Budget 2026: AI, indigenous tech take centre stage in security push

As Budget 2026 approaches, industry leaders urge the government to prioritise artificial intelligence and indigenous technology for defence and strategic resilience. Alongside tax, capex and export measures, experts say mission-grade AI, public-private partnerships and IDDM-led innovation will be critical to strengthening India’s national security architecture.

With the Union Budget 2026 just days away, calls are intensifying for the government to place artificial intelligence (AI) and indigenous technology at the core of India’s national security strategy. Finance Minister Nirmala Sitharaman is set to present her ninth consecutive Budget on February 1, and industry stakeholders believe this could be a defining moment for India’s defence-tech roadmap.

Ashok Atluri, Chairman and Managing Director of Zen Technologies, said AI is already making inroads into India’s defence ecosystem through simulation-based training, predictive maintenance tools, decision-support systems and early-stage autonomous technologies. However, he cautioned that current deployments lack scale, deep integration and full indigenisation.

According to Atluri, Budget 2026 should focus on developing mission-grade AI systems trained on Indian operational data and designed to function in contested, cyber-denied environments. He emphasised that such systems must be integrated across platforms under the Indigenously Designed, Developed and Manufactured (IDDM) framework to ensure technological sovereignty and resilience.

Industry voices argue that targeted investments in AI-enabled simulators, digital twins, wargaming platforms and autonomous training systems can significantly enhance preparedness while reducing long-term costs. These technologies not only improve training realism but also enable data-driven planning and faster decision cycles in complex operational scenarios.

Public-private collaboration is another recurring theme in pre-Budget expectations. Defence technology firms are seeking assured procurement pathways, long-term IDDM-focused programmes and operational testbeds that allow Indian companies to co-develop and validate advanced solutions at scale. Such measures, they say, will help convert domestic innovation into deployable national capability rather than remain confined to pilot projects.

The push for AI and indigenous defence tech is unfolding against a broader backdrop of fiscal balancing and sectoral demands. Industry leaders across infrastructure, manufacturing, insurance, financial services and MSMEs are also calling for sustained capital expenditure, tax rationalisation and policy stability. Yet, security and strategic technology are emerging as cross-cutting priorities, particularly amid rising geopolitical uncertainty and evolving cyber threats.

Experts note that modern conflicts increasingly span digital, cyber and information domains, making AI, cybersecurity and data infrastructure as critical as traditional hardware. Strengthening domestic capabilities in these areas could reduce import dependence, improve response times and enhance strategic autonomy.

At the same time, stakeholders caution that funding alone will not suffice. Clear standards, faster testing and certification processes, and closer coordination between the armed forces, research bodies and private industry will be essential to ensure that investments translate into usable capability.

As the Halwa Ceremony signals the final stage of Budget preparations, expectations remain measured on tax overhauls but high on strategic allocations. If Budget 2026 delivers a strong policy and funding push for AI-driven, indigenous defence technologies, it could mark a decisive step toward aligning India’s economic planning with its long-term national security objectives.