Union Budget bets big on emerging technology, startups

Nirmala Sitharaman announces national framework for GCCs, Rs 500-crore CoE for AI, new 'fund of funds' for startups

New Delhi: New and emerging technologies were in focus in the Union Budget, as Finance Minister Nirmala Sitharaman announced a national framework for Global Capability Centres (GCCs), Rs 500-crore centre of excellence in AI for education, and said a deep tech ‘fund of funds’ will be explored to catalyse the next generation startups.

A new fund of funds, with expanded scope and a fresh contribution of additional Rs 10,000 crore is also on anvil.

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A national framework will be formulated as guidance to states for promoting Global Capability Centres in emerging Tier-2 cities. This will suggest measures for enhancing availability of talent and infrastructure, building byelaw reforms, and mechanisms for collaboration with industry.

“I had announced three Centres of Excellence in Artificial Intelligence for agriculture, health, and sustainable cities in 2023. Now a Centre of Excellence in Artificial Intelligence for education will be set up with a total outlay of Rs 500 crore,” Sitharaman said.

Startups have a reason for cheer also as a new ‘Fund of Funds’ with expanded scope and a fresh contribution of additional Rs 10,000 crore will be set up.

“The Alternate Investment Funds (AIFs) for startups have received commitments of more than Rs 91,000 crore. These are supported by the Fund of Funds set up with a government contribution of Rs 10,000 crore. Now, a new fund of funds, with expanded scope and a fresh contribution of another Rs 10,000 crore will be set up,” she said.

Gaja Capital Managing Partner Gopal Jain said the introduction of a new Fund of Funds for AIFs, and a Center of Excellence for AI in Education are all “promising steps” toward fostering a knowledge-driven economy.

To improve access to capital, the credit guarantee cover will be enhanced for startups, from Rs 10 crore to 20 crore, with the guarantee fee being moderated to 1 per cent for loans in 27 focus sectors key for Atmanirbhar Bharat.

Bruce Keith, Co-founder CEO, InvestorAi believes that the announcement on deep tech funds, while details are awaited, needs to be viewed through the ‘DeepSeek’ lens of what can be done with relatively small amounts of capital when provided to agile and creative teams.

“We expect the venture capital ecosystem to bring velocity and momentum into funding these enterprises,” Keith said.

It is pertinent to mention here that the India GCC landscape has been progressing over the past five years and the total number of such centres have risen to over 1,700 in FY24 with over 2,975 centres.
Jaspreet Singh, Partner and GCC Industry Leader, Grant Thornton Bharat said that the Budget’s focus on expanding talent availability and infrastructure in Tier-2 cities marks a significant step in strengthening India’s Global Capability Centre ecosystem.

“By unlocking access to a wider talent pool, including professionals who prefer to stay in their hometowns, this initiative will enhance workforce stability and retention. Improved infrastructure will further enable seamless operations, making Tier-2 cities attractive destinations for high-value global work,” Singh said.

As GCCs evolve into strategic hubs for innovation and technology, the expansion will drive inclusive growth, reduce regional disparities, and position India as a global leader in digital and business services, Singh said and noted that a well-distributed GCC network will ensure long-term resilience, scalability, and global competitiveness.