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The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman, has unveiled a series of strategic initiatives aimed at strengthening India's Information Technology (IT) and Information Technology Enabled Services (ITeS) sector. As a key contributor to India's GDP and a major employment generator, the IT industry stands to benefit from new investments in artificial intelligence, digital infrastructure, and domestic manufacturing. These measures are expected to enhance innovation, drive competitiveness, and position India as a global leader in technology services.

*Key Announcements for the IT & ITeS Sector*

1. *Establishment of AI Centre of Excellence*
   One of the most ambitious initiatives in this year’s budget is the creation of a Centre of Excellence in Artificial Intelligence (AI) with an allocation of ?500 crore. This initiative aims to:
   - Drive AI-led innovation, particularly in education, healthcare, and governance.
   - Enhance India’s research capabilities in AI and develop a talent pool of skilled professionals.
   - Support the integration of AI in businesses to improve efficiency and productivity.
   This step reinforces India's commitment to becoming an AI-powered digital economy, bridging the gap between industry needs and cutting-edge research.

2. *National Manufacturing Mission for IT Hardware*
   To reduce import dependency and strengthen India's self-reliance, the budget introduces the National Manufacturing Mission. This includes incentives for domestic production of IT hardware, semiconductors, and critical technology components. The initiative is expected to:
   - Increase investment in semiconductor fabrication and high-end electronics manufacturing.
   - Support IT hardware firms in expanding their production capacities.
   - Encourage collaborations between global tech companies and Indian manufacturers.
   By bolstering indigenous IT hardware production, India aims to become a major player in the global electronics supply chain.

3. *Infrastructure Development for IT Hubs*
   Recognizing the importance of high-quality infrastructure for IT growth, the budget provides ?1.5 lakh crore in the form of 50-year interest-free loans to states for infrastructure projects. This is expected to:
   - Strengthen connectivity between IT hubs and tier-2 and tier-3 cities, promoting decentralized IT expansion.
   - Enable the development of smart office spaces and digital work environments.
   - Improve power and telecom infrastructure to enhance remote work capabilities.

4. *Focus on Research and Development (R&D)*
   With technology constantly evolving, the budget has placed an emphasis on research and development (R&D) in IT and emerging technologies. While no direct tax incentives have been introduced for IT firms, the increased focus on AI, digital transformation, and innovation signals government support for:
   - The development of next-generation IT solutions.
   - Expansion of cloud computing and cybersecurity advancements.
   - Greater collaboration between academia and industry to drive research-driven innovation.

5. *Addressing Emerging Risks & Global Competitiveness*
   The Economic Survey 2025 has highlighted emerging risks that threaten the IT sector’s sustained growth, particularly concerning taxation and global competition. To maintain India’s edge in the IT services market, industry experts recommend:
   - Removal of the 2% equalization levy, which impacts international trade competitiveness.
   - Streamlining tax compliance and regulatory frameworks to ease operations for global IT firms operating in India.
   - Strengthening data security regulations and digital governance policies.

6. *Tax Reforms & Incentives for Startups*
   The budget continues to support IT startups and software services firms by:
   - Extending tax holidays for IT startups to encourage more investments in innovation.
   - Providing funding assistance for deep-tech startups working in AI, blockchain, and quantum computing.
   - Simplifying corporate tax regulations to make India a more attractive destination for IT investments.

*Impact on India's IT & ITeS Industry*

The Union Budget 2025 sets the stage for a high-growth trajectory in India's IT and digital services sector. Key takeaways include:
   - Boost in AI-driven innovation, positioning India as a global AI hub.
   - Expansion of domestic IT hardware manufacturing, reducing reliance on imports.
   - Stronger digital infrastructure, enabling growth in cloud services, fintech, and remote work solutions.
   - Increased foreign investment opportunities, especially in deep-tech and digital transformation solutions.

*Conclusion: A Budget for the Future of Indian IT*

With strategic investments in AI, digital infrastructure, and R&D, the Union Budget 2025 presents a strong growth roadmap for India's IT and ITeS sector. By fostering innovation, strengthening IT manufacturing, and improving connectivity, the government aims to reinforce India’s position as a global technology leader.

For IT firms, startups, and investors, this budget signals a future of accelerated digital transformation and new opportunities in an increasingly tech-driven world.