Parliamentary panel flags delays and underutilisation of funds in AI, chip schemes

AParliamentary venire reviewing the Ministry of Electronics and info Technology’s (MeitY) budget has flagged lasting underutilisation of cash in hand and effectuation delays across several major technology schemes, including the semiconductor programme, and production-linked incentive (PLI) schemes.The observations were made in the 24th report of the Standing Committee on Communications and Information Technology on the Demands for Grants (2026-27), which was presented in the Lok Sabha and laid in the Rajya Sabha on Monday.The committee, chaired by Bharatiya Janata Party (BJP) MP Nishikant Dubey, examined the ministry’s budgetary allocations and programme performance after taking evidence from officials of the ministry on February 24, 2026, and adopted the report at its sitting held last Friday.The committee noted that the ministry attributed this to the mission being in its early stages of implementation. The ministry told the panel that the mission initially focused on creating institutional frameworks and setting up operational structures.Also Read: Interactions of Artificial Intelligence with India’s labour marketHowever, in its recommendations, the panel wrote, “That the AI landscape is fast changing and witnessing real-life impact of AI, the Committee have concerns about the development of a sovereign AI model. Though the Mission is aggressively working to establish a GPU cluster, the high cost of hardware, global supply chain delays, huge power and water consumption by data centres and a tax holiday are significant issues.”Under the India AI Mission, approved in March 2024 with an outlay of ₹10,372 crore over five years, the government has thus far made 38,000 GPUs accessible to academicians, startups at a subsidised rate, funded companies to build sovereign AI models, and streamlined access to non-personal datasets. The government has also announced its intentions to launch the second phase of the Mission soon. The government is expected to increase the compute capacity to 100,000 GPUs by the end of 2026, an IT ministry official told HT.Moreover, the committee also noted India’s “abysmal” expenditure of 0.64% of its GDP on research and development, which is below the global average.According to the Economic Survey, countries like the US, China and Israel lie in the 2.5-5% range.“The research funding is broadly for premier Institutions particularly IITs and national laboratories. The full impact of the new initiatives, such as Anusandhan National Research Foundation and the Research development and Innovation Fund, is yet to be seen,” said the panel.Among other schemes reviewed by the panel was the Modified Programme for Development of Semiconductors and Display Manufacturing Ecosystem in India, a flagship initiative aimed at establishing domestic chip manufacturing capacity. The committee noted that utilisation of funds has been slower than expected, with delays linked to the complexity of semiconductor projects and the time required to finalise agreements with companies.According to the ministry’s submission to the panel, “Semiconductor manufacturing in India is at a nascent stage and is a highly complex, technology-intensive sector requiring substantial and sustained investment… companies are taking considerable time to meet these conditions, resulting in delays in execution of the agreements.”The programme offers fiscal support to approved semiconductor projects, but disbursement of funds requires legal agreements and fulfilment of several conditions before financial assistance can be released.The committee also examined utilisation under production-linked incentive (PLI) schemes, including the incentive programme for large-scale electronics manufacturing and the PLI 2.0 scheme for IT hardware.The ministry told the panel that spending under the schemes depends on companies meeting investment and sales thresholds before incentive claims are processed. This has resulted in a gap between budget projections and actual disbursements in certain years.