Karnataka’s Budget Backs an AI Economy

Sector6  March 6, 2026 The bi-weekly newsletter by AIM that brings the biggest shifts shaping IT, AI, and GCCs. Karnataka's Budget Backs an AI Economy Karnataka's Budget 2026 is an attempt to reposition the state for the next phase of the technology-driven economy.  By Mohit Pandey Chief Minister Siddaramaiah, presenting his record 17th Budget while also holding the finance portfolio, unveiled a ₹4.49 lakh crore spending plan that places AI, advanced research, and Bengaluru's infrastructure at the centre of the state's economic strategy. The budget size has grown by over 10% from last year. Yet, the real headline is the state government's attempt to turn Karnataka into a hub for AI skills, research, and deep tech infrastructure while also addressing the pressure on Bengaluru's urban systems. One of the most striking announcements is Karnataka's proposal to ban social media for children under 16. If implemented, it would be the first such restriction introduced by any Indian state, even as Goa and Andhra Pradesh continue to mull over this. Alongside regulation, the government is placing significant emphasis on building an AI-skilled workforce. As many as 15 new courses in AI, machine learning, cloud computing, and automation engineering will be introduced across 11 government polytechnics and the Government Science College, Chitradurga.  The aim is to align technical education more closely with the skills companies are actively hiring for. AI will also be integrated directly into classrooms. Around 12.8 lakh students from classes 8 to 12 will receive access to a personalised digital tutor built using AI technology. The project, developed in collaboration with IIT Dharwad, has been allocated ₹5 crore and is designed to create adaptive learning pathways for students. The state is also expanding its ambitions beyond school education. Karnataka plans to establish AI data labs in 50 government colleges across tier-2 and tier-3 cities with a ₹10 crore grant.  These labs will operate with support from the IndiaAI Mission and aim to train students from smaller towns in modern AI tools and data systems. Bengaluru will remain the centre of the state's deep tech push. The government has announced plans to set up a Bangalore Robotics and Artificial Intelligence Innovation Zone in partnership with ISRO and KEONICS.  The Indian Institute of Science will also develop a dedicated Artificial Intelligence and Robotics Technology Park to support research, startups and industry collaborations in advanced technologies. Humanising Healthcare: AI and Innovation at Optum In this video, we explore the intricate world of healthcare innovation through a special conversation with Rohit Agarwal, Senior Vice President and Head of Transformation, Innovation, and Enablement at Optum Global. Agarwal redefines innovation not as a sudden "shiny object" but as a persistent journey of step-by-step changes aimed at making the health system work better for everyone. Building the Infrastructure Research infrastructure is receiving parallel attention. Karnataka has unveiled the first phase of a quantum roadmap with a ₹10 crore allocation over five years to build research capacity and prepare talent for emerging quantum technologies.  The state will also establish an artificial intelligence centre of excellence in Bengaluru, along with additional biotechnology research platforms in partnership with the Institute of Bioinformatics and NASSCOM. Healthcare technology is also part of the strategy. The government has allocated ₹4 crore to design surgical assistive robots with IIIT Bangalore and NIMHANS. In addition, a new institute of advanced genomics will be developed with a ₹20 crore investment to support gene-editing and biotechnology research. The Budget also includes several initiatives aimed at strengthening the startup and innovation ecosystem. New incubation centres will be launched with a ₹20 crore outlay in collaboration with institutions such as IIM Bangalore, the University of New South Wales, and the Indian Institute of Science.  The centres will focus on renewable energy innovation. The government also announced ₹20 crore for startup incubation centres in tier-2 and tier-3 cities such as Hubballi, Kalaburagi, Hoskote and Mysuru. The CM also said the state has proposed to the Union government the establishment of a 'Science City' near Bengaluru at an estimated cost of ₹233 crore. Karnataka is also attempting to maintain its lead in global capability centres (GCCs). The state is targeting 500 GCCs by 2029, which could create 3.5 lakh jobs and generate an estimated $50 billion in economic output.  A new IT park in Mangaluru will be developed through KEONICS to attract multinational companies. At the same time, the government is expanding its Beyond Bengaluru strategy. Mysuru will be developed as the state's second IT capital, with an attempt to reduce pressure on Bengaluru and distribute technology jobs across more cities. Infrastructure in Bengaluru remains a major focus. Apart from widening roads, a second international airport for Bengaluru is also under consideration.  Taken together, the 2026 Budget signals a shift in how Karnataka is thinking about AI, quantum research, and advanced manufacturing while also solving the infrastructure challenges that come with being India's tech capital. Best Firm for Data Scientists – Showcase your leadership in data science and build a thriving workplace. Apply Now Join AIM Leaders Council – Connect with top data leaders and shape the future of AI. Check Eligibility Our Events – Be part of an exclusive event uniting North America's top data leaders. More Details AIM PeMa Quadrant – Discover the best in AI and data services with AIM's PeMa Quadrant. Explore Now GCC Explorer Unlock Exclusive Insights into 1400+ Global Capability Centers (GCCs) in India with AIM Research's Comprehensive Database.  Access GCC Explorer Stay ahead with these insights, and join us in driving the future of data science and technology. Your active engagement and participation are what make our community thrive. For Brand Collaborations, Contact us at info@aim.media To unsubscribe from future emails, simply click the "unsubscribe" link AIM. Unsubscribe © Copyright, 2026, AIM • 1st Floor, Sakti Statesman, Marathahalli – Sarjapur Outer Ring Rd, Green Glen Layout, Bellandur, Bengaluru – 560103