Budget 2026 Expectations: HFCL MD Calls for Innovation-Linked Incentive Scheme

Ahead of the Budget, expectations are rising across sectors, particularly on the income-tax (IT) front. Rising living costs, higher housing expenses, and taxes on investment returns have now fuelled fresh calls for relief on the income-tax front. However, with the proposed Income-tax Act, 2025 already introduced, some industry experts expect limited substantive changes on the direct tax front in the upcoming Budget.

“The Union Budget’s relevance to technology will lie in how clearly it supports long-term, platform-led transformation rather than isolated technology adoption," Krishnan Venkateswaran, Chief Digital and Information Officer, Titan Company, said. Clear compliance and data frameworks will shape how enterprises build resilient digital cores that support transparency, traceability, and scalable AI adoption over multiple business cycles. Measures that support consumption and manufacturing can further drive investments in customer experience, analytics, automation, and connected operations across supply chains.

"From a travel and mobility perspective, Budget 2026 presents a strong opportunity to reinforce the foundations of the sector through strategic investments. Enhanced allocation towards tourism infrastructure and development can significantly strengthen connectivity while enabling more sustainable and inclusive growth across destinations," said, Yummi Talwar, Chief Operating Officer, South Asia Region, VFS Global.

"At the same time, focused investment in education and skilling, particularly in line with the government’s priority of preparing youth for an AI-driven future will be critical to building a future-ready workforce that can support the evolving needs of global mobility," she added.

"Continued emphasis on digital infrastructure and secure technology systems will further simplify travel facilitation, enhance efficiency, and build trust across cross-border journeys. A forward-looking Budget that brings together infrastructure development, AI-led skilling, and technology enablement can play a pivotal role in positioning India as a competitive, agile, and globally integrated economy," Talwar further said.

"With India accelerating its renewable energy and energy-transition goals, the Union Budget 2026 should continue to support domestic manufacturing across solar PV modules, power electronics, motors, pumps and lighting solutions," said, Vinit Bediya, Chairman and MD, Silver Consumer Electricals Limited.

"Policy stability through consistent PLI frameworks, rationalisation of customs duties on critical raw materials, and incentives for backward integration, including components and upstream technologies, will be essential to reducing import dependence, strengthening supply-chain resilience, and building globally competitive manufacturing ecosystems," he added.

"Such measures can enhance cost efficiency, encourage long-term capacity creation and enable organised MSMEs to invest in technology, automation and localisation. A well-aligned policy framework that supports energy efficiency, clean manufacturing and skill development will help advance the objectives of Make in India and Atmanirbhar Bharat, while accelerating India’s transition towards a resilient, self-reliant and innovation-led manufacturing economy," Bediya further said.

Speaking during the Budget Session, President Droupadi Murmu said that Babasaheb Ambedkar always believed in equality and social justice, values that are also at the heart of India’s Constitution. She said every citizen should enjoy full rights without facing any discrimination and assured that the government remains committed to delivering real social justice. The President added that these efforts have helped nearly 25 crore people come out of poverty in the last ten years, and said the government’s third term is moving faster to further support and empower the poor.

President Droupadi Murmu told Parliament that the government has made strong progress in giving insurance protection to people. She said schemes like Pradhan Mantri Jeevan Jyoti Bima Yojana and Pradhan Mantri Suraksha Bima Yojana have helped crores of people get insurance cover, with claims worth more than ₹24,000 crore already paid out.

President Droupadi Murmu told Parliament that Operation Sindoor in May 2025 showed India’s bravery and sent a strong message that the government will not tolerate any terrorist attack.

President Murmu spoke about the country coming together to honour national icons and freedom fighters. The President said India marked the 350th martyrdom anniversary of Guru Tegh Bahadur, paid tribute to Birsa Munda on his 150th birth anniversary for his contribution to the tribal community, and celebrated Sardar Patel’s 150th birth anniversary, which strengthened the spirit of “Ek Bharat, Shreshtha Bharat.” She added that celebrations marking Bharat Ratna Bhupen Hazarika’s birth anniversary brought a sense of unity and music across the country. Remembering the sacrifices and contributions of past leaders, she said, inspires the younger generation and helps speed up India’s journey towards a developed nation.

President Droupadi Murmu said the new Viksit Bharat–G RAM G law has been introduced to boost jobs and development in rural areas and will guarantee 125 days of employment in villages.

As NDA-BJP MPs applauded by thumping their desks, opposition MPs stood up to protest and demanded that the law be withdrawn.

"For years, there was fear and distrust in 126 districts of the country. Maoist ideology pushed the future of several generations into darkness. Youth, tribals and Dalits suffered the most due to this. Today, the challenge posed by Maoist terror is confined to just 8 districts. Of these, there are 3 districts which are seriously affected. In this one year, about 2000 people with links to Maoists have surrendered. With this, peace has returned to the lives of lakhs of citizens...The day is not far when Maoist terror will be completely eliminated from our country," said President Droupadi Murmu on the first day of Budget Session.

"For Budget 2026, we expect a continued capex push on infrastructure and urban development, with strong focus on Tier-II and Tier-III cities. Enhanced investments in connectivity, industrial corridors and regional infrastructure should remain a priority. In real estate, the industry expects expansion of the affordable housing framework, including an upward revision in the price cap and rationalisation of development charges. Digitisation of property registration and clear title mechanisms are also expected," said Pradeep Misra, Chairman and Managing Director, Rudrabhishek Enterprises Ltd.

"Towards making India 'aatmanirbhar', my government is making continuous and concrete steps. Today, the products made with Make in India vision are reaching different markets across the world," said President Droupadi Murmu.

 "To accelerate AI’s reach in ‘Bharat’, the Budget could provide for funding shared intelligence, not isolated pilots—AI that makes the Bank Mitra channel more productive and efficient, safer to trust, and easier for customers to use. This requires targeted public investment in common AI rails such as vernacular voice interfaces, real-time fraud and grievance intelligence, and alternative credit and cash-flow models tailored for rural livelihoods. The Budget could empower NABARD to support the Bank Mitra ecosystem with AI adoption, shared data platforms, and partnerships with cooperative banks, Regional Rural Banks, and State Rural Livelihood Missions," saidSeema Prem, co-founder & CEO, FIA Global.

President Murmu credited the Narendra Modi-led government with expanding social security coverage through welfare schemes and praised the decision to exempt salaried individuals earning up to ₹12 lakh annually from income tax in her address to both Houses on Wednesday. She said that over the past decade, around 25 crore people have been lifted out of poverty and nearly 4 crore pucca houses have been built across the country.

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"The rollout of GST 2.0 in September 2025 and the move to a dual-rate structure (5% and 18%) was a significant step toward rate simplification. However, operational challenges still continue. The inverted duty structure (IDS) remains one of the key concerns, particularly for MSMEs. Industry players are hoping that input services and capital goods will also be included in the current IDS refund formula. Further automation and easing of refund processes are also expected to support smoother cash flows, as it strains working capital. Another pressing concern is the multiple, parallel GST investigations and audits by different authorities, which disrupt business operations. Clear guidelines and a more coordinated enforcement framework are expected for improving certainty and ease of doing business," said Gourav Sogani, Partner, Economic Laws Practice.

Commenting on President Droupadi Murmu's addresses in the Parliament, Congress leader K C Venugopal told ANI, "...Nothing new, the same as what the government has been repeating previously about its promises. We agitated and the entire opposition as a whole asked for MGNREGA to be brought back."

Congress MP Ranjit Ranjan told ANI, "We are against the amendments made in MGNREGA. We will continue to oppose them until the government withdraws all of them. They have snatched away the right to work and they are saying that what they have done is right. They are talking about farmers, but even today the farmers' MSP has not been doubled."

As Union Budget 2026 approaches, the clean energy sector is urging a strategic shift from EV demand creation to deep domestic manufacturing of critical battery materials.

With global trade risks rising, industry leaders stress that energy security depends on controlling the full cell component value chain and building circular supply ecosystems.

“True energy security will come from domestic control over the full cell component supply chain,” stated Ankur Khaitan, Managing Director and CEO TACC Limited. He also called for stronger R&D support to commercialise next-generation materials and position India as a global battery innovation hub.

Ahead of Budget 2026, India’s digital economy is underscoring the need to consolidate gains from its digital public infrastructure with stronger trust frameworks. With Aadhaar and e-KYC driving scale and inclusion, the next phase must prioritise privacy, cybersecurity and fraud prevention.

“The upcoming Budget presents an opportunity to further strengthen digital trust infrastructure,” said Ajay Trehan – Founder & CEO of AuthBridge. He further urged clearer consent mechanisms under the DPDP Act, streamlined compliance and sustained investment to keep India’s digital systems secure, inclusive and future-ready.

“India’s FMCG sector is at a critical inflection point. The Union Budget 2026–27 should focus on enabling BIS compliance for MSMEs through testing subsidies and shared infrastructure, while strengthening domestic manufacturing competitiveness and export alignment with global standards,” said Anshul Agrawal, Managing Partner & Director, Mysore Deep Perfumery House & Zed Black.

Akash Agrawalla, Co-founder, ZOFF Foods said, "For the FMCG sector, particularly food and spice brands, our expectation from the Union Budget is a sustained focus on consumption growth and supply-chain stability. Strengthening agri-linkages, food processing, storage, and logistics infrastructure will be critical in managing input volatility and ensuring price stability in farm-linked categories like spices. We also look forward to easier and faster access to credit for MSMEs and rationalisation of GST on essential food inputs to support efficient scaling. Increased rural spending and income support can further drive demand across Tier II and III markets. Importantly, policy predictability around taxation and compliance will give FMCG brands the confidence to plan long-term investments in capacity building and brand growth. A budget that supports farmers, MSMEs, and domestic food manufacturing will strengthen the agri-FMCG ecosystem and enable sustainable, responsible growth for Indian brands."

Shobit Rai, Co-Founder and Managing Director of Prozeal Green Energy, has issued a compelling call to shift the national focus from mere renewable generation to system reliability.

“As India accelerates its growth momentum with the tax reforms of CY2025 and the forthcoming Union Budget, the nation is poised for all-around progress in manufacturing, digital adoption, and a leadership role in renewable energy.

India’s renewable journey has been remarkable in terms of capacity addition. Yet the next budget must confront a critical reality: generation alone does not ensure transition. Renewables already account for over 40% of installed power capacity, but grid-scale energy storage remains negligible compared to the requirements of a high-renewables system. Without storage, flexibility, and firm green power, clean energy cannot fully displace fossil fuels. Strategic budgetary support for battery energy storage systems, pumped hydro, and green hydrogen is essential to convert intermittent power into reliable, round-the-clock, industrial-grade energy," he said.

“As India prepares for the upcoming Union Budget, this is the moment to take deep tech from promise to execution. Sectors such as cloud computing, AI, GenAI, and advanced digital infrastructure need long-term, consistent policy support so Indian innovation can scale from prototypes to globally trusted platforms built in India.

Equally important is easing compliance and ensuring tax and regulatory stability, which will unlock investor confidence and enable technology businesses to plan and invest at scale. None of this is possible without talent - strengthening advanced tech upskilling and enabling mobility for highly skilled professionals will be critical for India to compete with the world’s most advanced technology ecosystems,” Deepak Mittal, CEO, CloudKeeper said.

“Incentivising value addition, by supporting the processing of raw spices into higher-value products, will allow Indian brands to move beyond bulk commodity exports and capture greater returns domestically. Increased and timely allocations for schemes such as the Spices Board’s SPICED Scheme can play a crucial role in strengthening farmer linkages, quality compliance, and manufacturing capabilities. At the same time, encouraging FDI in food processing under Make in India will help modernise infrastructure and improve global competitiveness, especially as Indian exporters face growing competition from countries that currently capture much of the value addition overseas," said Yashmit Gala, CEO, Galaji Spices.

"The PLI scheme proposal for agrochemicals needs simplification with realistic parameters to attract greenfield plants serving both domestic demand and exports. India’s technical competence warrants initial five-year government support, as developing nations require policy scaffolding to achieve global parity. While fertilizer subsidies underscores commitment to farmers, parallel investment in next-generation agri-inputs will enhance input efficiency, shield indigenous innovation, and secure agricultural resilience," Rajesh Aggarwal, Managing Director, Insecticides (India) Limited and Vice-Chairman, Crop Care Federation of India

“India stands at a decisive inflection point in its technological trajectory. Through resolute policy and demonstrated execution, evidenced by the national-scale success of BharatNet and the indigenous 5G rollout, we have laid the foundational pillars for architectural sovereignty. The strategic imperative now is to convert this infrastructure advantage into enduring technological leadership. The forthcoming Budget can catalyse this transition by introducing a targeted Innovation-Linked Incentive (ILI) mechanism. This program needs to be precisely engineered to reward R&D expenditure and patent generation in 6G, Artificial Intelligence, and Defence Technologies, the core triad of future strategic power, " said Mahendra Nahata, Managing Director, HFCL.

"Given the capital-intensive nature of this industry, access to long-term, competitively priced capital remains essential for ongoing investments in technology, safety, and advanced pollution control systems. Encouraging domestic production of key intermediates will further reduce import dependence and enhance value addition within India. Continued policy encouragement for R&D, process innovation, and green chemistry will help manufacturers offer higher-value, customised solutions aligned with evolving global compliance and sustainability expectations," said Mihir V Shah, Executive Director, Vipul Organics Limited.