Budget 2026: Groundwork for India’s Next Decade of Capital Formation

The Union Budget 2026 marks a clear departure from reactive fiscal policymaking, prioritising long-term capability building across deep technology, manufacturing, MSMEs, and capital markets. With India’s nominal GDP expected to cross USD 4.3 trillion in FY27 and public capex already at a record INR 11.1 lakh crore in FY26, experts believe the government has used this Budget to reinforce institutional depth rather than chase short-term consumption boosts.

Continued allocations for national missions in semiconductors, space, clean energy, artificial intelligence, and quantum technologies underline policy continuity. This is critical for sectors where innovation cycles often exceed 7-10 years and upfront capital intensity remains high.

The expanded India Semiconductor Mission 2.0, with a broader mandate covering equipment, materials, and full-stack IP, reflects an acknowledgment that semiconductor ecosystems cannot be assembled piecemeal.

Ankit Kedia, Founder and Lead Investor, Capital-A, said, “The announcements made today mark a clear inflection point in India’s manufacturing and deep-tech journey. The expansion of the India Semiconductor Mission into equipment, materials, and full-stack IP reflects an important recognition that semiconductors and advanced manufacturing cannot be built in silos, and that value creation sits across the entire supply chain.”

Beyond this, the Budget has sustained funding for AI-led national research missions and strategic materials, aimed at reducing import dependence and strengthening domestic supply chains.

Vishesh Rajaram, Founding Partner at Speciale Invest, said that the Budget reinforces a long-term, capability-building approach to deep technology in India. Continued support for national missions across emerging technologies, semiconductors, space, clean energy, AI, and quantum, signals policy continuity that is essential for deep-tech ventures, where innovation cycles are long, and capital requirements are high.

“The emphasis on digital public infrastructure and fibre connectivity is equally strategic. Robust, nationwide connectivity underpins data-intensive and hardware-led innovation, enabling deep-tech startups to develop, test, and scale solutions across manufacturing, defence, climate, healthcare, and space ecosystems. Rather than focusing on short-term outcomes, the Budget prioritises foundational systems that allow deep-tech companies to emerge from India and compete globally. This approach positions India not just as an adopter, but as a creator of frontier technologies over the next decade,” said Rajaram.

As of 2025, India has over 950 million internet users, but broadband quality and last-mile fibre penetration remain uneven. Budget 2026’s connectivity push aims to address this gap, enabling startups to develop and deploy solutions across manufacturing, defence, climate, healthcare, and space ecosystems at scale.

For private investors, this combination of public funding and infrastructure depth helps compress both technology and go-to-market risk, encouraging participation across early and growth stages.