The Union Budget 2026-27 sets out a decisive roadmap for India's next phase of economic transformation, combining sustained growth, fiscal discipline, moderate inflation and people-centric development. Anchored in the vision of Viksit Bharat, the Budget emphasises action over ambivalence, reform over rhetoric, and people over populism.
With an estimated GDP growth of around 7%, the Budget focuses on strengthening domestic capabilities, reducing critical import dependencies, and accelerating structural reforms across manufacturing, services, infrastructure, agriculture and governance.
Three Kartavyas Guiding Budget 2026-27
The Budget is structured around three core commitments:
- Accelerating and sustaining economic growth through productivity and competitiveness
- Fulfilling aspirations by building people's capacity and resilience against global volatility
- Ensuring inclusive participation, so that every region, sector and community benefits from growth
Manufacturing Push Across Strategic and Frontier Sectors
To deepen India's manufacturing ecosystem, the Budget announces targeted interventions across high-value and technology-intensive sectors, including:
- Biopharma SHAKTI
- India Semiconductor Mission 2.0
- Electronics Components Manufacturing Scheme
- Integrated Textile Programme
- Dedicated Chemical Parks
- Rare Earth Permanent Magnet manufacturing
- Container manufacturing and affordable sports goods
A major highlight is the revival of 200 legacy industrial clusters, aimed at boosting productivity and employment.
Tax and Customs Reforms to Boost Manufacturing
Several tax and customs measures have been introduced to improve competitiveness:
- Five-year income tax exemption for non-residents supplying capital goods to bonded manufacturing zones
- Safe harbour provisions for component warehousing
- Deferred duty payment for trusted manufacturers
- Customs duty exemptions on aircraft parts, microwave oven components and defence MRO inputs
- Liberalised export timelines and duty-free inputs for leather, textiles, footwear and seafood exports
Strong Support Framework for MSMEs
Budget 2026-27 adopts a three-pronged approach to help MSMEs emerge as "champions":
- Rs 10,000 crore SME Growth Fund
- Enhanced liquidity through mandatory TReDS usage, credit guarantees and securitisation of receivables
- Development of 'Corporate Mitras' by professional institutions to support MSMEs, especially in Tier-II and Tier-III towns
The removal of the Rs 10 lakh cap on courier exports further eases MSME participation in global trade.
Renewed Focus on Services Sector
Recognising services as a core growth engine, the Budget proposes:
- Five hubs for Medical Value Tourism
- Education-to-Employment initiatives for service-led growth
- Expansion of allied health professional training and caregiver skilling
- AVGC content creator labs in schools and colleges
- New institutions for design, sports and tourism
Significant tax reforms for IT and cloud services, including higher safe harbour thresholds and extended tax holidays for data centres, aim to reinforce India's global services leadership.
Infrastructure and Energy Security
Public capital expenditure continues its upward trajectory, reaching Rs 12.2 lakh crore, with focus on:
- New Dedicated Freight Corridors
- 20 National Waterways
- High-speed rail "Growth Connectors" between major cities
- Urbanisation through City Economic Regions, especially Tier-II and Tier-III cities
Energy security measures include customs exemptions for lithium-ion batteries, solar glass, nuclear projects and critical minerals, along with a Rs 20,000 crore CCUS scheme.
People-Centric Development and Trust-Based Governance
The Budget strengthens social infrastructure through:
- Care ecosystems for elderly and allied services
- Divyangjan skill and assistive device programmes
- Expansion of mental health and trauma care facilities
Trust-based governance reforms include simplified customs procedures, extended advance ruling validity, automated cargo clearance and enhanced duty deferral facilities.
Fiscal Discipline Maintained
Despite higher spending, fiscal prudence remains intact:
- Fiscal deficit estimated at 4.3% of GDP for FY 2026-27
- Debt-to-GDP ratio projected at 55.6% , with a target of 50±1% by 2030
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