The Union Budget 2026-27 is out now. This is a time for it because the Indian economy is doing well and it is one of the fastest growing big economies. The government says that the economy is strong inflation is under control people are paying taxes properly and the banking system is healthy. All these things will help the Indian economy grow in the future. The Budget 2026-27 is looking at the step for development, which is in line, with the vision of Viksit Bharat. The budget gives importance on domestic manufacturing, infrastructure creation, productivity improvement, and employment generation through sustained public investment and reforms. At the same time, the government aiming to inclusive development, fiscal discipline and balance long-term growth with macroeconomic stability.
Manufacturing Sector
In budget of 2026-27 manufacturing remains one of the strongest pillars. In high-value and technology-intensive sectors government has announced multiple initiatives to strengthen domestic manufacturing. It includes India Semiconductor Mission (ISM) 2.0, the Electronics Components Manufacturing Scheme, Biopharma SHAKTI, the Integrated Programme for Textiles, and the development of three dedicated chemical parks. Along with this extra support has been announced through schemes for container manufacturing, hi-tech tool rooms in CPSEs, rare earth permanent magnets affordable sports goods manufacturing, and the revival of 200 legacy industrial clusters across the country.
To improve cost competitiveness, several tax and customs duty reforms have been introduced. Exemptions from basic customs duty have been provided on specified parts used in microwave ovens, aircraft manufacturing, and on raw materials imported for aircraft maintenance, repair and overhaul (MRO) and defence units. For exporters, the limit for duty-free import of specified inputs used in seafood exports has been increased from 1% to 3% of FOB value, while the export timeline for leather, textile garments, and footwear has been extended from six months to one year. These measures are expected to strengthen India’s manufacturing ecosystem and boost exports.
MSME Sector
A structured three-pronged framework supported MSME sector in Budget 2026–27. In highlighting equity constraints, the government has announced a ₹10,000 crore SME Growth Fund, additionally with a ₹2,000 crore top-up to the Self-Reliant India Fund. This will help in providing long-term capital support and enable MSMEs to scale operations.
The Trade Receivables Discounting System (TReDS) help in liquidity challenges.The government has mandated TReDS as the settlement platform for all CPSE purchases from MSMEs. Credit guarantee support through CGTMSE for invoice discounting, linking GeM with TReDS, and enabling securitisation of TReDS receivables are expected to improve cash flows and reduce working capital stress. In addition, professional compliance support will be provided through ‘Corporate Mitras’, particularly in Tier-II and Tier-III towns, helping MSMEs meet regulatory requirements at affordable costs.
Services Sector: Healthcare, IT and Creative Economy
The services sector has been positioned as a core driver of economic growth. In healthcare, the budget supports the establishment of five Medical Value Tourism hubs through public-private partnerships. To strengthen the care ecosystem, 1.5 lakh multiskilled caregivers will be trained through NSQF-aligned programmes. The AYUSH sector will be expanded through the setting up of three new All India Institutes of Ayurveda, upgradation of AYUSH pharmacies and drug testing laboratories, and strengthening of the WHO Global Traditional Medicine Centre ecosystem.
In the IT and digital services sector, the government has rationalised tax provisions by increasing the safe harbour threshold from ₹300 crore to ₹2,000 crore, with a common safe harbour margin of 15.5%. Companies can opt for safe harbour provisions for a period of five years. To attract global digital investments, foreign companies providing cloud services to global customers through India-based data centres will be eligible for tax holidays till 2047, while related entities will receive a 15% cost-based safe harbour.
Education, Skills, Sports and Design
The link between education and employment is strengthens in budget 2026-27. To promote industry-academia collaboration, government has proposed the development of five university townships near major industrial and logistics corridors. To improve female participation in technical education a girls’ hostel in every district will setup for higher education STEM institutions. And also to strengthen scientific research four telescope infrastructure facilities will be set up or upgraded.
In the creative and sports sectors, AVGC content creator labs will be established in 15,000 secondary schools and 500 colleges. The Khelo India Mission will follow an integrated talent development pathway with a focus on coaching, sports science, and infrastructure. A new National Institute of Design will be set up in eastern India through the challenge route, supporting design-led innovation.
Agriculture and Allied Sectors
The budget focuses on increasing farmers’ income by enhancing productivity in agriculture and allied sectors.To support fisheries and water management a integrated development of 500 reservoirs and Amrit Sarovars will make. For coconut, cashew, cocoa, sandalwood, horticulture, and high-value agriculture a dedicated programmes have been announced by government. In field of animal husbandry, a new loan-linked scheme has launched which will provide support to the establishment of veterinary colleges, diagnostic laboratories, hospitals and breeding facilities in the private sector.
By using of AI-based systems, a Bharat-VISTAAR initiative will integrate AgriStack portals with ICAR packages. It enables farmers to access better advisory services and improve crop productivity. These changes will help in strengthen rural livelihoods and support entrepreneurship in rural and peri-urban areas.
Infrastructure Development
Infrastructure remains the backbone of India’s growth strategy in Budget 2026–27. A new Dedicated Freight Corridor connecting Dankuni in the East to Surat in the West has announced by government, along with the operationalisation of 20 new National Waterways. The government aims to increase the share of inland waterways and coastal shipping from 6% to 12% by 2047 by Coastal Cargo Promotion Scheme.States will receive ₹2 lakh crore of support under the SASCI scheme, while asset monetisation will be encouraged through REITs and InVITs.
Urban infrastructure development will focus on cities with a population of over 5 lakh, with special attention to Tier-II and Tier-III cities and temple towns to promote balanced urbanisation.
Energy Security and Sustainability
Ensuring long-term energy security is a key priority of Budget 2026–27. A ₹20,000 crore Carbon Capture, Utilisation and Storage (CCUS) scheme has been announced to promote cleaner industrial processes. Basic customs duty exemptions have been extended on imports for nuclear power projects till 2035 and expanded to cover all nuclear plants irrespective of capacity. Additional exemptions have been provided for capital goods used in lithium-ion cell manufacturing, processing of critical minerals, and solar glass manufacturing. The entire value of biogas blended with CNG has been excluded from central excise duty, supporting cleaner energy adoption.
Financial Sector Reforms
The budget has some changes to make the financial sector stronger. They are giving a reward of ₹100 crore to cities that issue bonds worth more than ₹1,000 crore at one time. This will help the market by adding a system where people buy and sell bonds and by allowing total return swaps in corporate bonds. They are also making some changes to the way things are structured like changing the way Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) work and they are taking a close look at the FEMA (Non-Debt Instruments) Rules to make sure they are working properly. The budget is trying to make the financial sector better with these changes with the municipal bonds and the changes, to Power Finance Corporation (PFC) and Rural Electrification Corporation (REC).
One of the most important market-related announcements in Budget 2026–27 concerns changes in the Securities Transaction Tax (STT). The government officially announced that STT on futures has been increased from 0.02% to 0.05%. In the options segment, STT on options premium has been increased from 0.10% to 0.15%, while STT on options exercise has been raised from 0.125% to 0.15%. These changes are aimed at moderating excessive speculative activity in the derivatives market and improving overall market stability.
Conclusion
The current union budget of 2026-27 is made as data-backed policy framework and reform-driven which give emphasis on sustainable growth. This budget lays a solid foundation for India’s long-term economic transformation by rising capital expenditure, targeted support for manufacturing and MSMEs, expansion of services, and strong fiscal discipline. The importance on energy security, infrastructure and human capital development help the economy to move steadily towards the goal of a developed India.
