Union Budget 2026 Expectations

The Union Budget 2026 is around the corner and will be announced on the 1st of February. In the run-up to the Union Finance Minister's budget announcement, there are several expectations across various industries and financial sectors. So, what can be expected from the 2026 Union Budget? Here is a round-up of the same below. 

Key Expectations from the Union Budget 2026

There is greater focus on sector-wise allocations, updates on income tax, and measures the Central Government may adopt to scale exports. The Economic Survey, scheduled to arrive on January 31, may offer an initial view of the Government's priorities. Here are some key expectations across sectors and experts. 

• Industry bodies are advocating for policy support and the rationalisation of GST to improve ease of doing business.
• Experts believe there may not be changes to tax slabs, particularly given that the new Income Tax Act will apply from April 1, 2026. Some experts expect the Government to ensure easier migration to the new tax legislative framework while eliminating redundant provisions. 
• Some experts also feel that while the 2025 Budget offered major relief by making income up to ₹12 lakh effectively tax-free under the new regime, there is still scope for further rationalisation to tackle inflationary effects on the middle class. 
• This would mean increasing the standard deduction to ₹1,00,000 while increasing the threshold for the 30% tax slab. 
• With the rupee hitting new lows and looming 50% tariffs due to strained ties with the US, experts are watching for Budgetary measures to support export-import substitution and infuse more FPI flows into India. 
• Investment firms are also looking out for measures on transaction taxes and long-term capital gains. 
• Stakeholders are also seeking simpler capital gains tax structures under the new law. They want a simpler classification of holding periods and harmonisation of rates across asset classes. 
• They also anticipate calibrated duty changes in sync with the Make in India and the China+1 blueprints to boost global competitiveness. 
• There is also a strong push to implement a one-time dispute resolution scheme, such as the Vivad se Vishwas or Sabka Vishwas initiatives. This may unlock more than ₹1.5 lakh crore presently stuck in litigation across around 38,000 cases. This will enable businesses to clear their legacy disputes by paying principal, along with penalty and interest waivers. 
• Many experts are also pushing for a higher Section 80C limit in the old tax regime, as it has remained at ₹1.5 lakh since 2014. 
• There is also growing demand for relief on deductions for health insurance under Section 80D, especially for senior citizens, along with more clarity on incentives to adopt the new tax regime. 
• They also advocate increasing the basic exemption limit for long-term capital gains on equities, which is currently ₹1.25 lakh (to up to ₹2 lakh), and reconsidering indexation benefits for long-term assets such as real estate and debt instruments. 
• Some experts also expect reduced levies on vital raw materials in customs duties, with the aim of supporting MSMEs, manufacturing, electronics, and green energy. Selective duty increases on finished products to promote Make in India are also expected, along with the rationalisation of inverted duty structures and support for segments such as EVs, solar equipment, defence manufacturing, and semiconductors. 
• Financial analysts anticipate stable corporate tax structures without major hikes and sector-based incentives for startups, green and digital infrastructure, and manufacturing. 

Budget 2026- Sectoral Expectations & Insights 

ICRA anticipates the Central Government capping the fiscal deficit at 4.3% of GDP for FY27, slightly lower than the 4.4% budgeted for FY26. It is anticipated to be the lowest fiscal deficit ratio since FY19. ICRA also expects more tax relief budgetary announcements, along with a range-bound budgetary increase for Railways. Announcements may also be anticipated for sectors impacted by US tariffs, such as textiles. Here are some more sector and category-wise expectations that have emerged in the run-up to the 2026 Union Budget.

Electronics Sector

There remain expectations of removing GST hurdles, amid challenges such as limited display fab availability, memory price volatility, ongoing semiconductor supply restrictions, and rupee depreciation. The industry also wants a more coordinated ecosystem drive to promote domestic manufacturing, along with temporary duty relief for critical components to enhance cost competitiveness, stable supply, and long-term TV manufacturing growth in India. 

Other expectations include export-based measures, such as logistics support, duty drawbacks, and the rationalisation of trade barriers, to help scale beyond the domestic market in India.

Renewable Energy

The renewable energy sector anticipates a game-changing budget for the clean energy space, with the Government’s focus on boosting domestic renewable energy capacity. There are industry-wide expectations for simplified, clear Government policies that support high-tech automation, patented binary solutions, and robotics. Higher budgetary allocations for local production, sustainable technologies, and other support for renewable energy providers is also expected. 

NBFCs (Non-Banking Finance Companies)

The NBFC sector anticipates continued support for the country's growth priorities, with big-ticket infrastructure projects already identified. The industry is now betting on the Government prioritising timely implementation, better coordination, and reduced friction in approvals. 

This sector is not expecting headline measures; rather, it anticipates enabling moves such as enhancing operational efficiency to support funding flows, ensuring greater accessibility to refinancing channels, and ensuring a level playing field in the use of SARFAESI. Also, targeted MSME support in the budget will be welcomed by the NBFC sector, since MSME credit usually increases when lenders have funding stability and infrastructure momentum is in tandem (mainly in rural and semi-urban clusters). 

Securities Transaction Tax (STT)

The 2026 Budget is expected to rethink the STT, which still pushes up trading costs despite long-term capital gains returning in 2018. Market participants want the STT to be eliminated or reduced for delivery-based trades. The least they want is for it to be allowed as a deductible expense. There is also a push to reduce equity capital gains tax rates back to 10% and 15%, particularly for smaller investors. 

Export Sector 

All eyes are on export-oriented measures, with expectations that the 2026 Union Budget will expand the country’s ₹25,060 crore Export Promotion Mission. Some measures reportedly being considered by the Centre include Government-supported collateral guarantees that cover up to 85% of small exporter loans, interest subvention on rupee export credit, and funding support for BharatTradeNet to reduce compliance and logistics expenses. There are also expectations for targeted support to labour-intensive sectors such as toys, leather, textiles, and more. 

Gold

With gold prices circling around record peaks and global uncertainty, investors in this sector are again prioritising gold as a safe haven for their portfolios. However, many believe that income tax rules remain unfair for gold funds and want the Finance Minister to address this in the upcoming Budget. Presently, gold ETFs are considered long-term after only a year, while gold mutual funds and physical gold are considered long-term after more than 2 years. The most-affected parties are retail players investing in SIPs. Several organisations and market participants are hoping for a shortened holding time for both physical gold and gold funds to one year. 

Another core demand is the revival of SGBs (Sovereign Gold Bonds), as the Government has not issued any new tranches lately. 

Tech & MSMEs

The Budget 2026-27 may encourage further technology adoption and digital transformation in the MSME sector, with particular incentives for cloud services, AI, SaaS tools, and cybersecurity. MSMEs are also looking for further credit-strengthening measures to be announced in the Union Budget. 

Electric Vehicles (EVs)

The industry wants more targeted EV subsidies in the 2026 Union Budget, along with specific incentives for electric motorcycles. There is also a sizable demand to sync GST on all EV components to a uniform 5% rate to boost affordable Make in India EVsfor mass consumers. Stakeholders also want a sharper focus on the entire value chain, including raw materials, cell manufacturing, recycling, and charging infrastructure. GST rationalisation on EVs and their components is a vital demand in this case. 

Solar Energy

The solar energy sector anticipates the extension of the PLI (production-linked incentive) scheme across the entire value chain and to vital grid equipment. Optimisation of the PM Surya Ghar Muft Bijli Yojana and PM-KUSUM is also expected, along with the introduction of new instruments for green finance, such as climate-focused funds and sovereign green bonds. 

Startups

Investors and founders want more practical enabling measures to ensure quicker access to capital and credit, GST rationalisation, clear tax treatment for early-stage investors, ESOPs, and more simplified compliance frameworks. 

Defence

The industry has been encouraged by the allocation of more than ₹6.8 lakh crore in the FY25-26 Budget. There are expectations of greater focus on outcomes, with quicker conversion of DAC approvals into firm orders, stronger support for indigenous MRO infrastructure, and robust investments in certification and testing facilities. 

Logistics

A larger infrastructure push is anticipated, particularly for port connectivity, freight corridors, dry ports, and the quicker rollout of Multi-Modal Logistics Parks under the PM Gati Shakti scheme. GST rationalisation is also anticipated for warehousing and logistics, alongside improved digital compliance systems. 

Healthcare 

The industry expects higher allocation in child and maternal healthcare, vaccination, and neonatal care. There is also a push for more focus on women’s health problems, including ovarian and cervical cancer. Ailments like diabetes, kidney failure, cancer, strokes, and heart attacks need higher budgetary support for boosting hospital-based infrastructure, diagnostics, and emergency services. The key expectation centres on policy support for early screening, tech-based solutions, and preventive care, along with increased public health spending and incentives for medical innovation. 

Steel 

The Budget is expected to consider trade safeguards where appropriate, while rationalising duties on vital steel inputs and offering other incentives to encourage value-added manufacturing and capacity expansion. More long-term financing access is anticipated for technology updates and compliance needs. 

Education

The industry anticipates higher focus on digital classroom infrastructure, teacher upskilling, and rationalisation of GST on vital education inputs. There is also demand to remove the 18% GST on textbook paper and lower taxes on digital learning infrastructure, tools, and content used by schools. Many industry experts have called for channelling CSR funds towards skilling infrastructure in schools and higher education institutions. Modular learning, vocational training, and work-linked degree courses with formal education are some of the key expectations in this regard.

FMCG

The industry anticipates the extension of the 0% GST policy for wheat to packaged Atta, which is currently taxed at 5%. Higher subsidies for farm-based food processing (staple segments) are also expected, along with support for industry-agro partnerships. 

Restaurant Sector

The restaurant sector in India is hoping for more growth enablers and stable policymaking in the upcoming Budget. Rationalisation of F&B rates, especially for dine-in, is expected, along with the restoration of ITC (input tax credit) to offset higher operating expenses. The industry is also seeking distinct sector recognition for F&B, with a potentially dedicated Ministry to tackle its challenges more effectively. 

Insurance

The industry anticipates robust regulatory oversight and better claims governance measures. It expects the Budget to make insurance more accessible and affordable for underinsured groups such as rural households, small businesses, and first-time customers. Incentives for social-sector coverage and micro-insurance are expected to support last-mile adoption, along with relief on policy-level costs for low-premium offerings. 

Housing and Infrastructure 

The 2026 Union Budget is anticipated to focus strongly on housing and infrastructure. The industry anticipates a further rationalisation of the affordable housing criteria, incentivising sustainable building practices, and measures to deepen market participation for investors.

Agriculture 

The agriculture sector is hopeful of a production cluster-based approach backed by FPOs (Farmer Produce Organisations). The budget is expected to enhance FPO support for better working capital access, post-harvest processing infra, market intelligence, and better management. 

Green Energy Corridors 

The 2025 Union Budget increased its allocation to the renewable sector with PM-KUSUM, PM Surya Ghar, and higher MNRE funding. However, the industry wants some gaps filled, especially the limited access to affordable, long-term financing for project development and manufacturing. There are expectations of more predictable policies for incentives, project contracts, and tariffs. 

Smart Meters

There are expectations for 2026, including a budgetary allocation for smart meters in India and formal recognition of AMI (Advanced Metering Infrastructure) under the Harmonised Master List of Infrastructure. It will help unlock low-cost capital, priority sector lending, infrastructure bonds, global institutional investments, and InVITs. 

It remains to be seen how the 2026 Union Budget shapes up, keeping all these sector and industry-wide expectations in mind. For now, all eyes are on the upcoming budget announcement on February 1.