What India’s Tech Sector Wants from the Union Budget 2026: Fintech, SaaS & AI Priorities

As India approaches the Union Budget 2026, capital expenditure, digital transformation, and the mobilization of private investment are expected to remain central to the government’s economic strategy. Policymakers are likely to focus on sustaining reform momentum while navigating global economic headwinds and addressing domestic priorities such as employment generation and productivity enhancement.

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Early signals from industry associations, startups, and international investors suggest that Budget 2026 will emphasize policy continuity over structural overhaul – given the scale of reforms launched across 2025, with calibrated regulatory adjustments and targeted interventions.

Meanwhile, technology-driven sectors, particularly fintech, software-as-a-service (SaaS), and artificial intelligence (AI), have assumed a strategic position within India’s growth framework. Beyond their contribution to exports and high-skilled employment, these sectors increasingly support national priorities such as financial inclusion, MSME formalization, productivity gains, and data-driven governance.

Their growing integration with public digital platforms and enterprise systems underscores a shift from standalone innovation to technology as a core enabler of economic and administrative infrastructure.

CLICK HERE: India’s Services Sector Performance and Contribution to GDP in 2025: An Overview

Key policy themes likely to shape the Union Budget 2026

India’s digital public infrastructure: A foundational growth enabler

India’s digital public infrastructure (DPI) has evolved into a core pillar of the country’s economic and governance architecture. Built around interoperable platforms such as Aadhaar, Unified Payments Interface (UPI), DigiLocker, Account Aggregator, ONDC, and a growing ecosystem of open APIs, DPI underpins financial inclusion, service delivery, enterprise formalization, and data-driven policymaking.

According to the Ministry of Electronics and Information Technology (MeitY), India’s digital economy contributed 11.74 percent of GDP in FY 2022–23 (INR 31.64 trillion / US$ 347.6 billion) and supported 14.67 million jobs, with productivity levels significantly higher than traditional sectors. The digital economy’s share is projected to reach 20 percent of GVA by FY 2029–30, driven by AI adoption, cloud computing, and platform-led digital systems.

UPI has become the world’s largest real-time payments platform by transaction volume, while Aadhaar-enabled authentication and e-KYC have reduced onboarding costs across banking, fintech, telecom, and government services. Digital public platforms such as GeM, DigiLocker, CoWIN, and the National Health Stack have also strengthened transparency, service access, and administrative efficiency.

Crucially, DPI is no longer confined to financial services. It increasingly supports healthcare delivery, logistics coordination, education access, MSME digitization, and cross-border payments, positioning technology as an essential layer of national infrastructure rather than a standalone innovation vertical.

Sustained public investment, regulatory clarity, and public–private collaboration have enabled DPI to scale rapidly while remaining interoperable and inclusive. For businesses, DPI reduces transaction friction, accelerates compliance processes, expands market reach, and supports data-driven operations. For policymakers, it enhances fiscal targeting, service monitoring, and economic formalization.

As India approaches Union Budget 2026, digital public infrastructure is expected to remain a strategic policy asset—supporting productivity growth, platform-led innovation, and the integration of technology into every major sector of the economy.

Budget 2026: DPI policy direction and expectations

The Union Budget 2026 is expected to reinforce DPI as a foundational policy asset rather than introduce major structural shifts. Industry expectations point to:

• Continued capital allocations for payments, connectivity, identity, and e-governance platforms
• Deeper integration of DPI across healthcare, logistics, education, and public service delivery
• Expanded roles for fintech, SaaS, and AI startups in extending DPI capabilities, particularly in digital payments, credit access, interoperable data systems, and multilingual services
• An emphasis on policy continuity and regulatory certainty, strengthening investor confidence in platform-based business models

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Innovation, productivity, and export competitiveness

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With services exports and high-value manufacturing gaining policy emphasis, technology firms are positioned as key drivers of productivity and global competitiveness. Policy support is expected to favor innovation-led growth, intellectual property creation, and scalable digital solutions rather than volume-based incentives.

SaaS and deep-tech startups, many of which are export-oriented, are likely to benefit from measures supporting global market access, R&D investment, and enterprise adoption.

Skilling, employment, and a future-ready workforce

Talent development remains a structural priority for sustaining growth in technology-intensive sectors. Budget 2026 is expected to continue emphasizing digital skilling, AI readiness, and industry-aligned training programs to support both domestic employment and export-oriented services.

Collaboration between startups, academic institutions, and incubators is likely to remain central to building a future-ready workforce.

Ease of doing business and regulatory certainty

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Industry expectations center on regulatory stability, predictable tax treatment, and simplified compliance frameworks, particularly for companies operating across borders or scaling rapidly. For fintech and SaaS companies, clarity around data governance, cross-border taxation, and regulatory harmonization will be critical to maintaining investor confidence.

Technology and public policy in India: Where attention is likely to converge

Artificial intelligence and deeptech

AI-led startups have emerged as a strategic growth engine within India’s innovation ecosystem. Backed by central government initiatives such as Atal Tinkering Labs, the Deeptech Reactor under Atal Innovation Mission (AIM) 2.0, Gen-Next Support for Innovative Startups (GENESIS), TIDE 2.0, and the MeitY Startup Hub, these ventures span enterprise AI, data analytics, language technologies, healthcare diagnostics, and industrial automation.

The ecosystem is gradually shifting from application-layer solutions to foundational and sector-specific models, supported by stronger linkages with academia, Centers of Excellence, and public digital infrastructure.

Fintech and digital financial services

India’s fintech ecosystem remains among the world’s largest and most mature, driven by DPI frameworks such as UPI, Aadhaar, and account aggregators. Fintech startups play a central role in advancing financial inclusion, expanding MSME credit access, and integrating digital finance with formal banking and regulatory systems.

Government-backed credit guarantee schemes, seed funding mechanisms, and regulatory sandboxes have enabled responsible scaling while supporting innovation across payments, lending, wealth tech, insurtech, and embedded finance.

India’s fintech sector underwent a decisive phase of recalibration in 2025, shifting from rapid expansion to more disciplined, sustainable growth. The year was defined by tighter regulatory oversight, constrained funding conditions, and a clear pivot toward profitability, stronger governance, and partnership-led scale. Rather than pursuing volume at any cost, fintech firms increasingly focused on compliance-led restructuring and diversified product strategies to strengthen long-term resilience.

Cross-border payments emerged as a critical growth vector. Indian fintechs intensified their focus on international remittances, trade-linked flows, travel payments, and B2B transactions, positioning themselves within global payment corridors. Regulatory approvals played a central role in this expansion. Notably, India’s fintech company Razorpay’s receipt of the RBI’s Payment Aggregator–Cross Border license enabled the platform to support international collections from over 130 currencies, underpinning its entry into markets such as the UAE, Europe, and Southeast Asia. 

SaaS and enterprise technology

India has consolidated its position as a global hub for SaaS, particularly in B2B software, cloud platforms, cybersecurity, HR tech, CRM, and vertical-specific enterprise solutions. These startups benefit from India’s engineering talent pool, cost efficiencies, and early exposure to global customers.

Notably, a growing number of SaaS ventures originate from Tier-2 and Tier-3 cities, reinforcing broader trends of entrepreneurial decentralization and export-led growth.

Strategic implications for businesses and foreign investors

Collectively, the growth of AI, fintech, and SaaS startups illustrate India’s transition from scale-driven expansion to technology-led value creation. Their growing prominence aligns with India’s goal of positioning startups not only as job creators but also as builders of core digital, financial, and economic infrastructure.

For businesses and investors, Union Budget 2026 is expected to reinforce this trajectory through policy continuity, targeted innovation support, and deeper integration of technology across the economy, making execution quality and regulatory predictability as important as headline fiscal announcements.

(US$1 = INR 91.02)

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