICT research will be essential. In parallel, stronger investment in skilling across cybersecurity, networking, cloud and AI, along with clearer guidance on responsible AI and data governance, will give enterprises the confidence to innovate at scale. A Budget that backs sovereign cloud, secure connectivity, sustainable infrastructure and workforce development will lay the groundwork for India’s next phase of digital growth.”

 

 

 

Ravi Kunwar, Vice President and Chief Executive Officer, HMD India and APAC

“As India prepares for the union budget 2026, we urge the government to extend the smartphone PLI scheme beyond March 2026 and introduce a strengthened PLI 2.0 with enhanced incentives of up to 6 per cent on incremental sales. This will be critical in order to sustain India’s projected $75 billion in mobile production and over $30 billion in exports by FY26, while building on the 1.33 million jobs generated under the Make in India initiative. Going forward, policy interventions should further reinforce Make in India through incentives for local manufacturing, raw material subsidies, export support, investments in R&D, AI-driven innovation, and skill development.

Parallelly, we also request a focused allocation toward multimodal logistics infrastructure including rail corridors, roads, warehousing, logistics parks, and power subsidies. This step can significantly reduce logistics costs, currently estimated at 7.9 per cent of GDP, while streamlining supply chains and component imports. Such targeted measures will drive in the direction of deeper manufacturing commitments, strengthen supply-chain resilience, and firmly position India as a globally competitive and sustainable technology export hub.”

 

 

 

Agendra Kumar, Managing Director, Esri India

“Geospatial technologies are being recognised as critical technologies for national security, governance, and economic development. The announcement of the National Geospatial Mission in the union budget 2025 marked an important step towards strengthening India’s geospatial infrastructure and data ecosystem. This mission will support the modernisation of geodetic frameworks, enhancing geospatial infrastructure, standardising data systems, and promoting the adoption of emerging technologies. As the next step, the government must allocate adequate funds so that the roll-out of this program can gain speed and provide the data and infrastructure to support numerous other programs and initiatives of various ministries. Together, these efforts will move the country closer to the Viksit Bharat 2047 vision.”

 

 

 

 

 

Sunil Kumar Sharma, Managing Director & Vice President – Sales (India & SAARC) – Sophos

“India’s digital economy continues to grow rapidly, requiring a commitment to cybersecurity as a fundamental component of creating an economy built on trust, economic growth and resilience as a nation. With budget 2026, we are now in a position to elevate cybersecurity as a strategic priority and make targeted investments to build cyber resilience across multiple sectors including banking, financial services and insurance (BFSI), healthcare, government, micro small and medium enterprises (MSMEs) and more. We want to see continued policy support for artificial intelligence (AI) based threat detection and ransomware prevention, as well as secure cloud adoption. This should also include incentives for the MSME sector to assist in improving their security posture. Additionally, it is essential to continue investing in developing cybersecurity skills, as well as developing stronger relationships between the public and private sectors to facilitate sharing of threat intelligence and help keep India’s future in the digital space secure and resilient.”

 

 

 

 

 

Sachin Panicker, Chief AI Officer, Fulcrum Digital

“India stands at a pivotal moment in its AI journey, with the AI ecosystem entering a phase where scale, trust and global competitiveness will define the next decade, and the union budget 2026 should reinforce the nation’s ambition to become a global AI innovation hub. We expect the budget to prioritise strategic investments in foundational infrastructure — particularly in world-class data centres, cloud ecosystems, and sustainable high-performance computing — that can unlock enterprise-grade AI adoption across sectors, efficiently and responsibly. Enhancing policy clarity and regulatory certainty for AI deployment and data governance will accelerate private-sector investment and innovation, while targeted incentives and support for research and development, early-stage AI ventures and domestic intellectual property (IP) creation will help India move from being a consumer of global AI to a significant creator. Equally important is ecosystem-wide support, including robust skilling initiatives that prepare India’s diverse workforce for an AI-augmented economy, and alignment of AI frameworks with ethical and inclusive growth goals.

By focusing on infrastructure, policy and human capital, the union budget can catalyse next-generation digital services to accelerate India’s transition into a globally competitive AI economy and ensure that India’s AI growth benefits every sector — from healthcare to manufacturing to public services.”

 

 

Ramarathinam Sellaratnam (Ram), Group CEO & Managing Director, iBUS Networks

“As India approaches the union budget 2026, sustained investment and policy support for digital infrastructure will be critical to meeting the growing connectivity needs of enterprises, startups, and smart urban developments. At iBUS Networks, we are steadily moving towards enabling intelligent digital infrastructure where connectivity within buildings and campuses is not just shared and neutral, but also adaptive, data-driven, and future-ready. As markets evolve and digital consumption accelerate, it is essential for infrastructure providers to continuously innovate and evolve to stay ahead of enterprise requirements driven by cloud, AI, and data-intensive applications. Policy measures that simplify infrastructure approvals, encourage active and passive infrastructure sharing, and support 5G and next-generation networks can significantly improve deployment speed and cost efficiency, particularly in large commercial and mixed-use developments. A continued focus on resilient and intelligent shared digital infrastructure will be key to enhancing ease of doing business, improving user experience, and strengthening India’s position as a globally competitive digital economy.”

 

 

 

 

 

 

Narendra Sen, Founder & Chief Executive Officer, RackBank & NeevCloud

“As we move from vision to execution, budget 2026 must recognise that data centres are the new sovereign territory and AI is the new electricity. While the projected 1.7-gigawatt capacity is a milestone, our focus must shift from just ‘housing’ hardware to ‘powering’ intelligence. To truly build an Atmanirbhar AI ecosystem, we need a production linked incentive (PLI) for compute that prioritises indigenous cloud platforms over foreign hyperscalers. By treating AI infrastructure as a strategic national asset—similar to highways or power grids—we can ensure that India’s data remains within India’s legal framework, securing our digital sovereignty for decades to come.”

 

 

 

 

 

 

 

Pankaj Singh, Head of Data Centre and Telecom Business Solutions, Delta Electronics India

“As India moves deeper into the 5G, cloud, and artificial intelligence (AI) era, mission-critical digital infrastructure is fast becoming the backbone of every industry. In the upcoming budget, energy-efficient and resilient data centre ecosystems must be a clear priority. Stronger incentives for modular and containerised data centre deployments will accelerate the rollout of scalable core and edge facilities, while support for advanced cooling technologies—including liquid-to-liquid and liquid-to-air coolant distribution systems—is essential to manage the high heat loads of AI-driven workloads. Complementing this with sustainability-linked benefits and Make-in-India incentives for locally manufactured power, cooling, and automation equipment will help original equipment manufacturers invest with confidence and build a future-ready digital backbone that is both low-carbon and globally competitive.”

 

 

 

 

 

 

Industry body’s perspective

Lt Gen Dr S.P. Kochhar, Director General, Cellular Operators Association of India (COAI)

The COAI has been advocating for measures that would reduce the sector’s financial burden, thereby enabling further expansion and rollout of next-generation connectivity to achieve the goal of a Viksit Bharat.

On reduction in regulatory levies, COAI suggested:

• The license fee (LF), which is a combination of the license [3 per cent of adjusted gross revenue (AGR)] and Digital Bharat Nidhi (DBN) contribution (5 per cent of AGR), is a huge financial burden for the licensed telcos. COAI has requested that the LF be reduced from 3 per cent to 0.5 per cent – 1 per cent just to cover the administrative costs.
• The DBN contribution should be paused for the time till the unused corpus has been completely utilised by the Department of Telecommunications.

On goods and services tax (GST), with a vast sum of money being accumulated in the ecosystem, COAI has recommended the following to help in reducing the financial burden and help in providing relief to the sector:

• Special benefit may be provided to telecom operators in goods and services tax (GST) by way of exemption of GST on regulatory payments of LF, spectrum usage charge (SUC) and spectrum assigned under auction.
• As an alternative to the above, COAI has suggested that the rate of GST under reverse charge on spectrum payment, LF, SUC, etc. can be reduced from the existing 18 per cent rate to the lower rate of 5 per cent slab, since it is revenue neutral to the government and shall help in reducing ITC accumulation.
• COAI has also suggested that usage of existing ITC balance be allowed for discharging GST under reverse charge mechanism on LF/SUC, which will not only protect the cash outflow for telcos but also help in utilising accumulated input tax credit (ITC).

COAI believes that the fact that since telecom today is no longer just a vertical, but a ‘horizontal value-added enabler’ for all other verticals, a recalibration of spectrum pricing and assignment models too is necessary.

 

 

 

Manoj Kumar Singh, Director General, Digital Infrastructure Providers Association (DIPA)

• Rationalising power costs and ensuring reliable supply

Despite serving the nation for over three decades, the telecom industry remains unrecognised as an industry by the Ministry of Power, continuing to bear the burden of commercial tariffs. He explains, “electricity tariffs across states impose a huge financial burden on infrastructure providers, estimated at nearly Rs 72 billion annually.”

DIPA strongly urges the implementation of industrial tariffs for telecom towers across India, recognising their critical role in nationwide digital connectivity. This reform would significantly reduce operational costs and enable greater investment in network expansion and modernisation at a much faster pace.

• Smart metering and billing reforms

Smart metering remains a major gap, with only about 22 per cent nationwide installation and around 21 per cent coverage across telecom towers. The extension of the RDSS timeline from 31 March 2026 to 31 March 2028 highlights the delay of deployment.

DIPA recommends: Priority implementation of smart meters for the telecom sector.

Absence of composite billing causes higher operational costs, duplicate processes, delayed reconciliation, and disputes. Composite billing adoption would streamline billing, improve transparency, reduce administrative overheads, and generate operational savings for DISCOMs and state governments.

• Green energy access and renewable integration

The Green Energy Open Access Rules, 2022 enable renewable energy uptake, but high transmission charges, cross-subsidy surcharges, and other levies restrict telecom sector participation despite net-zero commitments by 2070. Nil transmission charges for LT captive consumers would accelerate green energy adoption, energy transition towards self-reliance, in line to the PM Surya Ghar Yojana.

DIPA urges, “PM Surya Ghar Yojna may be extended to all the LT Captive consumers exemptive of tariff charge.”

• Inclusion of petroleum products and diesel under GST framework

Currently, petroleum products like petrol, diesel, and natural gas remain outside the GST ambit, with legacy taxes such as VAT, central sales tax, and central excise duty continuing to apply. The non-availability of credit on legacy taxes results in a cascading effect, leading to higher costs for end products and services.

DIPA urges the inclusion of petroleum products under GST, with input tax credit allowed for petroleum products used for industrial purposes. This reform would eliminate tax cascading, reduce operational costs, and improve the competitiveness of the telecom sector.

• RoW is the backbone of speedy rollouts. DIPA urges, “free of charges RoW should be enabled for shared infrastructure.”
• Batteries play an enabling role in renewable energy adoption by mitigating intermittency and availability challenges. DIPA urges they must be incentivised to support new battery technologies at the last mile (end users) such as telecom towers and EVs.

 

 

Lt General A.K. Bhatt (Retd), Director General, Indian Space Association

Indian Space Association (ISpA) has outlined key private space sector recommendations for government consideration which aim to boost domestic manufacturing, enhance national security, create high-value jobs and foster global competitiveness while ensuring controlled and secure access to strategic satellite and geospatial data.

As per ISpA, India’s space sector is entering a decisive growth phase yet remains structurally disadvantaged in access to finance due to its capital-intensive nature and long gestation cycles of five to seven years. While global peers classify space assets as strategic or critical infrastructure, India’s space ecosystem currently lacks formal infrastructure status, limiting access to long-term, low-cost capital. Recognising space infrastructure as a distinct infrastructure sub-sector is essential to unlock scale, private investment, and global competitiveness.

Space infrastructure underpins telecommunications, defence, navigation, finance, weather forecasting, disaster management, and governance. Formal recognition will enable infrastructure-grade financing, reduce cost of capital by 2-3 per cent, and strengthen national resilience.

Key recommendations included:

• Include “Space and Satellite Infrastructure” under the harmonised master list of infrastructure sub-sectors notified by the ministry of Finance and Reserve Bank of India (RBI).

• Notify a separate infrastructure sub-sector covering launch vehicles and spaceports, satellite manufacturing and integration facilities (LEO/MEO/GEO), ground stations, telemetry, tracking, and command (TTC) networks, and mission control centres, Earth observation (EO) and communication constellations and navigation systems and space situational awareness (SSA) networks.
• Enable access to long-term bank lending and development finance institution (DFI) financing (including NaBFID), infrastructure bonds with tax benefits and viability gap funding (VGF), insurance and credit-enhanced instruments.

Further, predictable demand is the single most powerful driver of private investment. While Indian private players now possess proven capabilities across satellites, launch systems, EO data, and ground infrastructure, lack of assured government demand constrains scaling. A formal procurement mandate will anchor industry growth while allowing ISRO to focus on strategic and exploratory missions.

Key recommendations included:

• Mandate that at least 50 per cent of all government procurement for space-based services, hardware, and missions be sourced from Indian private entities (NGEs).
• Scope to include satellite manufacturing and payloads, EO data and analytics, satcom services and ground infrastructure, launch subsystems and deep-tech components and SSA networks
• Introduce a standard procurement clause: “Where a viable Indian NGE capability exists, a minimum of 50 per cent of contract value shall be reserved for Indian private entities.”
• Position ministries as anchor customers.
• Oversight through Indian National Space Promotion and Authorisation Centre (IN-SPACe), with empanelment and periodic compliance review.

Furthermore, with growing use of satellite-derived data in governance and commercial applications, standardisation and security are critical. A structured procurement and access framework will support domestic industry while safeguarding national interests.

Key recommendations included:

• Require all ministries, state governments, and urban local bodies (ULBs) to procure satellite imagery and geospatial data only from empanelled Indian companies.
• Establish a geo-tagging framework for all space entities and authorised users.
• Restrict access to sensitive satellite data to geo-tagged, authorised entities, ensuring data security and regulatory compliance.
• Link eligibility for incentives to geo-tagging compliance.

In addition, given high upfront costs, rapid technological obsolescence, and delayed revenues, the space sector requires a tailored fiscal framework distinct from conventional manufacturing. A predictable incentive regime will crowd-in private and global capital while accelerating domestic capability creation.

Key recommendations included:

• Introduce product linked incentive (PLI) schemes for satellites, launch vehicles, space-grade components, and critical subsystems.
• Provide five-year tax holiday for space manufacturing, launch services, and space-based service providers.
• Enable research and development (R&D) tax credits of 20-30 per cent for qualifying space-sector R&D.
• Introduce capital investment tax credits for launch pads, ground stations, and satellite production plants.
• Allow accelerated depreciation on satellites, rockets, and launch-related hardware.

Moreover, space activities are inherently export-oriented. Extending special economic zones (SEZ)-like benefits will strengthen India’s role as a global space manufacturing and services hub.

Key recommendations included:

• Grant deemed SEZ status to space tech parks and manufacturing clusters.
• Extend duty-free import of components and equipment, zero-rated inter-SEZ supplies and simplified foreign currency handling for exports.
• Allow SEZ-to-DTA movement based on end-use relaxation for space products.

Meanwhile, high financing costs materially impact project viability in space manufacturing and launch services.

Key recommendations included:

• Introduce a 2-5 per cent interest subvention on term loans for satellite manufacturing, launch services, ground infrastructure and space-related R&D.
• Implement through IN-SPACe, in coordination with banks and DFIs.

India’s space ambitions depend on sustained R&D investment and a highly skilled workforce.

Key recommendations included:

• Restore 150 per cent weighted deduction under Section 35 for in-house R&D on space technologies.
• Introduce employment-linked tax deductions for hiring scientific, engineering, and technical personnel.
• Provide concessional goods and services tax (GST) and customs duties for R&D equipment, linked to end-use certification.

Additionally, current GST exemptions inadvertently block ITC, raising costs for domestic missions and distorting competitiveness.

Key recommendations included:

• Classify satellites, launch vehicles, and launch services as zero-rated supplies, not exempt supplies.
• Enable full ITC availability and refunds, including on capital goods.
• Create a special ITC refund framework for long-cycle satellite manufacturing.
• Allow ITC carve-outs under Section 17(2) for satellite manufacturing.

The organisation noted that India’s space sector must integrate with global value chains while retaining strategic oversight.

Key recommendations included:

• Exempt TDS under Section 195 for foreign services procured for space operations.
• Notify IN-SPACe as the single-window authority for space-related export approvals.
• Introduce export incentives for satellites, launch services, and space-based services.
• Increase foreign direct investment (FDI) cap for launch vehicle companies to 74 per cent under automatic route.
• Allow 100 per cent FDI under automatic route for launch vehicle sub-systems and components.

Ispa further mentioned that long-term private investment requires a stable and transparent regulatory environment.

Key recommendations included:

• Enact a comprehensive space act formally recognising spacetech as an industry.
• Grant statutory authority to IN-SPACe as the independent civilian regulator.
• Establish clear licensing, authorisation, and dispute-resolution mechanisms.

India stands at a defining moment in its space journey. By recognising space as critical infrastructure, mandating private sector participation, rationalising taxes, incentivising R&D, and strengthening regulatory certainty, the Union Budget 2026-27 can decisively shift the government’s role from provider to partner and anchor buyer.