A parliamentary panel has flagged high hardware cost, global supply chain delays, huge power and water consumption by data centres, and a tax holiday as significant issues facing India's plans to establish large clusters of graphics processing units (GPUs).
The Parliamentary Standing Committee on Communications and Information Technology in its latest report suggested the Ministry of Electronics and IT to consult with all stakeholders, academicians and environmentalists on how to tackle the challenges.
The committee's concerns come at a time when increasing domestic demand and skyrocketing global costs have made integrated circuits the third largest import item for India, after crude oil and gold. In the first nine months (April-December) of fiscal 2026, India imported chips worth $12.62 billion, official figures show.
It called for the ministry to meet with budget experts, referring to the government's announcement of a tax holiday till 2047 for any foreign company that provides cloud services to customers globally by using data centre services from India.
The committee also highlighted uncertainties over the development of sovereign AI models in the report. "The AI landscape is fast changing and witnessing real-life impact of AI, the committee has concerns about the development of a sovereign AI model," it said.
MeitY has reiterated that development of foundational models with capacities of 100-billion-plus parameters trained on datasets covering major Indian languages for priority sectors like healthcare, agriculture and governance remained a key programme.
The panel said the ministry was able to spend only 32% of the fund allocated for the IndiaAI Mission at revised estimate stage in FY26 as on December 31, 2025. It also noted that the amount sanctioned at the budgetary estimate stage in FY27 for the mission was only half the amount proposed by the ministry.
Massive pruning in funding
The committee pointed out MeitY's inability to secure more funds from the finance ministry for key projects.
MeitY had sought a budgetary support of Rs 28,169 crore for FY27. About 76.79% of this, or Rs 21,632 crore, was finally allocated in the latest budget. For FY26, the finance ministry had allocated a higher share (92.2%) of the Rs 28,223 crore sought by the ministry for 2025-26 (FY26), approving Rs 26,026 crore in the budget for that year.
As a result of these, key programmes vital for the continuous development of the electronics and IT industry, such as the state-run Semi-Conductor Laboratory in Mohali, promotion of IT & ITeS industries, the IndiaAI Mission and production-linked incentive schemes have shown “massive pruning of funds in FY 2026-27 in comparison to FY 2025-26, i.e., 16%, 31%, 50% and 83%, respectively”, it said.
It also pointed out that MeitY has been unable to spend the funds already at its disposal. As of December 31, 2025, it utilised Rs 13,048.70 crore, or just 64.49% of the revised estimate of Rs 20,232.95 crore it had submitted for FY26.
The Parliamentary Standing Committee on Communications and Information Technology in its latest report suggested the Ministry of Electronics and IT to consult with all stakeholders, academicians and environmentalists on how to tackle the challenges.
The committee's concerns come at a time when increasing domestic demand and skyrocketing global costs have made integrated circuits the third largest import item for India, after crude oil and gold. In the first nine months (April-December) of fiscal 2026, India imported chips worth $12.62 billion, official figures show.
It called for the ministry to meet with budget experts, referring to the government's announcement of a tax holiday till 2047 for any foreign company that provides cloud services to customers globally by using data centre services from India.
The committee also highlighted uncertainties over the development of sovereign AI models in the report. "The AI landscape is fast changing and witnessing real-life impact of AI, the committee has concerns about the development of a sovereign AI model," it said.
MeitY has reiterated that development of foundational models with capacities of 100-billion-plus parameters trained on datasets covering major Indian languages for priority sectors like healthcare, agriculture and governance remained a key programme.
The panel said the ministry was able to spend only 32% of the fund allocated for the IndiaAI Mission at revised estimate stage in FY26 as on December 31, 2025. It also noted that the amount sanctioned at the budgetary estimate stage in FY27 for the mission was only half the amount proposed by the ministry.
Massive pruning in funding
The committee pointed out MeitY's inability to secure more funds from the finance ministry for key projects.
MeitY had sought a budgetary support of Rs 28,169 crore for FY27. About 76.79% of this, or Rs 21,632 crore, was finally allocated in the latest budget. For FY26, the finance ministry had allocated a higher share (92.2%) of the Rs 28,223 crore sought by the ministry for 2025-26 (FY26), approving Rs 26,026 crore in the budget for that year.
As a result of these, key programmes vital for the continuous development of the electronics and IT industry, such as the state-run Semi-Conductor Laboratory in Mohali, promotion of IT & ITeS industries, the IndiaAI Mission and production-linked incentive schemes have shown “massive pruning of funds in FY 2026-27 in comparison to FY 2025-26, i.e., 16%, 31%, 50% and 83%, respectively”, it said.
It also pointed out that MeitY has been unable to spend the funds already at its disposal. As of December 31, 2025, it utilised Rs 13,048.70 crore, or just 64.49% of the revised estimate of Rs 20,232.95 crore it had submitted for FY26.
