Union Budget 2026 seems to have accelerated the government’s ambition to expand the digital economy, but industry executives said its significance also lies in how it shapes the country’s cybersecurity, privacy and digital risk landscape at a time of growing digitisation across enterprises and public systems.
With country reporting strong GDP growth ahead of the Budget, Finance Minister Nirmala Sitharaman outlined measures aimed at attracting capital, simplifying compliance and strengthening technology infrastructure.
While cybersecurity did not feature as a standalone budget head, industry leaders said several announcements would have direct and indirect implications for cyber resilience, data protection and risk management.
Pankit Desai, co-founder and CEO of cybersecurity firm Sequretek, said the Budget positioned digital growth as a core economic driver while attempting to reduce friction for technology companies operating in complex global environments.
“The Union Budget 2026 made the growth of India’s digital economy as one of the core focus area of growth of the economy,” Desai said, adding that the government’s emphasis was on initiatives that could bring more capital into the country.
One of the key announcements was the raising of the safe harbour limit to ₹2,000 crore for IT and IT-enabled services (ITES) companies, alongside a higher ₹300 crore threshold for companies with overseas group entities. Safe harbour provisions allow firms to avoid prolonged transfer pricing disputes if their cross-border transactions follow prescribed pricing norms.
“For IT companies with overseas group entities, the higher ₹300 crore threshold expands access to safe harbour provisions, reducing transfer pricing litigation and tax disputes,” Desai said.
“In effect, if transactions with overseas affiliates are priced in line with prescribed arm’s-length norms, tax authorities will not challenge the pricing methodology—bringing greater certainty, lower compliance risk, and fewer legal issues.”
Industry leaders say lower regulatory uncertainty can free up management attention and capital for investments in areas such as cybersecurity, compliance and data protection, which are increasingly critical as Indian firms handle sensitive data for global clients.
The Budget 2026 also announced a tax holiday for foreign cloud companies setting up data centres in India, a move aimed at accelerating domestic data infrastructure. This comes as global cloud providers expand capacity in India to serve enterprises, government platforms and emerging technologies such as artificial intelligence.
“Additionally, the tax holiday for setting up data centres in India by foreign cloud companies gives out a strong signal as the world looks at India as a major GCC centre,” Desai said. “This will also strengthen our technological sovereignty.”
Data centres are a foundational element of digital security, industry experts note, as localisation, redundancy and regulatory oversight become more important amid rising concerns around data privacy, cross-border data flows and cyber threats. Increased domestic capacity could also support compliance with India’s evolving data protection framework.
Beyond large technology firms, the Budget sought to support smaller businesses through a proposed ₹10,000 crore SME Growth Fund. The fund is intended to help small and medium enterprises adopt emerging technologies and access risk capital.
“The Make in India, Make for the World, has received a further impetus with the ₹10,000 crore SME Growth Fund that will empower the growth engine of our economy to adopt emerging tech, meet risk capital requirements to become globally competitive,” Desai said.
Cybersecurity firms say SMEs are often among the most vulnerable to cyber attacks due to limited resources and skills, making broader technology adoption inseparable from security preparedness.
Pavan Kushwaha, CEO, Threatcop and Kratikal, said the Budget should be viewed through the lens of resilience as India digitises at scale.
Union Budget 2026 sharpens focus on cybersecurity
“We see the Union Budget 2026 as a strong, forward-looking step toward building a resilient, technology-first India,” Kushwaha said. He pointed to the push for artificial intelligence adoption, industry-led research and large-scale skilling, alongside simpler tax and compliance frameworks for IT services.
“As enterprises and government systems digitise at scale, secure, trusted infrastructure will become non-negotiable,” he said. “In that context, the Budget’s focus on strengthening digital capabilities and modernising systems aligns directly with the growing need for cybersecurity, risk management, and People Security Management because technology is only as secure as the people using it.”
Industry executives note that human risk, including phishing, social engineering and insider threats, remains one of the biggest cybersecurity challenges for organisations, even as technology investments increase. Skilling initiatives highlighted in the Budget could therefore play a role in strengthening security culture across sectors.
Overall, while the Budget did not announce dedicated cybersecurity spending or new regulatory mandates, industry leaders said its emphasis on digital infrastructure, investment certainty and skills development could shape the cybersecurity market indirectly.
As India’s digital footprint expands, they said, security and risk management are likely to move from being enabling functions to becoming central pillars of sustainable economic growth.
