The Ministry of Electronics and Information Technology (MeitY) has been allocated a substantial ₹21,936.90 crore in the Union Budget for 2024-25, marking a significant 52 percent increase from the previous year. This major funding boost highlights the government’s strategic focus on enhancing critical sectors such as semiconductors and artificial intelligence (AI), where continued progress is essential.

The enhanced budget is set to catalyze growth across several key areas. According to Mr. S. Krishnan, Secretary of MeitY, the increased allocation will fuel advancements in semiconductor manufacturing, electronics production, and research and development within the IT and ITeS ecosystems. “This funding will not only bolster domestic manufacturing but also position India as a formidable player in the global market, fostering both direct and indirect job creation,” Mr. Krishnan said, while talking to ETCIO.com.

A standout feature of the budget is the dramatic increase in funding for the semiconductor sector. The allocation has surged from ₹3,000 crore in 2023-24 to ₹6,903 crore for 2024-25, underscoring a strong commitment to advancing India’s semiconductor capabilities. Additionally, the Production Linked Incentive (PLI) scheme for electronics has seen its budget rise from ₹4,645 crore to ₹6,200 crore.

In the AI sector, the Union Cabinet has approved ₹10,372 crore for the IndiaAI Mission, aimed at developing over 10,000 GPUs and foundational models with more than 100 billion parameters. This initiative is designed to support sectors like healthcare, agriculture, and governance, and provide startups with resources to create innovative AI tools. The Union Budget has allocated ₹551.75 crore for this mission, with provisions for additional funding if necessary.

Mr. Krishnan emphasized India’s potential to become a global leader in AI, citing the country’s robust human resources as a key strength. He referenced a Stanford University report highlighting India’s growing role in AI development and services, positioning the nation at the forefront of global AI advancements.

Addressing concerns about AI’s impact on employment, Mr. Krishnan acknowledged the risk of AI replacing certain white-collar jobs. However, he proposed that effective skill development initiatives could mitigate these risks and ensure that AI technology benefits both white-collar and blue-collar workers.

Regarding the challenges in the semiconductor sector, Mr. Krishnan pointed out that while India is home to around 20% of the world’s semiconductor design workforce and hosts several major global design facilities, there is a significant gap in semiconductor manufacturing capabilities. The industry’s advanced precision manufacturing techniques require specialized skills and a robust ecosystem of manufacturers and service providers. Mr. Krishnan emphasized that a single chip manufacturing plant is insufficient to meet the sector’s needs.

In response to India’s lag in R&D compared to countries like China, Taiwan, and South Korea, Mr. Krishnan highlighted the NRF (Anusandhan National Research Foundation) initiative. The Government of India has granted ₹1 lakh crore in the recent budget to elevate the country’s R&D efforts to a more advanced level.

As India embarks on this ambitious journey, the substantial budget increase for MeitY signifies a pivotal moment in driving the country’s growth in electronics, semiconductors, and AI, setting the stage for transformative developments in these crucial sectors.