UPSC Prelims Practice Questions — Budget 2026-27 lays strong foundation for AI Data Centres and Semiconductor Ecosystem

Q1. The Budget 2026-27 'tax holiday till 2047' for foreign companies running global cloud/AI services through India-based data centres operates as a direct-tax exemption on their income. Which one of the following administers this exemption?

  • A. The Department of Revenue (through the Central Board of Direct Taxes), Ministry of Finance
  • B. The Ministry of Electronics and Information Technology, which alone administers every fiscal incentive in the electronics and cloud sector
  • C. The Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry
  • D. The Department of Economic Affairs, Ministry of Finance

Q2. In the Budget 2026-27 data centre tax framework, what does the term 'safe harbour' precisely refer to?

  • A. A margin of 15% on cost that is accepted as the arm's-length price where the India-based data centre operator is a related entity of the foreign cloud firm
  • B. A flat 15% concessional corporate tax rate applicable to all data centres established in India till 2047
  • C. A guaranteed minimum period of 15 years during which a data centre's income cannot be reassessed by tax authorities
  • D. An exemption of the first 15% of a data centre's gross revenue from Goods and Services Tax

Q3. The launch of India Semiconductor Mission (ISM) 2.0 was announced under which one of the following?

  • A. Union Budget 2026-27
  • B. Union Budget 2025-26
  • C. The 2021 Cabinet-approved Semicon India Programme
  • D. Union Budget 2024-25

Q4. As per Budget 2026-27, which one of the following semiconductor/electronics measures carries the largest financial outlay?

  • A. Electronics Components Manufacturing Scheme (ECMS)
  • B. Modified Programme for Development of Semiconductor and Display Manufacturing Ecosystem (2026-27 provision)
  • C. India Semiconductor Mission (ISM) 2.0 provision for FY 2026-27
  • D. 2024 Cabinet tranche for the fab units in Odisha, Punjab and Andhra Pradesh

Q5. For how many years is the tenure of the Electronics Components Manufacturing Scheme (ECMS), excluding the optional gestation period?

  • A. 6 years
  • B. 7 years
  • C. 5 years
  • D. 4 years

Q6. With reference to the semiconductor units approved by the Union Cabinet (2024) in Odisha, Punjab and Andhra Pradesh, consider the following: 1. SiCSem is located in Odisha and sets up the country's first commercial compound semiconductor fab. 2. Continental Device India Limited (CDIL) is located in Punjab. 3. ASIP (Advanced System in Package Technologies) is located in Odisha. Which of the statements given above is/are correct?

  1. SiCSem is located in Odisha and sets up the country's first commercial compound semiconductor fab.
  2. Continental Device India Limited (CDIL) is located in Punjab.
  3. ASIP (Advanced System in Package Technologies) is located in Odisha.
  • A. 1 and 2 only
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1, 2 and 3

Q7. The semiconductor manufacturing units approved by the Cabinet in Odisha, Punjab and Andhra Pradesh are implemented under which one of the following?

  • A. The India Semiconductor Mission under the Ministry of Electronics and Information Technology
  • B. The Ministry of Heavy Industries under its Production Linked Incentive scheme for auto components
  • C. The Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry
  • D. The Department of Science and Technology

Q8. With reference to the institutional architecture for semiconductor development in India, consider the following: 1. The Ministry of Electronics and Information Technology is the nodal ministry. 2. Digital India Corporation is a Section 8 (not-for-profit) company. 3. The India Semiconductor Mission functions as an independent business division within Digital India Corporation. 4. The Reserve Bank of India is the implementing agency for disbursing capital-expenditure support to approved fabs. Which of the above is/are correctly identified?

  1. The Ministry of Electronics and Information Technology is the nodal ministry.
  2. Digital India Corporation is a Section 8 (not-for-profit) company.
  3. The India Semiconductor Mission functions as an independent business division within Digital India Corporation.
  4. The Reserve Bank of India is the implementing agency for disbursing capital-expenditure support to approved fabs.
  • A. 1, 2 and 3 only
  • B. 1, 3 and 4 only
  • C. 2 and 4 only
  • D. 1, 2, 3 and 4

Q9. Digital India Corporation, the body that houses the India Semiconductor Mission, is incorporated as which one of the following?

  • A. A Section 8 (not-for-profit) company under the Companies Act
  • B. A statutory body established under a dedicated Act of Parliament
  • C. A registered society under the Societies Registration Act, 1860
  • D. A central public sector undertaking under the Department of Public Enterprises

Q10. With reference to the Union Budget 2026-27, consider the following statements: 1. It was presented in Parliament on 1 February 2026 by Smt. Nirmala Sitharaman. 2. With this Budget, Nirmala Sitharaman became the first Finance Minister to present the Union Budget for the ninth consecutive time. 3. Budget 2026-27 was the first Union Budget to be advanced to 1 February from the earlier end-February date. Which of the statements given above is/are correct?

  1. It was presented in Parliament on 1 February 2026 by Smt. Nirmala Sitharaman.
  2. With this Budget, Nirmala Sitharaman became the first Finance Minister to present the Union Budget for the ninth consecutive time.
  3. Budget 2026-27 was the first Union Budget to be advanced to 1 February from the earlier end-February date.
  • A. 1 and 2 only
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1, 2 and 3

Q11. Under the 2021 Programme for Development of Semiconductors and Display Manufacturing Ecosystem, the Chip Design infrastructure support component of the Design Linked Incentive (DLI) Scheme — including the India Chip Centre — is set up by which one of the following?

  • A. Centre for Development of Advanced Computing (C-DAC)
  • B. Software Technology Parks of India (STPI)
  • C. National Informatics Centre (NIC)
  • D. Semiconductor Laboratory (SCL), Mohali