AI Push

For starters, India has allocated Rs 500 crore for a Centre of Excellence (CoE) in AI for Education as part of the vision to "Make AI in India and Make AI work for India”. This is on top of the three CoEs announced in Budget 2023.

“Now a Centre of Excellence in Artificial Intelligence for education will be set up with a total outlay of Rs 500 crore,” said Sitharaman in her speech today.

What is a CoE? They are collaborative centres that bring together various stakeholders in the field of AI to pave the way for foundational research, technology development and AI skill development. These centres, as laid out first in the IndiaAI Expert Group Report, support collaborations between domestic and international AI experts.

This also comes as India prepares to build its own foundation model, especially after mounting pressure as Chinese company DeepSeek built one with minimal chips and computing power.

“The Budget’s focus to spend on AI-related skilling is a reasonable approach, and the quantitative benefits of AI and skill considerations must be well-documented, since there is no tangible understanding of the same beyond the October 2023 IndiaAI Expert Group report,” Abhivardhan, managing partner at Indic Pacific Legal Research and Chairperson & Managing Trustee of the Indian Society of Artificial Intelligence and Law, told The Secretariat.

Secondly, the government has increased the budgetary allocation into the India AI Mission to Rs 2,000 crore, four times more than the Rs 551 crore last year. Yet, not to be a mood dampener, this still pales in comparison to the US, which recently announced a US$ 500 billion (Rs 43.34 lakh crore) bonanza for AI infrastructure.

The Budget also proposes to establish five National Centres of Excellence for Youth Skilling aimed at collaborating with global expertise and initiate partnerships to equip the Indian youth with the skills required for “Make for India, Make for the World” manufacturing.

“The partnerships will cover curriculum design, training of trainers, a skills certification framework, and periodic reviews,” announced Sitharaman.

This is a positive step, as highlighted in the Economic Survey 2024-25. The report noted that the government is building a strong and adaptable skill system to keep up with global trends like automation, AI and digitalisation, in light of concerns and fears around AI taking away human jobs.

“By integrating early exposure to STEM education, AI-driven learning, and higher technical training, these initiatives create a seamless learning-to-employment pathway, equipping youth with the tools needed to thrive in the global digital landscape and accelerating India’s journey toward a Viksit Bharat,” Sumit Kumar, Chief Strategy Officer at TeamLease Degree Apprenticeship, told The Secretariat in an email.

However, Abhivardhan critiqued that “...a more India-centric quantified approach to assess skill, employment and labour security issues due to the use, proliferation and dissemination of AI" would have been a better addition to the Survey.

R&D Gets Its Due

For quite some time now, the government has been criticised for its meagre investment in research and development. The proportion of GDP (0.64 per cent) India spends on research is significantly lower than most countries. The US (3.46 per cent), China (2.4 per cent), and even emerging economies like Brazil (1.2 per cent) invest much much more.

Recognising this gap, or perhaps to counter mounting criticism, the government has made a major course correction in the 2025-26 Budget, allocating Rs 20,000 crore to strengthen public-private partnerships in R&D. This infusion of funds aims to boost domestic innovation, encourage industry-led research, and reduce India's reliance on imported technology.

Public-private partnerships, where the government, private companies and universities team up to push the boundaries of all kinds of technologies, have worked for countries like the US. If India gets this right, it could build a strong research ecosystem in areas like AI, clean energy, biotech and chip manufacturing.

The research community in India also doesn't have access to a lot of research labs, which are typical hubs of innovaton, especially in leading Indian universities. Which is one of the reasons why India's contribution to AI research remains minimal.

Between 2018 and 2023, India accounted for just 1.4 per cent of global AI research papers, ranking 14th worldwide. Top educators say it's because of lack of funding and poor research facilities.

In contrast, the US and China dominated the field, contributing 30.4 per cent and 22.8 per cent respectively. 

So, it is encouraging that the Budget has put more focus on deep tech research. The Finance Minister announced the PM Research Fellowship for 10,000 students in India’s premier research institutes — Indian Institute of Technology (IIT) and Indian Institute of Science (IISc), Bengaluru.

“In the next five years, under the PM Research Fellowship scheme, we will provide 10,000 fellowships for technological research in IITs and IISc, with enhanced financial support,” said Sitharaman.

The idea is that with these fellowships and funding will drive more innovation in technology.

"Doing high-quality research requires tremendous skill and patience. In most areas of computer science, particularly AI, bright students are handsomely compensated in industries. If Indian universities are to stay competitive, we should do everything to make the student experience an enriching one, including paying them more," Danish Pruthi, assistant professor at IISc, told The Secretariat via email.

While the fellowship, R&D boost and Centres of Excellence are a step forward, the real test will be in how they are used and whether they can drive the innovation and growth needed to put India on the global AI map.