Parliamentary Panel Flags Cuts In AI And Semiconductor Spending

A parliamentary panel has flagged sharp funding cuts and weak utilisation in the Ministry of Electronics and Information Technology’s (MeitY) flagship artificial intelligence (AI) and semiconductor programmes.

The panel’s findings come at a time when India is stepping up its technology ambitions.

Cut In MeitY’s Total Allocation

The Parliamentary Standing Committee on Communications and Information Technology noted that MeitY’s total allocation for FY2026-27 has been cut to ₹21,632.96 crore. This marks a 17% decline from ₹26,026.25 crore in FY2025-26.

Within this reduced outlay, several key programmes have seen steep pruning. The committee said the Semiconductor Laboratory (SCL) and the IndiaAI Mission faced cuts of 16% and 50%, respectively. It also pointed to a ₹5,000 crore reduction in the Modified Programme for Development of Semiconductors and Display Manufacturing Ecosystem.

IndiaAI Mission: Lower Allocation, Weak Spending

The panel also pointed to a sharp cut in funds and slow use of money under the IndiaAI Mission. It said the ministry used just 32% of the revised estimate in FY2025-26. Spending stood at ₹256.86 crore until December 2025.

The shortfall continues for FY 2026-27. The ministry had sought ₹2,000 crore, but the budget provided ₹1,000 crore. The committee said the lower outlay, along with slow spending, puts the focus on how the programme is being executed.

Delays In Semiconductor Programme Execution

Execution gaps were also flagged in the semiconductor incentive programme. The committee noted that the shift from approvals to actual fund disbursement has been poor.

While several projects have been cleared under the scheme, the pace of fund release and on-ground progress appears to lag. Such delays could have a negative impact on the timelines for setting up semiconductor manufacturing and display ecosystem projects.

The report also pointed to delays in setting up basic infrastructure under the IndiaAI Mission. It said the plan to buy 10,000 graphics processing units (GPUs) is moving slowly. These chips are needed to train and run AI systems.

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Impact On The Sector

The committee’s remarks point to a mismatch between ambition and implementation in India’s deep-tech push. Lower allocations and slow fund utilisation could delay capacity creation in AI and semiconductors.

Industry watchers feel that the concerns may suggest that private sector participation and sustained funding could be critical to bridge existing gaps in the coming days.

Sources

Moneycontrol

Hindustan Times