Budget 2025: Infra, FMCG, Pharma, and Real Estate - Key Sectors FM Sitharaman Likely to Focus On

Amid concerns over growth and consumption, Union Finance Minister Nirmala Sitharaman is set to present the Budget for the financial year 2025-26 on February 1. It is expected to further push Prime Minister Narendra Modi-led government's "Viksit Bharat" by 2047 agenda. Experts say the Finance Minister is likely to keep the budget focused on policies like Atmanirbhar Bharat, Make in India, and the production-linked incentive schemes.

According to Axis Securities, key focus areas of the Budget are anticipated to be roads, water, metro, railways, defence, digital infrastructure, and green technologies. The brokerage expects overall capital expenditure spending to range between Rs 11 trillion and Rs 11.5 trillion, a 15-17% increase compared to the revised spending for FY25.

"Its overall focus would also be on creating more jobs and achieving investment-driven growth," Axis Securities said, adding that the PLI scheme may expand beyond the 14 sectors currently being offered. According to experts here are the key sectors expected to remain in Budget 2025-26.

Also Read: Union Budget 2025: How Nifty 50 Moved One Month Before and After Budget in Last 5 Years

Infrastructure

Axis Securities anticipates a major focus on infrastructure, particularly in segments such as roads, railways, and airports. It expects the government to expand allocation to the Ministry of Road Transport & Highways by 10–11% and a similar increase in the budgetary allocation to railways for 2025–26. 

The State Bank of India (SBI) has suggested that the government explore alternative means of funding for infrastructure projects. In its report, SBI stated, "Government may introduce alternate sources of funding to Infrastructure Projects, which are generally cheaper than loan markets for better-rated borrowers, like Tax-Free Bonds, Tax-Paid Bonds, etc." 

FMCG and Retail

Finance Minister Sitharaman is expected to focus on spurring consumption with investments in "digital infrastructure, skill upgradation, job creation, and MSME development," according to Axis Securities. 

They expect the government to boost farm income through schemes, incentives, and hikes in MNREGA. Additionally, they anticipate Sitharaman revising income tax slabs. 

"We believe that sensitivity of consumption demand is more responsive to indirect taxes vis-à-vis direct taxes. This thus calls for further rationalisation of the indirect tax structure to smoothen consumption activity in the economy," said SBI. 

Automobile 

The automobile industry is pinning its hopes on the Budget to put more money in people’s hands and boost consumption. Additionally, according to Motilal Oswal, "A simplified GST classification for vehicles and auto components will ease compliance and improve operational efficiency" for the sector. 

They have recommended that the government reduce GST on hybrid vehicles, currently taxed at 28%, to make these cars more affordable and help in the transition. 

Auto industry bodies are also expecting incentives to build an EV supply chain, especially for batteries, to reduce reliance on imports. They are also seeking an extension of FAME-III subsidies beyond the March 2025 deadline. 

Real Estate and Housing

Prospective homebuyers are also looking for some support from Budget 2025, particularly in the affordable housing segment. Axis Securities expects a revision in interest payment deductions from Rs 2 lakh to Rs 5 lakh under Section 24(b) for tax relaxation. 

"Incentives like lower stamp duty and reinstating CLSS under PMAY could be expected to incentivise buyers in the affordable segment," the brokerage said. 

Meanwhile, SBI is asking the government to align the definition of affordable housing with Priority Sector Lending (PSL) for affordable housing. Currently, in six metro cities, homes costing up to Rs 65 lakh are covered under this category. 

Pharma and Healthcare

In the upcoming Budget, Axis Securities expects a focus on incentivising research, simplifying taxation frameworks, and creating a simpler regulatory environment. 

"This may simplify licensing and compliance, making it less cumbersome and thus encouraging investment. A policy for refurbished medical devices can be introduced to increase access to healthcare in underprivileged communities," said Motilal Oswal. 

The sector is also hoping for increased financial incentives for R&D as well as an expedited system for patent filings and approvals, including the inducted Patent Term Extension (PTE) and Data Exclusivity (DE). 

Utilities and Power Ancillaries

The upcoming Budget is expected to boost the renewable sector, supporting the government’s target of 500 GW of renewable energy capacity by 2030.

According to Axis Securities, key announcements may include extensions to the PLI scheme for solar energy, increased allocation for rooftop solar and smart metering, and support for energy storage solutions. 

The Budget may also address trade barriers, the National Green Hydrogen Mission, and taxation incentives for renewable assets.