Union finance minister (FM) Nirmala Sitharaman on Sunday presented the Union Budget 2026–27 with a sharp focus on accelerating economic growth, expanding domestic manufacturing, building human capital and maintaining fiscal discipline, even as global trade uncertainties and geopolitical disruptions continue to weigh on the world economy.
Presenting her eighth consecutive Budget, the FM framed the National Democratic Alliance (NDA) government’s economic roadmap around three guiding principles, or kartavya—sustaining high growth, fulfilling aspirations through capacity building and ensuring inclusive development under the vision of Sabka Sath, Sabka Vikas. She described the Budget as a 'Yuva Shakti-driven' exercise, drawing inspiration from ideas shared during the Viksit Bharat Young Leaders Dialogue 2026.
India’s economy, she says, has maintained stability and resilience over the past decade through 'conscious choices' centred on fiscal prudence, public investment and structural reforms. Despite a fragile global environment marked by disrupted supply chains and weakening multilateralism, the government remains committed to pushing India towards its long-term goal of becoming a developed nation.
Manufacturing Push across Strategic Sectors
A major pillar of the Budget is a renewed thrust on manufacturing, with targeted interventions across seven strategic and frontier sectors. Ms Sitharaman announced the launch of Biopharma SHAKTI, a ₹10,000-crore programme spread over five years to position India as a global hub for biologics and biosimilars. The initiative includes establishing three new National Institutes of Pharmaceutical Education and Research (NIPERs), upgrading seven existing NIPERs, expanding the number of accredited clinical trial sites and strengthening the drug regulator to meet global standards.
Building on earlier semiconductor initiatives, the government will roll out India Semiconductor Mission 2.0, aimed at developing domestic equipment, materials and full-stack Indian intellectual property, while also deepening supply chains and workforce training, the FM says.
The electronics manufacturing ecosystem received a further boost as the outlay for the electronics components manufacturing scheme (ECMS) has been raised to ₹40,000 crore, following strong investor interest.
In the critical minerals space, the FM says mineral-rich states such as Odisha, Kerala, Andhra Pradesh and Tamil Nadu will be supported to establish rare earth corridors, covering mining, processing and advanced manufacturing.
To reduce dependence on chemical imports, the Union government will support the establishment of three dedicated chemicals parks on a cluster-based, plug-and-play model, Ms Sitharaman says.
Capital Goods, Textiles and Traditional Industries
Recognising the importance of capital goods in driving productivity, FM Sitharaman announced new schemes for high-tech tool rooms, construction and infrastructure equipment manufacturing, and container manufacturing, with an allocation of ₹10,000 crore over the next five years.
The labour-intensive textiles sector received a comprehensive package, including a national fibre scheme, modernisation of traditional clusters, a revamped handloom and handicrafts programme, sustainable textile initiatives, and Samarth 2.0 for skilling. The government will also set up mega textile parks through a challenge-based approach, the FM says.
In a bid to revive traditional industries, the Mahatma Gandhi gram swaraj initiative will strengthen khadi, handloom and handicrafts through better branding, skilling and global market linkages. A separate initiative aims to position India as a global hub for sports goods manufacturing, she added.
MSMEs and Infrastructure Spending
Describing micro, small and medium enterprises (MSMEs) as the backbone of economic growth, the finance minister outlined a three-pronged strategy covering equity, liquidity and professional support. A ₹10,000-crore SME growth fund will be launched to nurture future 'champion MSMEs', while the self-reliant India fund will receive an additional ₹2,000 crore, Ms Sitharaman says.
Measures outlined in the Budget to deepen the trade receivables discounting system (TReDS) include mandating its use for CPSE (Central public sector enterprise) procurement from MSMEs, credit guarantee support for invoice discounting, and the development of a secondary market for TReDS receivables.
According to the FM, public capital expenditure (capex) continues to remain central to the government’s growth strategy. Ms Sitharaman proposed raising capex to ₹12.2 lakh crore in FY26–27, up from ₹11.2 lakh crore in the previous year. To crowd in private investment, an infrastructure risk guarantee fund will be created to provide partial credit guarantees during the construction phase, she says.
Dedicated freight corridors, expansion of national waterways, incentives for seaplane manufacturing and promotion of coastal shipping are also announced to strengthen logistics and connectivity.
Fiscal Consolidation and Tax Reforms
Reaffirming its commitment to fiscal discipline, FM Sitharaman pegged the fiscal deficit for FY26–27 at 4.3% of gross domestic product (GDP), down from 4.4% in the previous year. The debt-to-GDP ratio is projected at 55.6%, continuing a gradual downward trajectory towards the target of 50 (plus or minus 1%) by FY30–31.
On the tax front, Ms Sitharaman announced that the Income-Tax Act 2025 will come into effect from 1 April 2026, promising simplified rules and forms. Several measures are unveiled to ease compliance, reduce litigation and rationalise penalties.
Key direct tax proposals from the Budget included lower tax collection at source (TCS) rates on overseas tour packages, education and medical remittances, streamlined tax deducted at source (TDS) processes and a one-time foreign asset disclosure scheme for small taxpayers. For corporates, safe harbour norms for information technology (IT) services are liberalised and incentives are introduced to attract global data centre investments.
Indirect tax changes focused on tariff simplification, support for domestic manufacturing, energy transition and export competitiveness, along with trust-based customs processes and faster cargo clearance.
City Economic Regions and High-speed Rail
To harness urban growth beyond metros, the Budget introduces the concept of city economic regions (CERs), focusing on tier-2 and tier-3 cities and temple towns. Each CER will receive ₹5,000 crore over five years through reform-linked financing.
Seven high-speed rail corridors, including Mumbai–Pune, Hyderabad–Bengaluru and Delhi–Varanasi, are proposed as 'growth connectors' to enable faster passenger movement between key economic centres.
Services Sector and Employment Focus
Under the second kartavya, the government placed renewed emphasis on the services sector as a key employment generator. A high-powered education-to-employment and enterprise standing committee will be set up to identify growth opportunities, assess the impact of artificial intelligence (AI) on jobs and chart a roadmap to achieve a 10% global share in services exports by 2047, FM Sitharaman says.
Healthcare, allied health professions, medical value tourism, AYUSH (ayurveda, yoga & naturopathy, unani, siddha and homoeopathy), animal husbandry, creative industries, design, higher education, tourism and sports received targeted interventions aimed at skill creation and job generation.
Notably, the FM says a Khelo India Mission will be launched to transform the sports ecosystem over the next decade, while five regional medical hubs will be developed to promote medical tourism.
Farmers, Women and Vulnerable Groups
To increase farmers' incomes, the Budget announced programmes covering fisheries, animal husbandry, high-value agriculture, and plantation crops such as coconut, cocoa, cashew, and sandalwood. A new Bharat-VISTAAR AI-based advisory platform will integrate agricultural databases to provide customised support to farmers, Ms Sitharaman says.
The FM says, rural women entrepreneurs will be supported through self-help entrepreneur (SHE)-marts, community-owned retail outlets designed to help women-led enterprises scale beyond self-employment.
Special schemes are also announced for divyangjan, including skill development, assistive device manufacturing and retail access, alongside expanded mental health and trauma care infrastructure.
A Reform-driven Roadmap
Closing her speech, Ms Sitharaman says the Budget seeks to balance ambition with inclusion, reform with resilience, and growth with fiscal responsibility. With heavy bets on manufacturing, infrastructure, youth skilling and services, Budget 2026–27 lays out an expansive roadmap for India’s next phase of economic transformation under the government’s Viksit Bharat vision.
