With the artificial intelligence wave taking over the world, the Union Budget 2025-26 paved the way to boost AI adoption in India’s education sector. During her speech on February 1 (Saturday), finance minister Nirmala Sitharaman announced that the government will set up a Centre of Excellence in AI for education with a total outlay of INR 500 Cr.

Notably, three such centres — for agriculture, healthcare and sustainable cities — were announced back in 2023. This time, the focus is on training individuals on the AI skills for the education sector.

Besides, the budget proposed setting up five National Centres of Excellence for skilling in the manufacturing industry. With global expertise and partnerships, these centres aim to empower the youth with skills, which can push the government’s ‘Make for India, Make for the World’ vision.

These budget developments align with concerns raised in the Economic Survey 2025 earlier in the week. The survey called for developing robust institutions to protect the country’s labour market from AI’s disruption.

“The quality of education is driven by the amount you can pay and where you live,” Srikanth Iyengar, chief executive officer at upGrad Enterprise told Inc42.

Iyengar added that accessibility to education is subjective. In India, where 65% of the population lives in the rural areas, AI can bridge the gap in the education system. For instance, AI can be used to eliminate barriers such as language and could enable personalised learning. Additionally, the intervention of AI in education could make things slightly easier for differently abled students by helping in faster aptitude building, added Iyengar.

Commenting on the announcements from the Budget 2025, Apurv Agrawal, founder and CEO of enterprise tech startup SquadStack, told Inc42 that CoEs can aid in development of tools and products that can be further used by educators and administrators.

Beyond the CoE in AI for education, Agrawal claimed the government should focus on subsiding AI-powered devices for classrooms and creating regional AI sandboxes for educators for experimentation. “Teacher training programs must also shift from tech fear to tech fluency, equipping educators to use AI as a collaborator, not a replacement,” he said.

With the establishment of five new CoE for skilling, the government is clearly looking at industry 4.0 and manufacturing as a focus area. While this year’s budget had a lot to say about the manufacturing sector of India, the need for trained labour is a concern, particularly for electronics and semiconductor manufacturing.

Even as India has the edge given the current geopolitical dynamics, there is a risk of losing this edge to other nations where skilled labour density is higher. Commenting on the announcement of five new CoEs for skilling, Arjun Rao, general partner at Speciale Invest said, “Overall upskilling of talent for the diverse needs of an emerging economy such as India, is of highest priority.”

Sitharaman also said that the government is proposing a National Manufacturing Mission that will be set up to promote ‘Make in India’.

“By training youth in AI-assisted design, robotics, and quality control, India can move beyond assembly lines to high-value production like semiconductor fabrication, not just smartphone assembly,” added SquadStack’s Agrawal.

While these centres could expedite India’s growth as a manufacturing hub, private investments need to continue. For instance, Indichip Semiconductors, along with its venture partner Japan’s Yitoa Micro Technology (YMTL) is investing to set up a semiconductor facility that will focus on manufacturing Silicon Carbide (SiC) chips in Andhra Pradesh.

“With these CoEs, we can train people a lot faster to increase their ability to manufacture at world class,” added upGrad’s Iyengar.

Job disruption is a major fear in the AI age. Skill development is critical to avoid large scale job displacement. CoEs could be tasked with training workers in relevant skills for the AI age, and making them ready for the jobs of tomorrow. But at the moment, these are just plans that need robust execution.

As the Economic Survey 2025 said, “These institutions would be agile, crosscutting across sectors and up to date on the latest developments, so that they are equipped to identify both opportunities and threats.”

Sharp focus on skill development institutions can help Indians of tomorrow make the most of the AI opportunity, and could reduce AI’s threat to human jobs. However, as ever, a lot will depend on implementation, and the deftness of the central government in creating relevant and up-to-date AI skilling programmes at these centres of excellence

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