Union Budget 2026: PLI scheme should be extended to new tech sectors like AI, robotics; here's what EY India recommends

EY India has recommended to extend the existing Production-Linked Incentive (PLI) scheme to new technology sectors such as AI, space, and robotics, while urging the FY27 Budget to focus on sustaining growth and ensuring tax certainty through a dedicated Customs dispute resolution mechanism.

The firm said a forward-looking policy approach would be key to strengthening investor confidence and encouraging greater participation from the private sector. Highlighting the need to stimulate private investment, EY India National Tax Leader Sameer Gupta said the current PLI framework could be widened to support new-age technologies.




"Additionally, public infrastructure investments in futuristic areas, including AI, GenAI, robotics, and space technology, may induce growth of private investment in these sectors. Targeted incentives for the emerging industries will be crucial in driving innovation and attracting both domestic and foreign investors," Gupta told PTI.

On taxation, EY said businesses continue to seek a firm commitment from the government towards tax certainty and simpler compliance mechanisms. Addressing indirect taxes, the firm proposed the introduction of a one-time settlement scheme under Customs law to help resolve long-pending disputes. It said the initiative could be modelled on the ‘Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019’, which helped unlock revenue tied up in litigation.

EY also stressed the need to simplify the existing customs tariff structure to ease the compliance burden on importers. It suggested sector-wise rationalisation of customs duties and aligning tariff rates with global standards to ensure that Indian goods remain competitive in global markets.

On the rollout of the new Income Tax Act, 2025 from April 1, EY said that the government should issue detailed guidelines and frequently asked questions to reduce confusion during the transition from the Income Tax Act, 1961.

"This is crucial to avoid litigation and ensure a smooth transition for taxpayers. Certainty and predictability: Establishing a stable tax environment by minimising frequent changes in tax rates is essential," the firm said.

EY further stated that a stable and predictable tax policy is crucial for trust and encourages compliance, playing a key role in boosting revenue collection.