Union Budget 2025 Expectations Highlights: Industries Demand Tax Relief from FM Sitharaman's 8th Budget

Indian benchmark indices, Sensex and Nifty 50, opened in red for the second consecutive session on Monday, amid concerns over weak corporate earnings, uncertainty in US trade policy, and persistent selling by FIIs.

At 10:25 AM, Sensex was trading 617 points or 0.81% down at 75,580 and Nifty 50 was trading below 23,000 mark at 22,894, down by 198 points or 0.86% from previous close.

First Slide: Benchmark indices, Sensex and Nifty, fell sharply in early trade on Monday, pulled down by losses in Telecom and Industrials stocks amid muted global market trends and the continuous foreign fund outflows.

The 30-share BSE benchmark Sensex declined over 600 points or 0.81% to 75,580 in early trade. The NSE Nifty dropped 198 points or 0.86% to 22,894.

From the Sensex constituents, Zomato, HCL Technologies, PowerGrid, Tata Motors, Adani Ports, Reliance Industries, IndusInd Bank, Infosys, Tata Consultancy Services and HDFC Bank were the major laggards.

"This 6-day week is likely to be highly volatile with other major events like the Fed decision and the Budget in India. The market is looking forward to fiscal stimulus through income tax cuts in the Budget. If the expectations are met, there can be a relief rally in the market. But if a rally is to sustain, we need data indicating growth and earnings revival," V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said.

Ahead of the Union Budget 2025, Micro, Small, and Medium Enterprises (MSMEs), which contribute around 30% towards India’s GDP, highlight the need for more effective implementation of several MSME schemes that have been introduced over the years to ensure these initiatives achieve their full potential and provide meaningful support to the sector.

Rohit Agarwal of Urban Space further highlights that despite being a significant initiative for the MSME sector, the implementation of the Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGTMSE) posed various challenges, especially for players in the home furnishing industry.

"Many MSMEs are unaware of the scheme or unclear about eligibility. Despite being collateral-free, lenders often impose additional conditions, making access difficult. Approval delays hinder timely funding, especially in a seasonal industry. The scheme doesn’t address unique needs like design innovation, technology upgrades, or global compliance," Agarwal explains.

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Rajiv Sabharwal, MD & CEO of Tata Capital says as we approach the Union Budget 2025, there is a significant opportunity for the government to boost consumption in the economy by increasing disposable income in the hands of people. Moreover, offering tax rebates on retail savings account and bank deposits will aid in improving the ability of banks to mobilise deposits and thereby boost the entire credit ecosystem. An increase in the tax deduction limit for housing loan interest will stimulate loan uptake and encourage the housing sector. Also, housing loan limits under priority sector lending should be increased considerably from the present levels to reflect the current market realities.

“Furthermore, prioritizing the creation of a robust digital ecosystem for MSMEs will be crucial in ensuring seamless credit access, promoting growth, and strengthening the backbone of our economy. Additionally lowering SARFAESI threshold from Rs 20 lakh to Rs 1 lakh will help NBFCs for faster resolution of stressed accounts and bring them at par with HFCs, Banks and other financial institutions,” he said.

These forward-looking measures can pave the way for inclusive and sustainable economic growth, Sabharwal further added.

"Artificial Intelligence (AI) will be as important in this decade as telecom, internet, healthcare, education and roads were in the previous decades. I hope the government recognizes that for India to stay ahead in global economy, the Govt. has to heavily invest in AI Infrastructure through public-private partnerships. We missed the bus on semi-conductors, we cannot afford to miss the AI advantage. India needs to allocate a large amount from the current budget to build world-class AI Infrastructure with our best minds from engineering colleges, research institutions and private sector. We need to replicate our successes like NPCI, IITs, Metro, ISRO in building AI Infrastructure and an apex body," said Adith Poddar, Founder Gemba Capital.

"I think this budget will largely focus on a revamp across the board, in the following ways: Tax structures will be significantly overhauled. Simplified taxation mechanism for SMEs and startups, extending tax holidays by 1-2 yrs, etc., ⁠Similar overhaul expected across Customs and excise, which will affect import costs and subsidies; and to boost growth, which in turn boosts GDP, Gov will have to increase spending across manufacturing and infra. Though it is largely expected that the SOPs will focus on sensitive sectors such as Defence and sensitive states Eastern corridor," said Gaurav Verliani, Partner, Audacity Venture.

Finance Minister Nirmala Sitharaman is scheduled to present the Union Budget on February 1, 2025. It comes at a time when the Indian stock market is going through a rough patch amid signs of economic slowdown, foreign capital outflow, and uncertainty around the US Federal Reserve’s interest rate decisions and Donald Trump’s trade policies.

With global uncertainties and various challenges, all attention is focused on the Union Budget 2025. Experts anticipate it will maintain a balance of increased capital expenditure to drive growth with the need for fiscal consolidation. Read full story here

"India's renewable energy sector has made tremendous strides, with the installation of 213 GW of renewable energy capacity, making significant progress towards our ambitious target of 500 GW by 2030. Looking ahead, I'm excited about the prospects for wind power in India. With over 1 TW of potential waiting to be harnessed, we've barely scratched the surface – having utilized just 4% of it so far. Encouragingly, wind power installations have grown to 48 GW and are on track to cross 100 GW by 2030. To achieve our ambitious renewable energy targets, it's crucial that we prioritize harmonized growth across all RE sources, ensuring that we deliver affordable energy to all Indians. By working together, we can unlock the full potential of renewable energy, drive sustainable development, and secure a cleaner, greener future for India," said Girish Tanti, Vice Chairman of Suzlon Group.

"Looking ahead to the 2025 Union Budget, there is a growing expectation for transformative initiatives in the education sector that focus on holistic development and future-readiness. Emphasizing early childhood education, skill-based learning, and the seamless integration of technology into curriculums can bridge the gap between traditional education and the demands of a rapidly evolving world. We are optimistic that the government's increased budget allocation for the education sector will fund essential initiatives such as teacher training, the development of inclusive learning environments, and the provision of affordable access to quality education across both urban and rural areas. Such investments are crucial for building a resilient and empowered generation. We are hopeful that these policies, once implemented, will reflect a long-term vision aligning with India's aspirations for global leadership and sustainable growth," said AK Srikanth, CEO of Klay.

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. Read full story here

"To make significant budgetary allocations, investing in education is essential to meet the evolving needs of students, educators and the broader society. Education is the cornerstone of national progress and this budget presents a unique opportunity to build a world-class, inclusive system. We must prioritise academic excellence and the holistic development of every child by addressing infrastructure challenges, improving teacher training, and integrating technology. Investing in STEM and skill-oriented programs, such as micro-credentials, is vital to equip students with the expertise needed to succeed in a digital world. By fostering innovation and critical thinking, we can ensure that our students are prepared to thrive in an increasingly globalized economy. The time to act is now—education will shape the future of India," said Devyani Jaipuria, Pro Vice-Chairperson, DPS Gurgaon.

"The pressure to improve farm productivity is high, and expected to increase even further with the need for agri sector to feed the energy sector as well, such as for ethanol from Maize. Agri-input players will expect measures to help improve farm realizations with more allocation to agri infrastructure development, market linkages and access to credit. Higher emphasis on bringing more land under irrigation will also help as it reduces one element of uncertainty in a highly unpredictable climatic situation.

I expect that there will be higher emphasis outlay for promoting farmer participation through the multi-state co-operatives set-up for promoting exports (NCEL), organic farming (NCOL) and seeds (BBSSL).

With the nano-fertilizers experiment not attaining the success that the Government expected, the focus will come back on efforts to reduce the fertilizer subsidy bill. I expect that this will not leave much for the developmental funding required for the sector in promoting infrastructure, and digital initiatives including through start-ups," said Santosh Sreedhar, Partner, Avalon Consulting.

Warren Harris, CEO & MD, Tata Technologies says as we approach the Union Budget 2025, the technology and engineering sector is looking forward to measures that can propel India into its next phase of economic and industrial growth. To achieve the ambitious goals outlined in India’s roadmap for a $5 trillion economy, the budget should prioritize innovation-driven policies, investments in emerging technologies, and the development of products in India—for India and the world.

Key growth drivers such as smart manufacturing, AI, digital transformation, and software-defined vehicles (SDVs) require strong government backing through incentives for R&D, skill development, and infrastructure enhancement. We recommend increased allocation toward upskilling initiatives aligned with Industry 4.0, creating a future-ready workforce capable of excelling in advanced technologies like AI, IoT, and cybersecurity. India’s focus on sustainability and green mobility can benefit from policies encouraging the adoption and manufacturing of electric vehicles (EVs) and clean energy solutions. Streamlined GST norms and enhanced PLI schemes for EV components, high-tech manufacturing, and software services would catalyze growth. The budget can also emphasize fostering global competitiveness by introducing fiscal incentives for exports of engineering and technology solutions, strengthening India’s role as an innovation hub. Moreover, programs like Make-in-India and Engineer-in-India can attract significant foreign investment and foster self-reliance.

At Tata Technologies, we believe that a collaborative effort between industry and government is pivotal for achieving self-reliance, sustainable growth, and technological excellence. We are optimistic about the Union Budget 2025 and its potential to empower industries with the tools to lead the global technology landscape.

“The real estate sector anticipates interventions to foster growth, stabilise costs and revive investor and buyer confidence as it navigates a complex economic landscape characterised by increasing borrowing costs and inflation. Granting the long-desired ‘infrastructure’ status to real estate sector can simplify regulatory frameworks, stimulate growth and enhance access to affordable financing. Additionally, measures that incentivise the sector’s focus on sustainability and green building initiatives would align with evolving market demands and promote long-term, eco-friendly developments. Furthermore, introducing tax benefits for REITs, particularly the exemption of double taxation on dividend income, would be a highly welcome move. This step would not only enhance liquidity but also drive participation from both retail and institutional investors, making REITs a more attractive asset class. Such reforms could also pave the way for increased foreign investments, fostering greater market dynamism," said Arvind Nandan, Managing Director, Research & Consulting, Savills India.

Like other sectors grappling with consumption and high inflation, the hospitality industry is seeking lower tax rates and simplification. According to the Hotel Association of India (HAI), reducing the GST on hotel rooms above Rs 7,500 is a key demand for Finance Minister Sitharaman. They propose lowering the GST rate from 18% to 12%, aligning it with competing Asian countries [3). Read full story here

Budget 2025 can strengthen agriculture by cutting import duties on pesticides from 10% to 5%, encouraging advanced, cost-effective solutions. We suggest reinstating a 200% tax deduction scheme for pesticide R&D, with funding for private and government institutions like CSIR and NCL, which will foster innovation and ensure compliance with WTO and TRIPS, positioning India as a leader in agricultural productivity. We believe eliminating GST on pesticides and fertilizers will reduce financial strain on farmers, boost productivity, and encourage quality product use. We also recommend a 500% tax deduction for training farmers in technologies like AI, IT, and IoT. A PLI scheme for pesticide and data protection norms would enhance competitiveness and reduce import dependence. These steps could enable India to achieve its $5 trillion GDP target and become the third-largest global economy by 2027," said R.G. Agarwal, Chairman Emeritus, Dhanuka Agritech Limited. Read full story here

"The FMCD sector saw a robust performance in 2024, and the sector is set to grow at 12–14% in 2025, propelled by rising disposable incomes, festive sales, and increased urbanisation. The demand for air conditioners and refrigerators driven by the excessive heat last Summer proved to be a shot in the arm for the industry. The industry is now focused on improving the quality of the workforce by pivoting towards selling a lifestyle rather than use age old techniques such as selling basis product features or pricing. Government schemes promoting domestic manufacturing under initiatives like PLI (Production Linked Incentive) and partnerships with skill development councils are key drivers of the sector's workforce transformation," said Balasubramanian A, Senior VP and Business Head at TeamLease.