Budget 2026: What India Expects from FM Sitharaman on February 1

Centre’s revenue receipts rose to 9.2% of GDP in FY25 (provisional), while gross non-performing assets fell to a multi-decade low of 2.2% as of September 2025. Financial inclusion expanded further, with 55.02 crore bank accounts opened under the PM Jan Dhan Yojana by March 2025, including 36.63 crore in rural and semi-urban areas.

India’s share in global merchandise exports increased from 1% in 2005 to 1.8% in 2024, while services exports hit a record $387.6 billion in FY25, growing 13.6%. The country remained the world’s largest recipient of remittances, with inflows of $135.4 billion in FY25. Foreign exchange reserves rose to $701.4 billion as of January 16, 2026, covering about 11 months of imports and 94% of external debt.

“From the retail sector’s perspective, the increase in GST on apparel priced above ₹2,500 to 18% has added pressure on the bridge-to-luxury segment, impacting pricing flexibility and demand. A more graded tax structure would support sustainable premiumisation,"  Abhinav Kumar, Cofounder of Brand Concepts Ltd said.

"The Production Linked Incentive scheme is a positive step and with the right execution, can encourage global premium and luxury brands to leverage local production capabilities to manufacture higher-value products in India, strengthening the domestic retail ecosystem. While stronger action on counterfeits and clear data-privacy norms are essential to protect brand equity and build consumer trust in organised retail.”

“As Budget 2026 approaches, the AYUSH sector is at an inflection point where scale, credibility, and global relevance must progress together," Issac Mathai, founder chairman & medical director, SOUKYA International Holistic Health Center, said.

The next phase of growth must be driven by stronger public investment, with a focus on well-funded national and regional R&D through public–private partnerships, robust outcome tracking, and closer integration of AYUSH services into public health schemes such as AB-PMJAY, he added.

Further, Incorporating standardised AYUSH treatment packages into public insurance systems can widen access, reinforce preventive and community-based care, and create jobs across the healthcare and wellness ecosystem. For the broader population, this marks a shift in AYUSH from an alternative therapy to a formal pillar of population health.

"For the wood panel and furniture industry, the Union Budget must continue incentives for affordable housing, increased tax exemptions on home loan interest payments, and policies that enhance liquidity for real estate developers. In addition, we look forward to a strong push for ‘Make in India’ furniture and interior products, that promote domestic sourcing and value addition. This will help drive capacity additions and make Indian wood panel manufacturers more sustainable and less dependent on imports,” said Manoj Tulsian, CEO & Joint Managing Director, Greenply Industries Ltd

"As India intensifies its focus on cleaner and more efficient freight mobility, we look forward to the upcoming Union Budget recognizing LNG as a critical transition fuel for long-haul transportation. While LNG trucks offer significant economic and environmental advantages, their adoption continues to face challenges such as higher upfront vehicle costs, limited refueling infrastructure, and fuel pricing complexities arising from multi-layered taxation. From the Budget, there is a strong expectation of targeted fiscal measures that can bridge this cost parity gap, including rationalization of GST, accelerated depreciation benefits, and direct purchase incentives for LNG-powered heavy vehicles. Equally important will be policy support to accelerate the development of LNG refueling corridors through viability gap funding, concessional financing, and strategic land allocation along national highways," said Deepak Acharya, Chief Executive Officer at INOX India Limited.

"Budget 2026–27 should recognise lab-grown diamonds as a strategic sunrise segment, with continued rationalisation of duties on raw materials and equipment, and targeted incentives for advanced manufacturing. Such measures can lower entry barriers for MSMEs and accelerate ethical, future-ready diamond production. Given the sector’s strong MSME backbone, simplified GST compliance, faster refunds for export units, and improved access to affordable credit would meaningfully strengthen cash flows and scalability," said Anand Lukhi, Founder & CEO, Lukson.

“The Economic Survey 2026 underscores India’s strong growth momentum, anchored in resilient domestic demand and a credible macroeconomic framework. With GDP growth estimated at 7.4% in FY26 and a stable outlook ahead, India remains among the world’s fastest-growing major economies. Progress on fiscal consolidation alongside sustained public infrastructure investment is encouraging. The continued reduction in the fiscal deficit reflects a clear focus on stability and quality expenditure, setting a constructive backdrop for the Union Budget. A continued emphasis on capex, productivity-enhancing reforms, and job creation will be key to sustaining momentum. Externally, the advancing India–EU free trade agreement offers an opportunity to boost competitiveness, exports, and employment. As India moves towards Viksit Bharat 2047, effective government–industry collaboration will be critical to delivering durable and inclusive growth,” said Yezdi Nagporewalla, CEO of KPMG in India.

"We believe the upcoming Budget should prioritise rationalisation of import duties on critical raw materials, long-term policy clarity for ODM-led manufacturers, and expanded incentives for design ownership, product engineering, and R&D," Sagar Gupta, managing director, Ekkaa Electronics, said. "Access to affordable long-tenure capital, support for automation, and skilling in design for manufacturability and advanced electronics manufacturing will be key to improving competitiveness and quality consistency."

PhysicsWallah Co-founder Prateek Maheshwari said that his expectation for the Budget is to make education affordable and accountable. "I want to see a reduction in the GST on educational services. The current 18% rate is a burden. Lowering this is essential to make quality learning accessible to every family," he added.

"Additionally, I want to see a shift to outcome-based budget allocation. This would be transformational for Bharat because it moves the focus from spending to impact. We shouldn't just fund infrastructure but results, such as improved learning outcomes and increased employability. When we link budget to performance, we ensure that every rupee spent directly empowers our youth and builds a skilled nation," Maheshwari further said.

Wyser Capital CoFounder & Managing Partner, Supria Dhanda, said that Union Budget 2026 must focus on removing structural barriers that slow early-stage enterprise AI and deep-tech startups.

"This includes clear and predictable policies, stronger tax incentives for fund-backed startups, simplified compliance for early capital deployment, and targeted R&D and infrastructure support for high-growth sectors," she added.

"For founders and investors, confidence comes from long-term policy continuity—not incremental incentives. A decisive push toward enterprise-led innovation, combined with easier access to early-stage capital and sustained R&D support, can firmly position India as a global hub for enterprise AI," Dhanda further said.

The government has strengthened India’s healthcare system in recent years, but the Union Budget FY27 presents an opportunity to accelerate progress by raising public health spending to 2.5–3% of GDP, said, Mumbai's PD Hinduja Hospital & Medical Research Centre CEO, Gautam Khanna.

"Higher allocation can help bridge infrastructure gaps, improve availability of skilled healthcare workers, and enhance the delivery of quality care, especially through stronger district hospitals and expanded secondary and tertiary facilities," he added.

Greater investment is also needed in preventive and early diagnostic care in Tier 2, Tier 3 and rural areas, along with focused attention on geriatric care as India’s ageing population grows. In addition, the sector needs access to long-term financing, a simplified tax framework, and reforms to the Ayushman Bharat scheme—such as wider procedure coverage and faster reimbursements—to build a sustainable, inclusive and future-ready healthcare system, Khanna said.

Meera Mehta, CRDF Professor Emeritus, CEPT University cautioned that sanitation policy must evolve beyond asset creation toward long-term service sustainability. She added that the Budget must prioritise climate-resilient planning, life-cycle financing and stronger municipal capacity, especially in small and medium towns, with (Water, Sanitation and Hygiene (WASH) allocations as a share of GDP declining and urban sanitation challenges set to intensify.

“The Union Budget 2026–27 should incentivise cities to adopt service-oriented and climate-resilient sanitation models supported by performance-linked grants,” expressed Mehta.

With India meeting 50% of its electricity demand through non-fossil fuel sources, expectations from the Union Budget are centred on accelerating the next phase of the energy transition.

She stated that policy support for grid modernisation, transmission upgrades and storage integration will be key to absorbing higher renewable capacity, while targeted incentives for green manufacturing can strengthen domestic supply chains.

“A budget focused on policies for grid modernisation and green manufacturing would further boost the green energy ecosystem in the country,” said Aarti Khosla, Founder-Director, Climate Trends.

Imran Kagalwala, Co-Founder, Unix India, said that the manufacturing sector is seeking policy continuity that goes beyond capacity expansion to strengthen domestic value creation, supply-chain resilience and competitiveness, especially in electronics and consumer devices.

“The next phase must focus on deepening localisation, improving supply-chain resilience and enhancing competitiveness,” he said, adding that targeted PLI-style support for MSMEs, duty rationalisation on critical inputs and investments in skilling and advanced manufacturing will be crucial to sustain growth.

Rishi Agrawal, CEO and Co-Founder, TeamLease RegTech, said that the Economic Survey positions regulation and compliance as economic infrastructure, signalling a move away from new law-making towards refining and digitising existing rules to support growth.

“India’s growth now depends on refining existing rules rather than creating new legislation,” he noted, adding that the focus on digital systems, regulatory hygiene and DPI-led compliance reflects a shift towards trust-based governance, with states playing a critical role in execution.

Rahul Garg, Founder-CEO of Moglix, said that “the Budget must move beyond basic incentives to deepen our industrial roots,” emphasising the need for targeted support for MSMEs to integrate into global value chains.

He added that fiscal frameworks promoting green manufacturing, domestic R&D and technological self-reliance in defence and electronics, along with a stronger logistics backbone, can turn global volatility into a competitive advantage for India’s manufacturing sector.

Madhumita Agrawal, Founder & CEO of Oben Electric, said that “aligning the GST on all EV components to a uniform 5% is essential to support domestic manufacturing and make 'Make in India' EVs more affordable for the mass market.”

She added that targeted subsidies for electric motorcycles, which dominate India’s two-wheeler landscape, will accelerate adoption and strengthen the country’s EV ecosystem.

Duttatreya Das, Energy Analyst – Asia, Ember, said that “what’s really needed are incentives that reduce the heavy upfront investment burden, such as capital subsidies or accelerated depreciation, to unlock investments.”

He added that while India’s solar module manufacturing program has succeeded with clear policy support, the next focus must be on upstream supply chains — from solar cells and wafers to battery storage and high-voltage grid infrastructure.

Shreya Mishra, CEO of SolarSquare, said, “my hope with this budget is for subsidy to be extended for another 50 Lakhs to 1 Crore homes but this time for solar paired with batteries.”

She added that India’s 26 Crore connected homes, which account for a quarter of electricity consumption, could achieve energy independence and a sustainable shift away from free electricity schemes.

"The upcoming Union Budget 2026 is expected to play a critical role in shaping longterm capital flows into the real estate sector. Targeted focus on infrastructure investment, clarity on REIT and InvIT taxation and incentives that encourage private and institutional participation can enhance liquidity and transparency across the market. Policy continuity and fiscal discipline will be key to sustaining investor confidence, enabling developers to plan responsibly and scale projects aligned with evolving urban demand," said Rohan Khatau, Director, CCI Projects.

"From an investment perspective, Budget measures should go beyond headline allocations to strengthen access to long-term capital, foster advanced and sustainable technologies, and rationalise duties on key inputs. Enhancing programmes like the PLI schemes and scaling workforce skilling, especially in fabrication and specialised trades, will boost industry resilience," said Manish Garg, CEO, Interarch Building Solutions Ltd.

The Centre is reportedly planning to to increase the annual allocation for the Revamped Distribution Sector Scheme (RDSS) to ₹18,000 crore in the upcoming Union Budget. Launched in 2021, the RDSS aims to transform the power distribution sector by improving efficiency and ensuring financial sustainability.

This year, the power ministry has proposed an allocation of around ₹18,000 crore for RDSS, which is currently under consideration, a report citing sources claimed last month.

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The Centre is likely to consider its biggest-ever push on railway safety amid mounting accidents and growing scrutiny over rail operations. According to reports, budgetary allocations for rail safety could cross ₹1.3 trillion in FY27, marking a nearly 12% increase over the current year.

The proposed outlay is expected to be directed towards maintenance of rolling stock and critical infrastructure, including track renewals, as well as the expansion of India’s homegrown automatic train protection system, Kavach.

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Union Finance Minister Nirmala Sitharaman tabled the Economic Survey 2025-26 in Parliament on Thursday, outlining the state of the economy ahead of the Union Budget.

• The survey expects India’s real GDP to grow in the range of 6.8–7.2% in FY27, slightly lower than 7.4% estimated for FY26.

• Centre’s revenue receipts rose to 9.2% of GDP in FY25 (provisional).

• Indian Banking sector's gross non-performing assets fell to a multi-decade low of 2.2% as of September 2025.

• India’s share in global merchandise exports grew from 1% in 2005 to 1.8% in 2024; services exports hit a record $387.6 billion in FY25, up 13.6%.

• Foreign exchange reserves rose to $701.4 billion as of January 16, 2026, covering around 11 months of imports and 94% of external debt.

• The survey noted that in FY27 headline inflation may be higher than current financial year, though it is expected to be "benign."

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Hamdard Laboratories Chairman Abdul Majeed outlines his Budget 2026 wishlist. He advocates for GST exemptions on generic AYUSH medicines, insurance coverage for outpatient care, and fiscal support for "Heal in India" wellness centers.

"We recommend enhanced budgetary allocation for the Ministry of AYUSH to support infrastructure development, digital initiatives, and capacity building across Ayurveda, Yoga, Naturopathy, Unani, Siddha, Sowa-Rigpa, and Homoeopathy. Dedicated funding should be earmarked for clinical research, classical formulation validation, pharmacovigilance, and integrative medicine through CCRAS, CCRUM, CCRH, and academic institutions, along with promotion of public–private research partnerships," he said.

Schneider Electric Infrastructure CEO Udai Singh advocates for grid modernization, digital metering, and Battery Energy Storage Systems (BESS) to accelerate India’s transition to Electricity 4.0.

“As India heads into the Union Budget, the country can take pride in the decisive progress it has made in expanding renewable energy capacity across solar and wind. Building on this strong foundation, the next phase of the energy transition must focus on ensuring that clean power is delivered efficiently and reliably to every consumer. Continued budgetary support for grid modernisation, transmission expansion, and smarter, digitally enabled distribution networks will be essential to sustaining the momentum the Government has already create," he said.

Nikhil Madan, MD of Mahima Group calls for infrastructure improvements in Tier-II cities, tax rationalisation for first-time buyers, and policies supporting premium housing.

"The Tier II cities are ushering in a new phase of residential development with homebuyers looking a cusp of better infra with a more balanced lifestyle. The Union Budget can now compliment this growth by focusing on improvements in urban infrastructure, connectivity as well as sound policies for upgraded premium housings. Stronger planning and investment will help Tier II cities grow into stable, well-rounded urban centres over the long term. Additionally, rationalisation of taxation is the key pillar which benefits buyers, especially the ones investing for the first time in a home. Overall, with the right policy push in this budget, tier 2 cities can emerge as India’s next engines of sustainable residential growth," he said.

Anirudh Garg, Fund Manager at INVasset PMS, shares his Budget 2026 outlook. He argues that fiscal discipline and conservative revenue assumptions are more critical for investor confidence than short-term stimulus or populist measures.

He said, "As the Union Budget approaches, we believe markets are far less focused on headline announcements than on the credibility of the underlying framework. In the current macro environment, the Budget is essentially a statement of intent on fiscal discipline, execution quality, and policy continuity rather than a tool for near-term stimulus. Investors will be evaluating whether the fiscal math is realistic, whether revenue assumptions are conservative rather than optimistic, and whether the borrowing programme is aligned with macro stability rather than short-term optics. Over time, it is this discipline that anchors bond markets, preserves policy flexibility, and reinforces confidence across asset classes."

Rohan Khatau, Director of CCI Projects, shares his Budget 2026 expectations. He advocates for clarity on REIT/InvIT taxation, targeted infrastructure investment, and fiscal discipline to sustain investor confidence in the real estate sector.

He said, "the upcoming Union Budget 2026 is expected to play a critical role in shaping longterm capital flows into the real estate sector. Targeted focus on infrastructure investment, clarity on REIT and InvIT taxation and incentives that encourage private and institutional participation can enhance liquidity and transparency across the market. Policy continuity and fiscal discipline will be key to sustaining investor confidence, enabling developers to plan responsibly and scale projects aligned with evolving urban demand. Tax reliefs definitely ease out decision making for the potential buyers sitting on a fence so overall taxation easing will benefit the sector largely too. A forward looking budget can further strengthen real estate’s role as a stable engine of economic growth."

Over the past year, India’s green hydrogen and green ammonia story has finally moved from broad ambition to actual execution, said Anil Kumar Taparia, COO - Green Hydrogen and Ammonia, ACME Group. Adding that without stronger transmission renewable sector cannot move faster pace.

"We have the renewable power, and we have it at the right cost, but without stronger transmission, none of it can move at the pace the sector needs. The budget must step in with dedicated funding, demand-aggregation tools, and greater flexibility on NFE norms for projects that are strategically important to the country. These steps matter, as India has earned a clear lead as costs are settling, supply timelines are improving, and global buyers now increasingly see India as a credible source," said Taparia.

The construction equipment industry looks forward to continued policy support from the Union Budget that sustains India’s growth momentum, said Deepak Shetty, CEO & Managing Director, JCB India. He added that Infrastructure investment has consistently demonstrated a strong multiplier effect, and its ongoing prioritisation will be critical in enabling economic expansion across sectors.

"Enhanced funding support for state governments can further accelerate rural infrastructure development, particularly roads and water projects. At a time when global trade conditions remain challenging, there is an opportunity to reinforce export competitiveness through WTO-compliant incentive frameworks and more effective utilisation of India’s Free Trade Agreements. A balanced emphasis on scaling up manufacturing, alongside sustained infrastructure development, will play a pivotal role in positioning India as a resilient and globally competitive economic powerhouse,” said Shetty.