The Indian Finance Minister presented the Union Budget for the financial year 2026-27 on 1 February 2026 in the Indian Parliament (Budget). The Prime Minister of India has described this Budget as a strong base for India’s high flight towards Developed India of 2047.
More than just a plan on annual spend, the Budget is certainly futuristic and directed towards a strong and developed India revolving around the following objectives:
- To accelerate and sustain economic growth with enhanced productivity and competitiveness, and build resilience towards global dynamics;
- To fulfil people’s aspirations and building their capacity towards being a major contributing factor in prosperity of the nation; and
- To provide access to resources, amenities and opportunities for meaningful participation to every family, community and region of India.
The following are key highlights of the Budget:
- Creating “Champions MSMEs”, with a dedicated INR 100 billion (USD 1.1 billion) SME Growth Fund for creating future champions, through dedicated equity and liquidity support.
- Providing for INR 200 billion (USD 2.2 billion) for Carbon Capture Utilization and Storage (CCUS) and extension of nuclear power project tax breaks up to 2035.
- Developing 7 new High-Speed Rail Corridors as ‘growth connectors’, 20 new National Waterways and establishment of 1 new Dedicated Freight Corridor.
- Setting up a National Institute of Hospitality; introducing a pilot scheme for upskilling 10,000 guides across 20 iconic tourist sites, developing 15 archaeological sites into vibrant cultural destinations providing a major boost to the tourism sector.
- Establishing a new ‘Education to Employment’ committee focusing on developing an ‘Orange Economy’.
- Introducing the Biopharma SHAKTI* scheme with a provision of INR 100 billion (USD 1.1 billion) to develop India as a global Biopharma manufacturing hub, including to create a network of over 1,000 accredited India Clinical Trials sites, building an ecosystem for developing domestic production of biologics and biosimilars and setting up 3 new National Institutes of Pharmaceutical Education & Research and upgrading the 7 existing ones.
- Focusing on large-scale public infrastructure development through initiatives such as InVITs, REITs, NIIF and NABFID, with continued emphasis on strengthening infrastructure in Tier II and Tier III cities (population over 0.5 million).
- Introducing key policy measures including financial sector reforms, restructuring the Power Finance Corporation (PFC) and Rural Electrification Corporation (REC), and reviewing the Foreign Exchange Management Act; accelerating energy transition via adopting CCUS technologies and customs duty exemptions for nuclear, lithium-ion and critical mineral projects; boosting agricultural productivity through crop-specific promotion schemes and the Bharat-VISTAAR** AI platform; and promoting exports through extended timelines and expanded duty exemptions for key manufacturing sectors.
Amongst other corporate tax reforms, a couple of key ones are:
- the consideration received on a buy-back of shares will be taxed as capital gains instead of dividend income, with promoter shareholders liable to an additional tax resulting in an effective rate of 22% for domestic corporate promoters and 30% for others; and
- a concessional rate of tax of 15% (instead of 22% or 30%), applicable on eligible business income of units in an International Financial Services Centre (IFSC) for income earned after the tax holiday period will be taxed at.
In addition to the above highlights, the Budget introduces several initiatives and reforms across a wide range of sectors, including automobiles, media and entertainment, oil and gas, real estate, start-ups and technology.
The Budget can be accessed through the link: https://www.indiabudget.gov.in/doc/budget_speech.pdf
* Strategy For Healthcare Advancement Through Knowledge, Technology And Innovation
** A multilingual AI tool to enhance farm productivity, improve farmer decision making and reduce risk