Karnataka's Budget 2025-26: Boosting AI, Startups, and Tech Innovation

Karnataka's Tech-Focused Budget Aims to Boost AI and Startup Ecosystem

The Karnataka government has unveiled its Budget 2025-26, allocating substantial funds to strengthen the state's position as India's tech capital. Chief Minister Siddaramaiah announced a series of initiatives aimed at fostering innovation, supporting startups, and advancing artificial intelligence (AI) technologies 1

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Significant Investments in AI and Deep Tech

At the heart of the budget is a strong focus on AI and deep tech development. The state has earmarked ₹300 crore for a Fund-of-Funds and an additional ₹100 crore corpus fund specifically for deep tech startups 1

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. Furthermore, ₹50 crore has been allocated over five years for the establishment of the Centre for Applied AI for Tech Solutions (CATS) .

Boosting the Startup Ecosystem

The government has launched the Local Economy Accelerator Programme (LEAP) with a substantial grant of ₹1,000 crore. This initiative aims to create jobs in tier II and III cities and is expected to generate 5 lakh jobs across the state 1

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. The program will focus on developing startup ecosystems in cities like Mysuru, Mangaluru, Hubballi-Dharwad, and Kalburgi .

Quantum Research and Electronics Manufacturing

In collaboration with the Indian Institute of Science, Bengaluru, the state plans to set up the second phase of the Quantum Research Park with an investment of ₹48 crore over three years 1

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. Additionally, a state-of-the-art PCB Park will be developed in Mysuru, along with a ₹99 crore SensorTech Innovation Hub to encourage sensor research and development .

AI in Governance and Education

The Karnataka AI cell is developing AI-based solutions using technologies like computer vision, Natural Language Processing (NLP), and Large Language Models (LLMs) to enhance governance. An AI-based Government Order Summary and Information Extraction Tool will be implemented to improve access to government information .

Electric Vehicle (EV) Manufacturing Push

To encourage EV manufacturing and usage, the government plans to establish a testing track of international standards and a state-of-the-art EV cluster with common infrastructure around Bengaluru, investing ₹25 crore in this initiative .

Global Capability Centers and IT Policy

The state aims to develop Global Innovation Districts in Mysuru, Belagavi, Dharwad, and Bengaluru to strengthen its leadership in Global Capability Centers (GCCs). The GCC Policy 2020-25 targets an investment of ₹5,000 crore and aims to create 3.5 lakh jobs . Additionally, a new IT policy focusing on cloud computing and emerging technologies is in the works, with a target of $300 billion in investments and 1.5 lakh job creations .

Broader Economic Impact

The recent Global Investors' Meet 2025 saw MoUs totaling ₹10.27 lakh crore, with expectations of creating over 600,000 job opportunities . These initiatives, combined with the budget allocations, position Karnataka as a potential hub for AI, AI-driven governance, education, electronic manufacturing, deep tech, biotechnology, and IT.