With the Union Budget 2025 just around the corner, speculations and discussions are rife about who stands to benefit and what allocations will be made. While finance is obviously the big picture, considering how India’s AI Mission found its place in the previous Budget, AI will possibly take centre stage in the upcoming session.
AI 2025 for Indian Startups
In the Union Budget 2024-25, the Indian government has underscored its commitment to AI by approving the comprehensive IndiaAI Mission. A substantial financial outlay of over ₹10,000 crore was earmarked for the mission over five years, of which ₹551 crore has already been allotted.
This initiative aims to democratise access to AI innovation and ensure the global competitiveness of India’s AI ecosystem.
Speaking on the upcoming Budget with AIM, Ankush Sabharwal, founder and CEO of conversational AI startup CoRover, said, “We expect targeted funding and grants for AI R&D, aligning with global trends that attract over $100 billion in annual investment.”
Sabharwal believes that investment in infrastructure could further empower startups and that strengthening AI talent through skill development is crucial, as India faces a shortage of 2 million professionals.
Notably, the IndiaAI FutureSkills program was also part of the IndiaAI mission, which aims to improve the availability of AI courses at different levels of education, including UG, PG and PhD.
“A balanced approach will create a developing ecosystem and contribute to India’s goal of becoming a $5 trillion economy by 2027 and $7 trillion economy by 2030, and positively a developed nation by 2047,” Sabharwal said.
Ajai Chowdhry, co-founder of HCL and chairman of the Mission Governing Board of India’s National Quantum Mission, has always been a proponent of making India a ‘product nation’.
“The present tax system…hinders the use of employee stock option plans (ESOPs), which are crucial for startups to recruit and retain talent. Whatever the situation may be, employees are still obligated to pay taxes when they exercise their options,” he told AIM.
According to him, it would be more equitable to tax ESOPs only when the shares are sold, which is in line with the employee’s financial means to pay the tax.
Compute for India
Under 2024’s IndiaAI Mission, a significant portion of its investment is allocated to the IndiaAI Compute Capacity, which focuses on creating a scalable AI computing ecosystem.
This includes deploying over 10,000 GPUs through public-private partnerships. Moreover, an AI marketplace is envisioned to offer AI as a service and pre-trained models, serving as a central hub for essential AI resources.
The mission also emphasises the development and deployment of indigenous LLMs and domain-specific foundational models through the IndiaAI Innovation Centre.
Research and Dataset Collection
While India’s allocation of GPUs is a promising step on the infrastructure side, Zerodha CTO Kailash Nadh believes that research should also be prioritised.
“Funding for serious, high-quality AI research is way more important than GPUs, which are merely an ephemeral means to an end. Solid research capability and depth is what will lay the true foundation for AI capabilities,” he told AIM.
Research and consulting firm Gartner believes that readying the workforce has become a priority. “Given the market demand, we need to create more short-term courses to make our workforce AI-ready to tap the market not just locally but globally,” DD Mishra, research analyst at Gartner, said while speaking to AIM.
“From a budgetary perspective, investing in AI skill development or supporting institutions by giving them incentives can make sense. Investment in digital inclusion and building a high-speed network should continue.”
IndiaAI Datasets Platform, which will also come under the IndiaAI Mission, will aim to streamline access to high-quality, non-personal datasets for Indian startups and researchers. This could potentially accelerate AI-based research and development, thereby envisioning Nadh’s expectations.
Recently, the co-founders of Bengaluru-based Sarvam AI met Ashwini Vaishnaw, union minister of railways and IT, to discuss the idea of building sovereign LLMs for India. Last year, NITI Aayog signed a statement of intent with Sarvam to build a pilot for an enterprise reasoning engine that is built atop the national data and analytics portal.
Notably, big tech companies are also vested in building and scaling the AI ecosystem in India through strategic investments and partnerships with the government.
Microsoft CEO Satya Nadella recently met Prime Minister Narendra Modi during the Microsoft AI Tour in India. In addition to committing to invest $3 billion over the next two years to expand Microsoft’s cloud and AI infrastructure, the company has set a goal of training 10 million individuals in AI skills by 2030.
Considering the recent wave of AI commitments and developments by big tech and the government, the Union Budget 2025 will clearly position AI as the protagonist.
