Budget 2026: India’s Long-term Growth Roadmap

Finance Minister Nirmala Sitharaman presented the Union Budget 2026 in Parliament today. This Budget did not aim to excite the markets. It aimed to steady the economy.

Union Budget 2026 signals a clear shift towards disciplined growth, long-term capacity building, and structural preparedness. Instead of headline-grabbing announcements, the government has focused on strengthening fundamentals that will shape India’s economic trajectory over the next decade.

Economy & Sectoral Push

• The total Budget size has been placed at ₹53.5 lakh crore, with net tax receipts estimated at ₹28.7 lakh crore. 
• The government has pegged the fiscal deficit at 4.3 percent of GDP for FY 2026–27, lower than the 4.4 percent projected for the current financial year. 
• India’s debt-to-GDP ratio is expected to decline to 55.6 percent in FY 2026–27 from 56.1 percent in FY 2025–26, indicating a gradual reduction in interest burden and improved fiscal efficiency.

The government has reiterated its long-term focus on maintaining economic growth while improving fiscal health in a calibrated manner. The Budget is anchored around three Kartavyas: accelerating growth, fulfilling aspirations, and ensuring Sabka Saath, Sabka Vikas.

Impact
Macro numbers reinforce macroeconomic discipline and predictability. Lower fiscal deficit and a declining debt trajectory strengthen India’s credit profile and support long-term investment confidence. The emphasis on gradual improvement signals stability rather than abrupt policy shifts.

Capex Boost

• The Budget has proposed capital expenditure of ₹12.2 lakh crore for FY 2026–27, an increase from ₹11.2 lakh crore in the previous year. This allocation reinforces the government’s continued push towards infrastructure-led growth. 
• The introduction of the Infrastructure Risk Guarantee Fund is aimed at building confidence among private developers by mitigating execution and financial risks.

Impact
Sustained public capital expenditure remains the primary growth driver for the economy. The risk guarantee framework is a structural reform that encourages private sector participation, improves project viability, and supports long-term capacity creation.

Industry

• The Budget has announced a tax holiday until 2047 for foreign companies providing cloud services globally using data centre services located in India, providing a significant boost to the IT and AI ecosystem. 
• The safe harbour threshold for IT services has been raised to ₹2,000 crore, reducing transfer pricing disputes.

MSMEs

• A growth fund of ₹10,000 crore has been introduced to hedge against tariff-related risks. The revival of 200 legacy industrial clusters has been announced to promote India as a global manufacturing hub.
• ₹2,000 crore targeted support for micro enterprises.
• Timelines for Advanced Pricing Agreements have been reduced to two years, with a possible six-month extension. 
• The Minimum Alternate Tax rate has been cut to 14 percent and made the final tax.

Impact
These measures reduce compliance friction and improve business certainty. Faster tax resolution, lower MAT, and MSME support improve cash flows and encourage private investment, particularly in manufacturing and export-oriented sectors.

Critical Sectors & Manufacturing Depth

• Biopharma: The Budget has introduced Biopharma Shakti with an outlay of ₹10,000 crore over five years to position India as a global biopharma hub. 
• ISM 2.0: Under the India Semiconductor Mission 2.0, the government will focus on industry-led research and training centres for semiconductors, along with an additional ₹40,000 crore outlay for the Electronics Components Manufacturing Scheme.
• Rare Earth Corridors: Dedicated rare earth corridors connecting Odisha, Kerala, Andhra Pradesh, and Tamil Nadu have been announced to reduce import dependence for critical minerals.
• Chemical: The government will also support states in establishing three dedicated chemical parks through a challenge-based, cluster-driven, plug-and-play model.

Impact
The focus on strategic sectors strengthens supply chain resilience and reduces external dependencies. These initiatives deepen India’s manufacturing ecosystem and enhance its role in global value chains.

Rail & Waterways

• Seven high-speed rail corridors have been announced to connect India’s major financial hubs, technology centres, manufacturing clusters, and emerging cities, including Mumbai–Pune, Pune–Hyderabad, Hyderabad–Bengaluru, Hyderabad–Chennai, Chennai–Bengaluru, Delhi–Varanasi, and Varanasi–Siliguri.
• In addition, twenty new waterways will be operationalised. A new freight corridor from Dankuni in West Bengal to Surat announced. 
• The Coastal Cargo Promotion Scheme aims to double the modal share of coastal transport by 2047.

Impact
Improved multimodal logistics lowers transportation costs and improves supply chain efficiency. These investments support sustainable growth, regional development, and export competitiveness.

Fisheries & Agriculture

Fisheries

• The Budget has provided significant relief to the fisheries sector by removing customs duty on fish caught by Indian fishing vessels in the Exclusive Economic Zone. 
• Integrated development of 500 reservoirs and Amrit Sarovars has been proposed.

Agriculture

• The government has announced promotion schemes for high-value crops such as cocoa, cashew, and coconut, rejuvenation of old orchards, high-density cultivation of walnuts, almonds, and pine nuts.
• Proposed strengthened sandalwood cultivation and processing. 
• Dividend income exemption has been provided for notified national cooperative federations for a period of three years. 
• Bharat VISTAAR has been introduced to enable AI integration in agriculture.

Impact
The agricultural strategy focuses on income enhancement rather than volume expansion. By encouraging high-value crops, fisheries, and technology adoption, the Budget aims to improve rural incomes and resilience.

Services

The Budget places focused emphasis on developing tourism, healthcare, and medical tourism to drive employment, foreign exchange earnings, and better service infrastructure.

Tourism

• A pilot scheme has been announced to upskill 10,000 tourist guides across 20 tourist destinations. 
• Digital documentation of heritage sites and the development of 15 archaeological sites into cultural destinations have been proposed. 
• The government has also announced the establishment of a National Institute of Hospitality.

Impact
Services remain central to job creation in India. Tourism and healthcare provide scalable employment opportunities while supporting India’s positioning as a global services destination.

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Healthcare

• Exemption of basic customs duty on 17 cancer-related drugs and medicines. 
• Emergency and trauma care facilities will be strengthened nationwide through the establishment of trauma care centres at district hospitals. 
• NIMHANS 2.0 will be set up in North India to strengthen mental health infrastructure, and seven additional rare diseases will be added for import duty exemption on medicines.

Impact
Healthcare measures are targeted toward accessibility and outcomes. Reduced drug costs, improved emergency response, and enhanced mental health capacity strengthen social infrastructure without excessive fiscal burden.

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Jobs, Education, Skilling

• The government has announced a strong push towards the Orange Economy through the setting up of AVGC content creator labs in 15,000 secondary schools and 500 colleges. 
• The She-Mark scheme has been introduced to support women entrepreneurs, alongside the establishment of one girls’ hostel in every district.
• An Education-to-Employment-and-Enterprise Standard Committee has been announced to align education outcomes with industry needs. 
• The Budget also supports states in developing five university townships near major industrial and logistics corridors, and a new National Institute of Design will be established in Eastern India.

Impact
The Budget recognises the need for skill-based and industry-aligned education. Emphasis on creative industries, women's participation, and employability supports inclusive and future-ready workforce development.

Income Tax

• There are no changes to existing income tax slabs or rates for FY 2026–27. 
• The deadline for filing revised income tax returns has been extended from December 31 to March 31, subject to a nominal fee. 
• The due date for filing returns for non-audit businesses has been extended to August 31, while individuals filing ITR-1 and ITR-2 will continue to have a July 31 deadline.
• Taxpayers will be allowed to update returns even after reassessment by paying an additional 10 percent tax. 
• TCS on foreign tour packages has been reduced to a flat 2 percent, and TCS on education and medical remittances under LRS has also been reduced to 2 percent.
• TDS on sale of immovable property by a non-resident to be deducted through the resident buyer on a PAN-based challan (no TAN required)
•  Interest Deduction Against Dividend & MF Income Removed, no deduction for interest paid for funds borrowed for investments. 

Foreign Investment Disclosure Scheme

• A six-month foreign investment disclosure scheme has been announced with graded tax and fee structures based on the nature and size of undisclosed assets. 

• Six-month special disclosure scheme
• Category A: Undisclosed assets ≤ ₹1 crore → 60% tax
• Category B: Income disclosed, assets unreported ≤ ₹5 crore → ₹1 lakh fee
• Immunity from prosecution & penalties
• Retrospective Immunity for Small Foreign Assets below Rs 20 lakhs Applicable retrospectively from 1 Oct 2024
  

Impact
The scheme balances enforcement with pragmatism. It aims to broaden the tax base, resolve legacy issues, and reduce prolonged litigation while encouraging voluntary compliance.

Capital Markets & Investments

• The Budget has increased Securities Transaction Tax on futures and options to curb speculative trading. STT on Futures, increased to 0.05% from current 0.02%. STT on options premium and exercise of options raised to 0.15 percent from the present rate of 0.1% and 0.125%, respectively.

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• Share buy-backs will now be taxed as capital gains instead of dividends, and SGBs purchased from the secondary market will attract capital gains tax even if held till maturity.
• The government has also liberalised the direct equity investment pathway for overseas individuals, increasing individual equity shareholding cap from 5% to 10%, while increasing the aggregate limit from 10% to 24%.
• Digital submission of Form 15G and 15H has been enabled through depositories.

Impact
These measures signal a preference for long-term, transparent investment over short-term speculation. The reforms aim to improve market quality and governance while encouraging stable capital inflows.

The Broader Takeaway

Union Budget 2026 is not a populist statement. It is a policy document built on patience, discipline, and long-term vision.

For investors, distributors, and finance professionals, the Budget reinforces the importance of understanding policy direction rather than reacting to short-term market movements. As India builds for the future, informed decision-making and continuous financial education will become increasingly critical.

Platforms like AssetPlus Academy play an important role in helping professionals decode budgets, markets, and policy changes with clarity, enabling them to guide investors confidently in an increasingly complex financial landscape.

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