Union Budget 2026: Key Expectations Across Major͏ Sectors

As͏ February 1st approaches, anticipation builds for ͏the Union Budget 2026. Against the background of global volatility and robust domestic growth, the new fiscal policy is being framed. From st͏artups to large industries, defence to agriculture, every sector is looking for clear signals and supportive measures. In this article, we highlight the most significant expectations and policy actions that could drive the India story for the next year.  

D͏efen͏ce ͏and Aerospace: ͏Strengthening D͏omestic C͏apabilit͏ies͏ 

The defence sector is likely to continue being a focus area, with industry stakeholder͏s expecting momentu͏m in indigenisation and domestic procurement to be sustained. This includes higher allocations for defence capital outlay, better support for defence research and development, and strengthened public–private collaboration. Industry stakeholders have also stressed the need for predictable procurement timeframes and policies to facilitate the engagement of MSMEs and start-ups in the defence ecosystem.  

Insurance: Expanding Coverage Through Structural Reforms 

With insurance penetration in India still below global averages, the sector is calling for reforms to improve affordability and coverage. Key expectations include tax parity across pension and insurance products, rationalisation of deductions for health insurance premiums, and a simplified tax framework for insurance products. There is also interest in regulatory changes that could improve operational efficiency and enable insurers to offer a wider range of products under a unified licensing framework. 

Renewable Energy: Policy Certainty and Manufacturing Push 

The renewable energy sector continues to seek policy stability to address execution bottlenecks and investor concerns. Industry stakeholders are urging faster resolution of pending power purchase agreements and continued support for domestic manufacturing of clean energy equipment. Expectations include incentives for battery energy storage systems, rationalisation of GST rates, extended transmission charge waivers, and improved access to low-cost finance to support India’s clean energy targets. 

MSMEs: Credit Access and Compliance Relief 

Micro, small, and medium enterprises remain vulnerable to global trade volatility and domestic cost pressures. Ahead of the Budget, MSMEs are seeking easier access to affordable credit, simplified GST compliance, and higher exemption thresholds for small businesses. Support for technology adoption, green manufacturing, and export competitiveness is also emerging as a key expectation, alongside measures to reduce regulatory complexity. 

Healthcare and Medical Technology: Focus on Efficiency and Quality 

The healthcare and med-tech sectors are advocating higher public spending on healthcare infrastructure and improved support for domestic manufacturing of medical devices. Industry representatives have highlighted the need for procurement policies that prioritise long-term value, quality, and patient outcomes. Expectations also include greater funding for public hospitals, digital health initiatives, and innovation in medical technology. 

Education and Skilling: Digital Access and Capacity Building 

Education and skilling are expected to feature prominently, with calls for increased public spending on digital infrastructure, teacher training, and skill development programmes. The sector seeks measures to make digital learning more affordable, particularly in underserved regions. There is also emphasis on aligning education and skilling initiatives with emerging industry needs to improve employability and long-term workforce readiness. 

Infrastructure: Beyond Capital Expenditure 

While investment in infrastructure remains important, experts are urging a shift towards lifecycle performance and asset durability. Proposals include better maintenance planning, longer performance-linked contracts, and the adoption of proven technologies to reduce long-term costs. The focus is on ensuring infrastructure investments deliver sustained economic value beyond initial construction. 

Agriculture: Post-Harvest Infrastructure and Market Access 

The agriculture sector is seeking higher allocations for post-harvest infrastructure, including warehouses, cold storage, and logistics. Strengthening market linkages and improving price realisation for farmers remain central concerns. Industry and farmer groups are also advocating continued rationalisation of GST on agricultural inputs and enhanced interest subvention to support farm-level liquidity. 

Manufacturing: Enhancing Global Competitiveness 

Despite steady output growth, manufacturing’s share in GDP has remained largely unchanged. Ahead of Budget 2026, the sector is seeking continued support for production-linked incentive schemes, deeper localisation of components, and stable input tax credit mechanisms. Improved infrastructure, automation support, and cost competitiveness are viewed as critical to positioning India as a global manufacturing hub. 

Private Investment: Restoring Momentum 

Reviving private corporate investment remains a key macroeconomic challenge. Industry participants expect the Budget to focus on improving regulatory certainty, easing land and labour norms, and sustaining public infrastructure investment to crowd in private capital. Predictable policies and reduced compliance burdens are seen as essential for boosting investor confidence. 

Digital Economy and Artificial Intelligence 

The technology sector is looking for expanded support for digital public infrastructure, artificial intelligence adoption, and startup innovation. Expectations include improved access to computing resources, clearer regulatory frameworks, and incentives for businesses adopting advanced digital technologies. Continued investment in digital skills and domestic data infrastructure is also seen as critical for long-term competitiveness. 

Space Sector: Enabling Private Participation 

With private participation in space technology growing, industry stakeholders are seeking clearer regulatory frameworks and policy support to attract long-term investment. Expectations include incentives for manufacturing, technology development support, and financing mechanisms that can help scale India’s space ecosystem. 

Logistics and Transportation: Driving Efficiency 

The logistics sector continues to highlight the importance of infrastructure investment, particularly in multimodal transport and last-mile connectivity. Budget expectations include measures to reduce transportation costs, improve supply chain efficiency, and strengthen digital integration across logistics networks to support MSMEs and exporters. 

Real Estate and Housing: Regulatory Clarity 

The real estate sector is seeking regulatory simplification, faster approvals, and updates to affordable housing norms to reflect market realities. There are also calls for enhanced tax incentives for homebuyers and clearer land and development policies to support timely project completion. 

Taxation and Compliance: Simplification and Stability 

Across sectors, there is a strong demand for simplifying tax compliance. Expectations include rationalisation of TDS provisions, clarity on foreign tax credits, fewer procedural changes, and stronger dispute resolution mechanisms. Stability and predictability in tax policy remain top priorities for businesses and investors. 

Gold and Jewellery: Duty Rationalisation 

The gems and jewellery industry is calling for rationalisation of import duties and GST to manage price volatility and curb unofficial imports. Industry representatives believe transparent customs processes and pragmatic duty structures could support domestic manufacturing and employment. 

Senior Citizens: Strengthening Financial Security 

Senior citizen welfare features prominently in pre-Budget discussions, with expectations of higher tax exemptions on interest income and increased deductions for healthcare expenses. There are also calls for improved long-term care frameworks to address the needs of India’s ageing population. 

Financial Markets: Supporting Investment Flows 

Market participants are seeking measures to enhance liquidity, reduce transaction costs, and improve regulatory predictability. Rationalisation of capital gains taxes, deeper bond markets, and easier retail participation are among the expectations aimed at strengthening India’s financial ecosystem. 

Environmental Sustainability: Incentivising Green Transition 

Industry stakeholders are calling for targeted incentives to support energy efficiency, clean technology manufacturing, and research in sustainable materials. A phased approach to environmental regulation, supported by adequate transition funding, is seen as essential to balancing sustainability goals with industrial competitiveness. 

Social Infrastructure: Healthcare and Education 

Beyond sector-specific measures, there is broad support for increased allocations to healthcare and education. Stakeholders are urging higher public spending to address infrastructure gaps, workforce shortages, and long-term human capital development. 

Conclusion 

Union Budget 2026–27 faces the complex task of addressing diverse sectoral expectations while maintaining fiscal discipline and macroeconomic stability. Strategic support for domestic manufacturing, infrastructure, digital capabilities, and social sectors is expected to remain central to the government’s approach. The Budget’s policy signals and allocations will indicate how effectively these competing priorities are balanced amid evolving global and domestic challenges.