India’s Union Budget FY 2026–27: Key Highlights

Finance Minister Nirmala Sitharaman presented the Union Budget for FY 2026–27 in Parliament on February 1, 2026, against the backdrop of global economic uncertainty, shifting supply chains, and evolving investment trends. The Budget reiterates India’s commitment to sustained economic growth, fiscal discipline, and long-term resilience.

Presenting the Budget, the Finance Minister stated that the government seeks to “transform aspiration into achievement and potential into performance.” She described the Budget as Yuva Shakti–driven, with a strong focus on strengthening domestic manufacturing, scaling high-growth services, and reinforcing infrastructure as the foundation for long-term economic expansion.

Reflecting on India’s growth trajectory, she highlighted the government’s emphasis on structural reforms, fiscal prudence, and monetary stability, supported by sustained public investment. Keeping Atmanirbharta as a guiding principle, the government has strengthened domestic manufacturing capabilities, enhanced energy security, and reduced critical import dependencies. She further emphasised that reforms are aimed at ensuring inclusive growth, supporting employment generation, agricultural productivity, household purchasing power, and universal access to essential services.

Overall, the Union Budget 2026–27 underscores the importance of regulatory certainty, ease of doing business, and targeted reforms to attract long-term capital and deepen India’s integration with global markets.

Key Focus Areas of Union Budget 2026–27

Budget Theme

Yuva Shakti–driven growth
Harnessing India’s demographic dividend by investing in skilling, employment generation, and enterprise creation.

Three Kartavya Guiding the Budget

Accelerating and sustaining economic growth by enhancing productivity, competitiveness, and resilience amid global volatility.
Fulfilling aspirations and building capacity through stronger human capital, skills development, and institutional capability.
Advancing Sabka Sath, Sabka Vikas by ensuring equitable access to opportunities across regions, communities, and sectors.

Investment-Led Development

Scaling manufacturing in strategic and emerging sectors.
Strengthening MSMEs as key growth enablers and supply-chain anchors.
Reinforcing the services sector as a major driver of employment, growth, and exports.

Strengthening India’s Investment Ecosystem

Sustained public capital expenditure to crowd in private investment.
Infrastructure-led regional development with a focus on Tier II and Tier III cities.
Long-term emphasis on energy security, climate technologies, and resource resilience.

Enhancing Ease of Doing Business and Capital Flows

Regulatory simplification, tax certainty, and trust-based compliance.
Measures to strengthen FDI facilitation, portfolio investments, and global market integration.
Proposal to launch an Investment Friendliness Index of States in 2025, aimed at promoting competitive cooperative federalism and encouraging states to improve policy frameworks, investor facilitation, and responsiveness.

Biopharma: A Strategic Pillar in Union Budget 2026–27

The Union Budget 2026–27 places biopharmaceuticals at the heart of India’s strategy to scale manufacturing in strategic and frontier sectors. With a clear objective of positioning India as a global biopharma manufacturing hub, the Budget introduces a comprehensive framework focused on ecosystem creation, capacity building, and clinical research enablement.

Biopharma SHAKTI

(Strategy for Healthcare Advancement through Knowledge, Technology & Innovation)

Biopharma SHAKTI is the flagship initiative aimed at strengthening India’s biopharmaceutical ecosystem.

The scheme will be launched with an outlay of ₹10,000 crore over five years.
It focuses on enabling domestic production of biologics and biosimilars, reducing import dependence, and enhancing export competitiveness.
A dedicated biopharma institutional network will be created, including the establishment of three new National Institutes of Pharmaceutical Education and Research (NIPERs) and the upgradation of seven existing institutes.
To strengthen clinical research capabilities, a nationwide network of over 1,000 accredited clinical trial sites will be developed.

Institutional and Talent Capacity Development

To support long-term sectoral growth, the Budget emphasises strengthening human capital and research infrastructure:

Establishment of three new national institutes and upgradation of seven existing institutions to enhance advanced pharmaceutical education, research, and skill development.
Alignment of academic curricula and research output with industry needs and global standards, ensuring workforce readiness for advanced biopharma manufacturing.

Clinical Research and Regulatory Infrastructure

Recognising the importance of robust regulatory and research frameworks, the Budget proposes:

Creation of a network of 1,000 accredited clinical drug trial sites across the country.
Strengthening of regulatory processes to reduce approval timelines, improve compliance efficiency, and enhance global acceptance of Indian-manufactured biopharma products.

Manufacturing Push Across Strategic and Frontier Sectors

Through targeted schemes, cluster-based development, and capacity expansion, the Budget seeks to create an enabling environment for long-term industrial investment. Key initiatives include:

Biopharma SHAKTI Scheme
Ecosystem-led capacity creation to establish India as a global biopharma manufacturing hub.
India Semiconductor Mission (ISM) 2.0
Enhanced outlay of ₹40,000 crore to strengthen capabilities across semiconductor equipment, materials, design, and supply-chain resilience.
Electronics Components Manufacturing Scheme
Increased outlay to ₹40,000 crore to deepen domestic value addition and leverage growing investment momentum.
Rare Earth Corridors
Establishment of dedicated corridors in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu to promote mining, processing, research, and manufacturing of rare earth materials.
Chemical Manufacturing Infrastructure
Support for States to develop three cluster-based Chemical Parks on a plug-and-play model to boost domestic chemical production.
Construction and Infrastructure Equipment (CIE)
Introduction of a dedicated scheme to enhance domestic manufacturing of high-value, technology-intensive construction and infrastructure equipment.
Container Manufacturing Scheme
Launch of a scheme with an allocation of ₹10,000 crore over five years to build globally competitive container manufacturing capacity.
Rejuvenation of Legacy Industrial Clusters
A new scheme to revive 200 legacy industrial clusters through infrastructure modernisation and technology upgradation, improving efficiency and cost competitiveness.

Textiles: Strengthening a Labour-Intensive Growth Engine

The Union Budget 2026–27 reaffirms textiles as a priority labour-intensive sector with strong linkages to employment generation, exports, and regional manufacturing clusters. The Budget adopts an integrated strategy to modernise traditional textile ecosystems, enhance fibre self-reliance, and upgrade skills across the entire value chain.

Integrated Textile Programme

The Budget proposes an Integrated Textile Programme comprising five key components aimed at boosting productivity, sustainability, and global competitiveness:

National Fibre Scheme
To promote self-reliance in natural fibres, man-made fibres, and emerging new-age fibres, reducing import dependence and strengthening domestic supply chains.
Textile Expansion and Employment Scheme
Focused on modernising traditional textile clusters through capital support for machinery, technology upgradation, and productivity enhancement.
National Handloom and Handicraft Programme
Integration and strengthening of existing schemes to support artisans and weavers, improve market access, and preserve traditional craftsmanship.
Tex-Eco Initiative
To promote globally competitive, sustainable, and environmentally responsible textiles and apparel manufacturing.
Samarth 2.0
An upgraded skilling initiative to modernise the textile workforce through closer collaboration between industry and academic institutions.

Together, these measures aim to drive value addition, improve efficiency, and reinforce India’s position in global textile and apparel markets.

Infrastructure: Enabling Growth Through Public Capital Expenditure

The Union Budget continues its strong emphasis on public capital expenditure to enhance logistics efficiency, support urbanisation, and facilitate industrial expansion—thereby crowding in private investment.

Key Infrastructure Initiatives

Public capital expenditure of ₹12.2 lakh crore in FY27 to sustain momentum in infrastructure development.
Development of seven High-Speed Rail corridors to improve inter-city connectivity and promote economic agglomeration across major growth regions.
Expansion of inland water transport through the operationalisation of 20 new National Waterways, enhancing logistics efficiency and connectivity between industrial clusters, mineral-rich regions, and ports.
Continued infrastructure development in Tier II and Tier III cities with populations above 5 lakh, recognising their role as emerging growth centres.
Development of City Economic Regions (CERs), with an allocation of ₹5,000 crore per region over five years, to unlock agglomeration-led growth through a challenge-based, reform-linked financing model.
Infrastructure-led regional development to strengthen manufacturing clusters, services hubs, and urban economic ecosystems.

Champion SMEs and Micro Enterprises: Scaling Growth and Resilience

Recognising MSMEs as a cornerstone of employment, exports, and supply-chain resilience, the Budget introduces targeted measures to support their scale-up, formalisation, and long-term competitiveness.

Key MSME-Focused Measures

Creation of Champion SMEs through targeted equity support, enhanced liquidity access, and professional management assistance.
Improved access to capital and risk finance for growth-oriented enterprises.
Introduction of a ₹10,000 crore SME Growth Fund to nurture future Champion SMEs, with incentives linked to defined performance and scale criteria.
A ₹2,000 crore top-up to the Self-Reliant India Fund (launched in 2021) to continue supporting micro enterprises and ensure sustained access to risk capital.

Digital Infrastructure and Data Centres

The Union Budget places digital infrastructure at the heart of India’s investment-driven growth strategy, recognising data centres and cloud services as vital pillars of the digital economy, artificial intelligence, and next-generation digital services. The Budget highlights long-term policy stability and regulatory certainty, encouraging large-scale investments in data storage, computing capacity, and digital service delivery.

Key measures to strengthen digital infrastructure and attract investment include:

Tax holiday extended until 2047 for data centre operations
Introduction of a long-term tax holiday for foreign companies offering cloud services through data centres located in India
Measures aimed at ensuring predictability and investment certainty for hyperscalers, cloud service providers, and digital infrastructure investors
Benefits applicable to data centre operations commencing on or before 31 March 2031
Mandatory provision of services to Indian customers through an Indian reseller entity
Safe harbour margin of 15% on costs where data centre services are provided by a related entity from India
Strong policy support for large-scale digital infrastructure development
Reinforcement of India’s position as a preferred destination for data centre investments, supported by improvements in power availability, connectivity, and regulatory frameworks
Alignment with rising demand from digital services, fintech, e-commerce, artificial intelligence, and global capability centres
Creation of an enabling ecosystem for technology-driven and digital services
Strengthening the foundation for high-growth sectors such as cloud computing, AI, analytics, and platform-based businesses
Integration of digital infrastructure initiatives with broader reforms in ease of doing business, tax certainty, and investment facilitation

Education, Skills, and Services-Led Growth

The Union Budget 2026–27 reaffirms the services sector as a key engine of economic growth, employment generation, and exports, supported by focused institutional reforms and skill development initiatives.

Key initiatives include:

Establishment of a high-powered Education to Employment and Enterprise Standing Committee
Strategic focus on expanding India’s share in global services exports to 10% by 2047
Rationalisation of taxation for IT services—covering software development, ITeS, KPO, and contract R&D—under a unified Information Technology Services category with a common safe harbour framework

AVGC and the Creative Economy

The Union Budget recognises the expanding role of the creative or Orange Economy as a significant driver of skilled employment and export growth. With global demand for digital and creative content rising, targeted support has been announced for this high-potential sector.

Key initiatives include:

Focused support for the Animation, Visual Effects, Gaming, and Comics (AVGC) sector, which is expected to require nearly 2 million skilled professionals by 2030
Strengthening of creative talent pipelines through the establishment of AVGC Content Creator Labs in 15,000 secondary schools and 500 colleges
Institutional support through the Indian Institute of Creative Technologies, Mumbai, to nurture industry-ready creative talent

Climate Technologies and Energy Transition

The Budget reinforces India’s commitment to climate action, energy security, and industrial decarbonisation by promoting the adoption of emerging clean technologies.

Key measures include:

Promotion of Carbon Capture, Utilisation, and Storage (CCUS) technologies
Proposed outlay of ₹20,000 crore over the next five years
Focus on scaling CCUS solutions and advancing technology readiness across five key industrial sectors—power, steel, cement, refineries, and chemicals

These initiatives aim to balance long-term energy security with sustainable and cleaner industrial growth.

Healthcare and Medical Value Tourism

The Budget places strong emphasis on strengthening healthcare services while positioning India as a preferred global destination for medical value tourism.

Key initiatives to strengthen the healthcare workforce include:

Expansion of institutions for Allied Health Professionals (AHPs) to bridge skill gaps across critical healthcare disciplines
Coverage of diverse healthcare roles, including diagnostics, clinical support, and behavioural health services
Development of a robust talent pipeline to meet both domestic healthcare needs and international patient demand

Care Economy and Allied Health Services

The Budget proposes the development of a structured and inclusive care ecosystem to address demographic changes and rising healthcare needs.

Key focus areas include:

Development of organised geriatric and allied care services
Introduction of nationally aligned training programmes for multi-skilled caregivers
Improvement in service quality, enhanced employment opportunities, and better preparedness for an ageing population

AYUSH and Traditional Medicine

To strengthen India’s traditional medicine ecosystem, the Budget outlines measures aimed at improving quality, research, and global outreach.

Key initiatives include:

Establishment of new All India Institutes of Ayurveda
Upgradation of AYUSH pharmacies and drug testing laboratories to enhance certification and quality standards
Strengthening of research, training, and international promotion of traditional medicine systems

Healthcare Infrastructure and Trauma Care

The Budget focuses on expanding emergency response and trauma care capacity across the country.

Key measures include:

Establishment of new institutions and upgradation of existing mental health and trauma care facilities
Strengthening district-level healthcare infrastructure to improve accessibility, resilience, and emergency preparedness

Medical Value Tourism Hubs

To boost medical tourism, the Budget supports States in establishing five Regional Medical Value Tourism Hubs through public–private partnerships.

These hubs are envisioned as integrated healthcare ecosystems offering:

Advanced medical and surgical care
Medical education and research facilities
Diagnostics, post-treatment care, and rehabilitation services
Dedicated facilitation centres to support international patients

Tourism

The Union Budget adopts a holistic approach to strengthening the tourism sector by focusing on infrastructure creation, skill development, sustainability, and digital enablement. The objective is to enhance visitor experiences, improve destination management, and unlock tourism’s potential as a major driver of employment and regional growth.

Key initiatives include:

Destination Development and Experiential Tourism

Development of 15 archaeological sites into vibrant, experiential cultural destinations through curated visitor access and immersive interpretation
Promotion of ecologically sustainable tourism, including mountain trails, turtle trails, and bird-watching trails across select regions

Regional and Niche Tourism Promotion

Targeted initiatives to strengthen tourism circuits in emerging destinations, including heritage, spiritual, and nature-based tourism hubs
Alignment of tourism development with regional infrastructure, transport connectivity, and urban development initiatives

These measures aim to position tourism as a scalable economic activity, supporting job creation, regional development, and investment opportunities across hospitality, transport, digital services, and allied sectors.

Tax Reforms

The Budget introduces wide-ranging tax reforms aimed at simplifying compliance, improving certainty, reducing disputes, and strengthening India’s attractiveness as an investment destination.

Key reforms include:

Introduction of a simplified and modernised Income Tax framework with redesigned rules and forms to reduce compliance complexity and enhance ease of filing
Tax holiday till 2047 for foreign companies providing cloud services using data centre infrastructure in India, reinforcing India’s position as a global digital and data centre hub
Measures to reduce tax litigation and strengthen trust-based administration, including rationalisation of penalties, decriminalisation of minor offences, and integration of assessment and penalty proceedings
Extension and rationalisation of safe harbour provisions, particularly for Information Technology and IT-enabled services, to provide greater certainty on transfer pricing outcomes
Targeted tax incentives to support manufacturing, services, and export-oriented sectors, including data centres, cloud services, toll manufacturing, and bonded warehousing
Reforms to facilitate foreign investment and global mobility through exemptions and simplified tax treatment for non-resident experts and foreign service providers operating from India
Rationalisation of customs and indirect tax provisions to support energy transition, critical minerals, electronics manufacturing, and export competitiveness
Continued emphasis on predictability, transparency, and stability in the tax regime to improve long-term investor confidence

Customs Reforms

The Budget advances customs reforms to simplify trade procedures, enhance transparency, and reduce transaction costs for businesses engaged in international trade.

Key measures include:

Simplification of the customs tariff structure to support domestic manufacturing, promote exports, and address duty inversion issues
Phased withdrawal of long-standing customs duty exemptions on items that are domestically manufactured or where imports are negligible
Incorporation of effective duty rates from customs notifications directly into the tariff schedule to enhance transparency and certainty
Expansion of duty-free and concessional duty regimes to support export-oriented sectors such as marine products, leather, textiles, electronics, and energy transition technologies
Strengthening of trust-based customs systems through extended duty deferment periods and enhanced facilitation for authorised and compliant importers
Increased use of automation and risk-based assessment mechanisms to enable faster clearance of goods and improve overall trade facilitation

India’s Union Budget FY 2026–27: Key Highlights