Budget Expectations 2026: Tax Cut, Capex Push, PLIs; Here's What FM Can Bring on February 1

Ahead of the Union Budget 2026-27, farmers have once again reiterated their demand to cover all agricultural crops under the minimum support price (MSP). Bhartiya Kisan Union (BKU) National General Secretary Chaudhary Yudhvir Singh said this has always been a key demand of farmers.

Currently, the government sets MSPs for about 22 crops, including 14 Kharif crops, six Rabi crops, and two commercial crops, to support farmer incomes. Sugarcane is covered under a separate mechanism called the Fair and Remunerative Price (FRP).

India’s defence manufacturing sector has built strong intent, capabilities, and talent over the years, but sustaining this ecosystem as it scales now requires policy attention. The most vulnerable phase lies in moving from early production to large-scale deployment, where costs rise, timelines stretch, and momentum often weakens.

Long-term capital investments, uneven budget cycles, and the demands of quality, compliance, and after-sales support add to the strain. While global interest in Indian defence exports is growing, success in international markets will require upfront investment in certifications, regulatory compliance, documentation, and lifecycle support.

The Union Budget 2026 offers a crucial opportunity to strengthen India’s position as a global hub for artificial intelligence and digital talent. Industry stakeholders are calling for a clear policy roadmap covering AI skilling initiatives, incentives to encourage enterprise-wide reskilling, R&D tax credits for homegrown AI and SaaS innovations, and targeted support for MSMEs through affordable cloud access and digital vouchers.

"India’s technology sector is poised to hit USD 300 billion in FY 2025–26, contributing over 7% to GDP, with the digital economy set to reach one-fifth by 2030," Sameer Nigam, co-founder & CEO, Stratbeans, said.

The sector’s expectations for 2026 is to prioritize on comprehensive land digitalization and progressive asset tokenization frameworks. As they're essential catalysts for unlocking institutional capital at scale. y unlocking this liquidity, India can synchronize its development cycle with global standards, ensuring that even new inventory in emerging markets meets the 'quality bar' of ECSBC 2024 and ESG compliance. The coming year will reward developers who can deliver 'metro-grade' compliance and experience in emerging cities, while non-compliant assets risk obsolescence regardless of location.

"As we look toward 2026, Indian real estate is expanding beyond its traditional metro-centric narrative. While top cities face a Grade A seller’s market, a parallel growth engine is igniting in Tier-II hubs like Ahmedabad, Jaipur, Kochi, and Coimbatore, driven by GCC decentralization and retail penetration. These emerging corridors are now critical to solving the nationwide inventory crunch," Umesh Uttamchandani, managing director, DevX, said.

“From the industry’s perspective, the Budget should address everyday bottlenecks, especially the gap between academic learning and workplace readiness. Budget-backed apprenticeships and industry-linked internships can help make entry-level talent job-ready, particularly in smaller towns," Achal Khanna, CEO, SHRM APAC & MENA, said.

“Greater operational stability through simpler compliance, timely GST refunds, continued investment in digital infrastructure and a stronger focus on employee wellbeing will help the industry improve productivity, retention and long-term resilience," she added.

“India’s cosmeceutical sector is evolving rapidly as consumers increasingly choose dermatologist-recommended, clinically validated skincare. The industry expects the Union Budget 2026 to recognise cosmeceuticals as healthcare-adjacent, supported by GST rationalisation, clearer regulations, and stronger backing for domestic manufacturing, R&D and omnichannel retail infrastructure to unlock the sector’s full potential," Sukhbir Singh Chimni, Founder of Ceuticoz, said.

“As India deepens financially, the focus must move from just expanding credit to making finance more affordable, flexible and aligned with real cash flows. Budget 2026 can help by strengthening credit guarantees, co-lending and domestic liquidity to lower borrowing costs and support sustainable, inclusive growth," Manish Shah, MD & CEO, Godrej Capital, said.

The agri-tech sector enters Union Budget discussions with cautious optimism, calling for deeper digitisation and wider adoption of advanced technologies in Indian agriculture, stated Amith Agarwal, Co-Founder and CEO of StarAgri.

He added that a renewed push to the Digital Agriculture Mission—backing AI-based crop monitoring, GPS-enabled farm mapping and drone-led interventions—can significantly improve productivity and farmer participation. “Indian agriculture needs deeper digitisation, stronger technology adoption, and greater farmer participation online,” he stated.

The sector also urges a differentiated rural credit framework for agri-focused NBFCs that reflects farmers’ income realities.

Ankush Tiwari, CEO & Co-Founder, pi-labs, stated that the defence and internal security ecosystem is seeking a more execution-focused fiscal push amid rising geopolitical and security challenges.

"From this Budget, the industry expects multi-year capital allocations that enable not just development, but scaled deployment of indigenous AI-led intelligence systems, cyber defence platforms, robotics, quantum-safe communications and secure software stacks across defence and law enforcement," he added.

He also urged incentive structures to support indigenous design, R&D and long-term lifecycle readiness.

Rahul Dwivedi, Founder & CEO, Pelorus Technologies, said India’s national security now demands technology-led preparedness against digital, cyber and unmanned threats.

“From Union Budget 2026, the security ecosystem expects a sharper focus on strengthening India’s indigenous defence and internal security capabilities through technology,” he added.

He emphasised the need for higher allocations for AI-led intelligence systems, cyber forensics, counter-drone capabilities, sustained R&D funding, faster procurement of domestic solutions and structured support to scale proven innovations.

"Incentives for R&D, lower import duties on high‑precision instruments not manufactured locally, and a stronger policy push for EV, hydrogen, and alternative fuel testing will significantly strengthen the innovation ecosystem. Enhanced allocations for nationwide air and water quality monitoring, along with reduced GST on diagnostic equipment, will further enable better public health and environmental management,” said Dr. Rajeev Gautam, President, HORIBA India.

"Budget 2026 is a timely moment to simplify these interfaces. Enabling Section 80E in the new regime, recognising self-funded overseas tuition through a small capped deduction, and creating a single predictable LRS framework for education can reduce friction without adding subsidies. A clearer financial pathway will support India’s human capital formation and strengthen the country’s long-term position in global talent markets," said Saurabh Arora, Founder & CEO, University Living.

"As public investment in infrastructure and urban development continues to expand, Budget 2026 presents an opportunity to strengthen not only asset creation but also the systems that support it. The effectiveness of infrastructure spending is closely linked to the availability of reliable construction materials, robust manufacturing capacity and policy stability that supports long-term planning across the value chain," said Akshat Seth, Managing Director and CEO at BirlaNu.

“Hotels are anchors of local ecosystems, generating employment, supporting MSMEs, and enabling destination-led growth, particularly in Tier II and Tier III markets. Granting infrastructure status to hospitality would unlock long-term financing, improve capital efficiency, and accelerate quality development beyond metros. This must be complemented by continued investment in connectivity aligned with tourism clusters, alongside GST rationalisation and restoration of input tax credit to improve competitiveness and affordability. Targeted incentives for high-yield segments, stronger global promotion, support for sustainable operations, and hospitality-specific skilling initiatives can significantly enhance economic impact,” said Nikhil Sharma, Managing Director & COO, South Asia, Radisson Hotel Group

“As the industry looks forward to the upcoming union budget, we understand that affordability and cost efficiency will remain central to policy priorities. Today, travellers are smart and making more informed choices to navigate price volatility. This shift in behavior is structural, underscoring the need for sustained measures that support efficient pricing and demand stability,” said Bernard Corraya, General Manager, Wego India.

“India’s mobility ecosystem is undergoing a decisive transformation, driven by rapid urbanisation, progressive policy making and growing adoption of clean energy vehicles. As we approach Union Budget 2026, we are hopeful of continued policy momentum to further accelerate the growth pace of the industry. Support for shared and technology-led mobility solutions will be critical in shaping the next phase of growth for the automobile industry and addressing the evolving needs of naya Bharat,” said Mayank Jain, CEO, Auto Classifieds, CarDekho Group.

"As the Union Budget 2026 approaches, the industry looks forward to further GST rationalisation, building on recent rate corrections. Streamlining GST on essential home and kitchen appliances across cooling, heating, cooking, and fabric-care categories would recognise their role in modern living and everyday convenience. Such a move could encourage wider adoption of branded, energy-efficient, and multifunctional appliances, particularly in Tier 2 and Tier 3 markets, supporting sustained consumption growth and long-term sector resilience," said Madhav Mani, CEO - Usha International.

"While the country spends roughly $3 billion on pharma R&D, the United States invests close to $50–60 billion and China nearly $15–20 billion. This gap is not just numerical, it reflects a wider innovation deficit that limits India’s ability to create breakthrough therapies, build future-ready technologies, and strengthen long-term healthcare resilience. The upcoming Budget presents a crucial opportunity to change this trajectory by placing pharma innovation at the centre of national priorities," said Arushi Jain, Director of Akums Drugs & Pharmaceuticals Ltd.

“ As the Union Budget 2026–27 approaches, healthcare providers are hoping to see practical measures that strengthen capacity without adding to operational strain. The year can become the inflection point where India’s healthcare promise turns into a measurable impact. The conversations are more about whether digital care works or how many seconds it takes to beam an ICU-grade decision into a village clinic without losing a heartbeat.

The need for easier access to long-term, lower-cost financing for hospital infrastructure, along with incentives tied to quality accreditation, would support sustainable expansion. Greater clarity and consistency around reimbursement timelines under public insurance schemes is equally important for maintaining financial discipline across the system. At the same time, a more structured approach to digital health, covering interoperability, electronic records, and reimbursement for teleconsultations, can improve efficiency if backed by clear implementation support. Encouraging domestic manufacturing of medical devices and diagnostics would help stabilise input costs. Finally, targeted investment in clinical and allied health skill development, particularly in non-metro markets, along with simpler approval processes for hospital upgrades, can translate policy intent into real capacity on the ground," Avinash Ojha, Managing Director- RG Hospitals said.

“The 2025 GST rationalization was a gamechanger for India's nutraceutical sector, delivering simplified tax structures and providing significant relief to consumers, and we commend the government for this bold reform. As India advances towards Atmanirbhar Bharat, Budget 2026 presents a timely opportunity to further strengthen the overall health and wellbeing ecosystem. We recommend formally recognising food and dietary supplements as an integral part of overall wellness, with the potential to improve health outcomes while unlocking significant economic value. The budget should focus on simplifying custom duty structure by rationalising customs duty slabs on imported supplements, ingredients used in nutraceutical, beauty and personal care, and select consumer durables. Such measures would enhance India’s trade competitiveness, boost local manufacturing and exports aligning with the “Make in India” initiative. This should be complemented by Production-Linked Incentive (PLI) schemes, targeted tax benefits, and export-linked incentives to support global expansion.

To enable grassroots entrepreneurship, the Budget should consider introducing lower income tax slabs for small businesses like direct sellers/ distributors, sole proprietors, similar to the fiscal support extended to start-ups through deferred taxation, thereby enabling millions, including women and those in smaller towns, to participate meaningfully in the formal economic growth and drive more inclusive development.

Finally, dedicated budgetary support for clinical research and evidence-based nutrition will be crucial to strengthening consumer trust and enhancing the global credibility of Indian-made supplements, firmly positioning India as a trusted, science-led hub for preventive health and long-term well-being,” Rajneesh Chopra, Managing Director, Amway India said.

"With India’s real GDP projected to grow at a robust 7.4% in FY 2025–26, driven by strong growth in professional services, the Union Budget 2026 must now focus on converting this momentum into sustained global leadership. At QualiZeal, we see an urgent need to address the structural gap in talent supply. With demand for AI-skilled professionals expected to cross 1.25 million by 2027, the Budget must prioritise high-quality technical skilling for India’s over 5 million-strong tech workforce.

While over ₹1.75 lakh crore in investments under the PLI scheme has helped anchor India’s manufacturing base, the next frontier is IP-led innovation. To bridge the gap between India’s current R&D spending of around 0.6–0.7% of GDP and global benchmarks, the Budget should introduce targeted innovation-linked incentives. Equally critical is national resilience. With climate-related risks posing a growing threat to economic output and agriculture continuing to support around 46% of the workforce, integrating digital engineering into green infrastructure and supply chain modernisation is no longer optional. It is a core economic imperative," Satish Sureddi, CFO, QualiZeal said.

"The budget should focus on simplifying custom duty structure by rationalising customs duty slabs on imported supplements, ingredients used in nutraceutical, beauty and personal care, and select consumer durables. Such measures would enhance India’s trade competitiveness, boost local manufacturing and exports aligning with the “Make in India” initiative. This should be complemented by Production-Linked Incentive (PLI) schemes, targeted tax benefits, and export-linked incentives to support global expansion," said Rajneesh Chopra, Managing Director, Amway India.

"Ahead of the Union Budget, we expect a strong focus on strengthening farm resilience and market efficiency. Higher allocations for agricultural R&D, particularly for high-yield, climate-resilient seeds, are critical to improve productivity amid climate risks. On the markets side, rationalising or removing the Commodity Transaction Tax and providing clarity on GST for commodity derivatives will improve hedging viability for farmers and FPOs," said Dr. Arun Raste, MD & CEO, NCDEX.

"The next phase of logistics transformation will need sharper execution and more targeted policy intervention, particularly beyond metropolitan centres. More investment in first- and last-mile connectivity, sustainable, technology-led warehousing and fulfilment, along with a clear focus on skilling and talent development, will be key," said Ravi Goel, CEO of RapidShyp.

"A Budget that aligns infrastructure, physical networks and human capital will equip the sector to deliver faster and smarter outcomes, while supporting the country’s long-term economic growth," he added.