Union Budget 2026–27: Building Scale and Strengthening India’s Economic Foundations

The Union Budget 2026 reinforces India’s long-term growth strategy with a continued focus on capital expenditure, infrastructure expansion, critical sector investments, and policies designed to support India’s goal of becoming one of the world’s largest economies.

The government has increased capital expenditure outlay to ₹12.2 lakh crore, up from ₹11.21 lakh crore last year. This solidifies public investment as the primary engine of growth, especially while private capex recovery remains uneven.

Growth Outlook for FY 2026–27

• GDP Growth Projection: 6.8%–7.2% (slightly lower than previous year’s 7.4%)
• Fiscal Deficit: Expected to glide toward ~4.2% of GDP
• Public Capex: Continues at ~3% of GDP
• Market Borrowings: Gross borrowing estimated at ₹17.2 lakh crore

Infrastructure & Connectivity

The Budget proposes major infrastructure upgrades to enhance mobility, reduce logistics costs, and boost productivity.

High-Speed Rail Corridors Announced

• Mumbai–Pune
• Pune–Hyderabad
• Hyderabad–Bengaluru
• Hyderabad–Chennai
• Chennai–Bengaluru
• Delhi–Varanasi
• Varanasi–Siliguri

Additionally, infrastructure development in Tier II and Tier III cities continues to be a major priority.

Financial Sector & Capital Markets

• A high-level committee on banking will be formed under the Viksit Bharat framework.
• NRI investment limit raised from 5% → 10%.
• Sectoral investment limit increased to 24% from 10%.
• STT on options increased from 0.1% → 0.15%.
• Fiscal deficit for FY27 set at 4.3% of GDP.

MSMEs, Manufacturing & Self-Reliance

• ₹4,000 crore top-up to Self-Reliant India Fund
• ₹10,000 crore under Bio-Pharma Strategy for innovation & global competitiveness

Energy Transition & Sustainability

• ₹20,000 crore for Carbon Capture, Utilisation & Storage (CCUS)
• Support for data-centre energy demand & digital infrastructure

Healthcare & Social Development

• Customs duty exemption on 17 critical cancer drugs
• Upgradation of AYUSH pharma infrastructure

Tourism, Culture & Skill Development

• Skill upgrade for 10,000 tourist guides across 20 iconic sites
• Eco-friendly tourism trails in Himachal Pradesh, Uttarakhand, J&K

Trade & Tax Rationalisation

• Import tariff on personal goods reduced: 20% → 10%
• TCS on liquor, scrap, minerals rationalised to 2%

Sector-wise Budget Allocation (FY27)

Agriculture – ₹1.27 lakh crore+

• Natural farming promotion
• Pulses & oilseed expansion
• Post-harvest infra strengthening

Defence – ₹7 lakh crore+

• Indigenisation focus
• AI, cyber defence, next-gen capabilities

Education – ₹1.28 lakh crore

• 75,000 new medical seats
• Support for AVGC sectors

Railways – ₹2.62 lakh crore

• Seven high-speed corridors
• Passenger transport modernisation

Chemicals & Manufacturing

• Three dedicated Chemical Parks

Semiconductors (ISM 2.0) – ₹40,000 crore

• Strengthening domestic semiconductor ecosystem

Healthcare – ₹98,311 crore

• Cancer care centres
• Medical tourism hubs

Electronics Components Manufacturing – ₹40,000 crore

• Deepening electronics supply chains

Biopharma SHAKTI – ₹10,000 crore

• Boosting biosimilars & biologics

Logistics & Manufacturing – ₹10,000 crore

• Domestic container production

Urban & Regional Development – ₹5,000 crore

• City Economic Regions development

Six Strategic Focus Areas

1. Advanced Manufacturing Development

Strengthening seven key sectors: semiconductors, biopharma, rare earths, chemicals, toolrooms, container manufacturing & capital goods.

2. MSME Growth & Competitiveness

A dedicated ₹10,000 crore fund for MSME scale-up and innovation.

3. Revitalisation of Legacy Industrial Clusters

Modernisation of 200+ old industrial clusters nationwide.

4. Infrastructure Expansion & Modernisation

₹12.2 lakh crore allocated for roads, railways, waterways, ports & logistics upgrades.

5. Long-Term Economic Resilience

Defence modernisation, indigenisation & advanced tech adoption.

6. Development of City Economic Regions

₹5,000 crore to build regional urban growth hubs.

Taxation Updates

Securities Transaction Tax (STT)

• Futures: 0.02% → 0.05%
• Options premium: 0.10% → 0.15%
• Options exercise: 0.125% → 0.15%

Direct Tax Measures

• Tax relief on accident compensation
• TCS on overseas tour packages reduced
• New simplified Income Tax Act proposed

Customs Duty & Trade Measures

• Duty-free input limit for seafood processing: 1% → 3%
• Personal import tariff: 20% → 10%
• Solar & nuclear energy exemptions expanded till 2035

Cheaper Items After Budget 2026

Travel & Remittances

• TCS on overseas tours: 5–20% → 2%
• Education & medical remittances: 5% → 2%

Consumer Products

• Microwaves & personal imports: Duty 20% → 10%
• Makhana & roasted nuts: Duty 150% → 30%

Healthcare

• Cancer & rare-disease drugs: BCD exempt

Industrial Inputs

• Capital goods for lithium-ion manufacturing: BCD exempt
• Sodium antimonate for solar glass: Duty removed

Costlier After Budget 2026

• STT on options & futures (increased)
• TCS on alcohol, scrap, minerals → 2%
• Cranberries & blueberries – higher import duties
• Chewing tobacco, gutkha: NCCD 25% → 60%
• Potassium hydroxide: Duty 0% → 7.5%

Conclusion

The Union Budget 2026–27 represents a forward-looking and transformative approach, with focused investments across semiconductors, rare earths, advanced manufacturing, defence, and infrastructure. The emphasis on city economic regions, energy transition, MSME empowerment, and simplified taxation positions India for sustained long-term growth.

Disclaimer – The information provided in this article is for general informational purposes only and is based on publicly available data and announcements related to the Union Budget 2026–27. While every effort has been made to ensure accuracy, readers are advised to independently verify details and consult qualified financial, tax, or investment professionals before making any decisions. The author and the website are not responsible for any losses, errors, or omissions arising from the use of this content.