Finance Minister Nirmala Sitharaman presented the Union Budget for the financial year 2026–27 in Parliament on February 1, 2026, marking her ninth consecutive Budget presentation. The Budget has been framed against a backdrop of global economic uncertainty, shifting supply chains, and evolving investment patterns, while firmly reinforcing India’s commitment to sustained growth, fiscal discipline, and long-term competitiveness.
While presenting the Budget, the finance minister stated that the government aims to “transform aspiration into achievement and potential into performance.” She described the Union Budget 2026–27 as a Yuva Shakti–driven Budget, focused on harnessing India’s demographic dividend through employment generation, skill development, and enterprise creation. Emphasis was also laid on strengthening domestic manufacturing, scaling high-growth services, and reinforcing infrastructure as the pillars of long-term economic expansion.
Reflecting on India’s growth journey, Sitharaman highlighted the government’s focus on structural reforms, fiscal prudence, monetary stability, and sustained public investment, guided by the principle of Atmanirbharta. She reiterated that all reforms are designed to ensure that citizens benefit directly through improved employment opportunities, agricultural productivity, enhanced purchasing power, and universal access to essential services.
Budget Theme and Guiding Principles
At the heart of the Union Budget 2026–27 is the theme of Yuva Shakti–driven growth, aimed at converting India’s demographic strength into productive economic capacity.
The Budget is guided by three Kartavya (duties):
- Accelerating and sustaining economic growth by enhancing productivity, competitiveness, and resilience amid global volatility.
- Fulfilling aspirations and building capacity through investments in human capital, skills, and institutional strength.
- Advancing Sabka Sath, Sabka Vikas by ensuring inclusive growth and equitable access to opportunities across regions and sectors.
Investment-Led Development Strategy
The Budget places strong emphasis on investment-led development, focusing on:
- Scaling manufacturing in strategic and frontier sectors
- Strengthening MSMEs as growth partners and supply-chain anchors
- Reinforcing the services sector as a major driver of employment, exports, and economic expansion
To strengthen India’s investment ecosystem, the government has committed to sustained public capital expenditure, infrastructure-led regional development, long-term energy security, and climate-resilient technologies. Measures to enhance ease of doing business, improve tax certainty, and facilitate capital flows have also been announced.
A key reform is the proposed Investment Friendliness Index of States, to be launched in 2025, aimed at promoting competitive cooperative federalism and encouraging states to strengthen investor facilitation frameworks.
Biopharma: A Strategic Growth Engine
The Union Budget 2026–27 places biopharmaceuticals at the centre of India’s strategy to scale manufacturing in frontier sectors.
Biopharma SHAKTI Scheme
The newly announced Biopharma SHAKTI (Strategy for Healthcare Advancement through Knowledge, Technology & Innovation) scheme aims to develop India as a global biopharma manufacturing hub. With an outlay of ₹10,000 crore over five years, the initiative will focus on domestic production of biologics and biosimilars, supported by:
- Establishment of three new NIPERs and upgradation of seven existing institutes
- Creation of a network of 1,000 accredited clinical trial sites
- Strengthening regulatory processes to enhance global acceptance of Indian biopharma products
Manufacturing and Industrial Expansion
To create an enabling environment for long-term industrial investment, the Budget introduces several targeted initiatives, including:
- India Semiconductor Mission (ISM) 2.0 with an enhanced outlay of ₹40,000 crore
- Expansion of the Electronics Components Manufacturing Scheme
- Establishment of Rare Earth Corridors across select states
- Support for Chemical Manufacturing Parks
- Dedicated schemes for container manufacturing, construction equipment, and rejuvenation of 200 legacy industrial clusters
Textiles: Modernising a Labour-Intensive Sector
Textiles continue to be a priority sector due to their strong employment and export linkages. The Budget introduces an Integrated Textile Programme, comprising:
- National Fibre Scheme
- Textile Expansion and Employment Scheme
- National Handloom and Handicraft Programme
- Tex-Eco Initiative for sustainable textiles
- Samarth 2.0 for skill upgradation
These measures aim to enhance productivity, strengthen fibre self-reliance, and improve India’s global competitiveness.
Infrastructure and Regional Development
Public capital expenditure has been pegged at ₹12.2 lakh crore for FY27, reinforcing infrastructure-led growth. Key initiatives include:
- Development of seven High-Speed Rail corridors
- Operationalisation of 20 new National Waterways
- Focused infrastructure development in Tier II and Tier III cities
- Creation of City Economic Regions (CERs) with ₹5,000 crore per region over five years
Championing MSMEs and SMEs
Recognising MSMEs as key drivers of employment and exports, the Budget introduces:
- Creation of Champion SMEs
- A ₹10,000 crore SME Growth Fund
- A ₹2,000 crore top-up for the Self-Reliant India Fund
These measures aim to improve access to capital, risk finance, and professional support.
Digital Infrastructure and Data Centres
The Budget places digital infrastructure at the core of India’s growth strategy. Key measures include:
- Tax holiday till 2047 for data centre operations
- Long-term tax holiday for foreign cloud service providers
- Safe harbour provisions to ensure tax certainty
- Policy stability to attract hyperscalers and digital infrastructure investors
Education, Skills, and Services-Led Growth
The services sector is reinforced through:
- Establishment of an Education to Employment and Enterprise Standing Committee
- Rationalisation of taxation for IT and IT-enabled services
- A goal to achieve 10% global share in services by 2047
AVGC, Climate Tech, Healthcare, and Tourism
The Budget also focuses on:
- Supporting the AVGC and creative economy
- Scaling climate technologies such as CCUS with ₹20,000 crore outlay
- Strengthening healthcare infrastructure, medical value tourism, and allied health services
- Developing tourism through destination development, experiential tourism, and regional circuits
Tax and Customs Reforms
The Union Budget 2026–27 introduces a simplified and modernised Income Tax framework, aimed at reducing compliance burden, improving trust-based administration, and enhancing investor confidence. Customs reforms focus on tariff simplification, export competitiveness, and trade facilitation through automation and risk-based assessments.
Conclusion
Overall, the Union Budget FY 2026–27 reflects a forward-looking, investment-driven approach focused on inclusive growth, competitiveness, and long-term economic resilience. With strong emphasis on youth, manufacturing, services, infrastructure, and regulatory certainty, the Budget seeks to position India as a globally integrated, high-growth economy over the coming decades.
