As the Union Budget 2025 approaches, scheduled for presentation by Finance Minister Nirmala Sitharaman on February 1st, stakeholders across various sectors are keenly observing potential allocations and policies, especially concerning artificial intelligence (AI). The government’s commitment to AI has been evident in previous budgets, notably with the approval of the comprehensive IndiaAI Mission, which received a substantial financial outlay of over ₹10,000 crore over five years.

AI Expectations for Budget 2025

The IndiaAI Mission aims to democratize access to AI innovation and ensure the global competitiveness of India’s AI ecosystem. In the Union Budget 2024-25, the government allocated ₹551.75 crore to this mission, emphasizing its dedication to advancing AI research and applications.

indiaai.gov.in This funding is directed towards enhancing AI infrastructure, including the procurement of high-performance Graphic Processing Units (GPUs), which are essential for complex AI computations. Recent developments under the IndiaAI Mission include plans to deploy 10,000 GPUs over the next 18-24 months and the scheduled launch of the datasets platform by January 2025. These initiatives are expected to significantly boost AI computing capacity, research, and innovation in the country.

As the upcoming budget is unveiled, industry experts have outlined several expectations to further bolster AI development in India:

1. Increased Funding for AI Initiatives

The IndiaAI Mission, launched with an initial allocation of ₹10,400 crore, marked a significant step toward making India a leader in artificial intelligence. However, industry experts believe that more investment is required to match the global pace of AI development.

Global AI Investments Are Growing Rapidly: Countries like China and the USA have committed billions of dollars toward AI research and innovation. If India aims to remain competitive, it must increase its financial commitment to AI infrastructure, research, and development. More funding could attract private investments, encouraging companies to invest in AI research, which would boost employment and technological advancements. India has a thriving startup ecosystem, and additional government funding would provide the necessary grants, subsidies, and tax benefits for startups working on AI innovations.

What can we expect?
A revised AI budget exceeding ₹15,000 crore to fund AI research, infrastructure, and development projects. Direct funding for AI startups and research institutions to support innovation. Expansion of AI adoption across sectors such as agriculture, healthcare, and smart cities to enhance efficiency and productivity.

2. Detailed Implementation Plans

While previous budgets introduced various AI initiatives, industry stakeholders now expect clear and specific implementation roadmaps to ensure transparency and efficiency.

Avoiding Delays in AI Infrastructure Development: Without fixed timelines, critical projects like IndiaAI Compute Capacity and GPU deployment may experience slow implementation. If industries, startups, and academia are provided with specific deadlines, they can align their strategies to match government initiatives. A clear roadmap will ensure that funding is distributed efficiently, preventing wastage and mismanagement.

What Can Be Expected?
Official announcements on the timeline for GPU deployment, including the expected launch date of IndiaAI Compute Capacity. Progress reports on the IndiaAI Datasets Platform, which will provide structured data for AI model training. A structured AI research roadmap, outlining key milestones, expected outcomes, and collaboration frameworks.

3. Support for Localized AI Innovations

One of the biggest challenges in AI development is ensuring that the technology benefits all linguistic and cultural groups in India. This is why the focus on vernacular AI models and India-specific AI innovations is crucial.

India is a Multilingual Country with 22 official languages and hundreds of dialects, AI tools must understand and process regional languages efficiently. Most AI tools are English-centric, limiting their usability in rural and semi-urban regions where people primarily communicate in local languages. Strengthening Digital Public Infrastructure (DPI) including Aadhaar, UPI, and CoWIN, could be significantly enhanced by AI-powered solutions that cater to diverse linguistic groups.

What can be expect?
Development of vernacular Large Language Models (LLMs) that support multiple Indian languages. Expansion of AI-driven public services, such as regional chatbots for e-governance and AI-powered legal assistance. Grants and incentives for AI projects that develop India-specific solutions, such as AI models for regional agriculture and healthcare.

4. Enhanced AI Infrastructure

AI requires powerful computational infrastructure, including data centers, supercomputers, and high-performance computing (HPC) clusters. The previous allocation of ₹4,500 crore for AI computing infrastructure was a good start, but industry leaders now expect greater investment.

India Needs More Computing Power: AI models require high-performance GPUs and specialized AI chips, which are currently limited in India. Indigenous AI Hardware Development that creates Dependence on foreign chip manufacturers (like NVIDIA and AMD) makes India vulnerable to global supply chain disruptions. Supporting AI Startups and Research Labs: AI startups and institutions struggle to access affordable AI computing resources, which slows innovation.

What can we expect?
An increased budget allocation (₹7,000–₹10,000 crore) to boost AI infrastructure development. Incentives for private companies to manufacture AI-specific semiconductors, GPUs, and processors in India. Government-backed cloud computing platforms, offering affordable access to AI computing resources for startups, universities, and researchers.

5. Accessible AI Resources for Startups and Research Institutions

While large corporations have the resources to invest in AI, smaller startups and academic institutions often struggle to access AI computing infrastructure, datasets, and research grants.

Startups Drive Innovation: Many of the most disruptive AI innovations come from small startups. However, they lack access to expensive computing power and datasets. Bridging the Digital Divide: AI should not be limited to elite institutions; it must be available to students, researchers, and developers across India. Encouraging AI Research: Many Indian universities lack the funding and infrastructure needed for cutting-edge AI research.

What Can Be Expected?
AI infrastructure grants for startups, allowing them to access high-performance computing resources at subsidized rates. AI training programs in universities, ensuring that students and researchers have access to AI tools and computing power. A national AI research fund, supporting projects in healthcare, agriculture, defense, and smart city development.

Commitment to Responsible AI

The government has demonstrated its commitment to ethical AI through advisories on fairness and bias in algorithms and plans for a National Committee on Responsible and Trustworthy AI. Announcements regarding the establishment of this committee might provide clearer governance mechanisms, though timelines could remain tentative. Measures like mandatory watermarking of AI-generated content could be proposed as part of efforts to combat misinformation and promote accountability. Additionally, the introduction of an AI regulatory sandbox, enabling controlled experimentation and fostering innovation, might also feature in the government’s agenda.

Partnerships with industry leaders have been initiated to train 500,000 individuals, and AI Productivity Labs have been introduced to address workforce readiness. However, scaling these efforts to match the sector’s growth remains a challenge. The upcoming budget is expected to focus on the expansion of skilling programs tailored to regional economic needs and industries such as manufacturing and services, through strengthened collaborations with private players.

The Union Budget 2025 presents a critical opportunity for the Indian government to build on its progress in AI. With past budgets laying the groundwork through initiatives such as the IndiaAI Mission, enhanced infrastructure support, and ethical AI frameworks, the focus should now shift to implementation and expansion. By addressing industry expectations and committing to responsible AI development, India can position itself as a global leader in artificial intelligence, driving innovation and economic growth in the years to come.