Union Budget 2026: EY India backs expanding PLI to AI, robotics, space; seeks customs dispute mechanism
EY India has recommended extending the Production-Linked Incentive (PLI) scheme to new technology areas including AI, space and robotics, while also calling for stronger tax certainty and a dedicated customs dispute resolution mechanism to improve investor confidence.
A push to widen PLI beyond current sectors
As Budget 2026 preparations accelerate, EY India has urged the government to broaden the Production-Linked Incentive (PLI) framework to cover emerging technology sectors such as artificial intelligence, robotics and space. The premise is that incentive-led scale-up, which has been used to strengthen manufacturing in selected sectors, could be adapted to accelerate domestic capacity in strategic tech domains.
EY’s recommendation reflects a wider policy debate: whether India’s next phase of industrial policy should be more explicitly oriented towards frontier technologies where global value chains are still fluid and competitive advantage is being created in real time.
Tax certainty and easier dispute resolution
Alongside the PLI expansion proposal, EY India also flagged the need for stronger tax certainty to sustain growth and support long-term investment planning. One specific suggestion cited was a dedicated mechanism to resolve customs disputes, aimed at reducing friction for companies dependent on imported components, machinery and specialised inputs.
From an industry standpoint, faster and clearer dispute resolution can reduce working capital lock-ups, improve supply-chain predictability and make India a more attractive base for both production and R&D activities, especially in hardware-linked technology sectors.
Why AI, robotics and space are central to the next cycle
AI and robotics are increasingly viewed as foundational for productivity gains across manufacturing, logistics, healthcare and public services, while space technology underpins communications, navigation and earth observation use-cases. Supporters of targeted incentives argue that these are not niche segments but general-purpose platforms that can lift competitiveness across the economy.
Budget 2026 will be closely watched for signals on how the government intends to combine incentives, public infrastructure investments and regulatory clarity to build a pipeline from research and prototypes to production-grade deployment at scale.