India’s 2026 budget builds data fortresses, but leaves the keys abroad

By Rajesh Dangi

India’s Union Budget for 2026 has been welcomed by the technology and infrastructure sectors with clear optimism. Its headline measure, a long term tax holiday for data centers alongside strong incentives for foreign investment, signals a decisive push to position India as a global hub for digital infrastructure. The logic is compelling. Expanding domestic data capacity can attract capital, create jobs, strengthen connectivity, and support the rapid growth of AI, cloud services, and digital platforms. As a foundation for the digital economy, this infrastructure drive is both timely and strategically sound.

At the same time, the budget highlights a deeper policy tension. While India is accelerating the construction of digital infrastructure, the underlying technologies that power these facilities, from chips to core software platforms, still largely originate abroad. This does not diminish the value of the current push, but it does raise an ...