On the plus side, allocations to key infrastructure sectors and to defence relative to gross domestic product (GDP) were roughly maintained in 2026-27 (FY27). The focus on boosting manufacture in critical areas, along with the creation of rare earth corridors, could have long-term positive implications. Customs duty relaxations on key inputs could help the renewables sector. The biopharma drive could also be positive.

The STT hike may affect liquidity in futures & options (F&O) or derivatives segment. While it is designed to discourage retail traders from excessive activity, it will also hurt serious players, including foreign portfolio investors (FPIs) who use the F&O market to hedge positions. Loss of liquidity could translate into wider spreads. Given the tense geopolitical situation, and a recent selloff in global commodity markets, including both industrials and precious metals, this may increase hedging costs at a point where many serious players are looking to offset exposures. 

The Nifty 50 index is up about 9.7 per cent in the last 12 months despite sustained selling from FPIs whose net sales add up to over ₹1.6 trillion over this period. This has also contributed to the rupee’s dip. The benchmark is down about 3.6 per cent in the last three months. Steady buying by mutual funds and other domestic institutions has prevented a bigger downtrend.

The Nifty is trading at a price-earnings (PE) multiple of 21.6x, which is close to the lowest valuations we have seen since the Covid lockdown. But the PE is fairly high in historic terms and higher than many peer emerging markets (EMs).
In technical terms, the index is trading below its own 200-day moving average (DMA) around 25,200 which is a bearish long-term signal. The index’s next key support level is at around 24,500-24,600. The movements on the Budget day briefly pulled the index above 200 DMA levels but it closed lower. Short-term indicators are bearish, too.

In terms of sector movements on the Budget day, most sectoral indices lost ground but the metals and PSU bank sectors were the worst affected, with both indices losing over 3 per cent each. The IT and telecom indices managed to buck the trend and registered small positive moves. 

In terms of returns in the last 12 months, most segments are up. The metals index is one of the largest gainers of the last 12 months (despite the correction on the Budget day) with around 42 per cent gains while the PSU bank index is also up by about 44 per cent. The financial services sector overall is up 20 per cent, while financial service ex-banking is up 24 per cent. The oil & gas sector has also done well and the index is up 15 per cent. The worst performers of the last 12 months include the IT index and realty index.

The downtrend on the Budget session was quite broad, though value loss was marginal. It’s too early to say if the Budget has triggered a generally bearish phase, though, as mentioned above, trends across timeframes and sectors do indicate bearishness. If the 24,500 support is broken, the market could dip till around 23,750 before finding reliable support. On the upside, a close above 25,500 would signal a likely recovery, though there’s heavy resistance between 25,500 and 25,850 levels, where the index may range trade.

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The push for Green Credits and incentives for sustainable construction technologies – such as dry construction methods and recyclable materials – signals a clear policy shift toward environmentally responsible development. The Construction and Infrastructure Equipment (CIE) scheme, with its focus on advanced and energy-efficient equipment including modern lift systems for high-rises, further supports this transition toward smarter, greener buildings.

On the demand side, simplified NRI transactions – especially PAN-based TDS compliance without the need for a TAN – can significantly reduce friction for overseas buyers, making Indian real estate more accessible and investment-friendly.

Importantly, the Budget’s emphasis on sustainable urban renewal across housing segments — from mid-income to premium – along with credit guarantees and process simplification, empowers developers to create more inclusive, well-planned communities. Growth corridors such as Kokapet and Neopolis in Hyderabad are well-placed to benefit from improved financing access and green incentives, enabling projects with smart technologies, global certifications, and future-ready amenities.

From a premium developer’s perspective, the real opportunity lies in building integrated townships that balance density, sustainability, lifestyle, and livability — ensuring that growth remains equitable for both developers and homebuyers, while meeting the rising aspiration for high-quality urban living.

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Union Finance Minister Nirmala Sitharaman on Sunday presented the Union Budget for the financial year 2026–27 (FY27), marking her ninth consecutive Budget. The finance minister proposed several exemptions on customs duties across sectors, including critical minerals, nuclear energy, batteries, electronics, defence and aviation, among others. 

Sitharaman said that these exemptions are aimed at simplifying tax rates, supporting domestic manufacturing, boosting exports, and removing old duty exemptions that are no longer needed. The latest exemptions are likely to make several products cheaper for consumers and the industry.

Union Budget 2026: Which items will become cheaper?

Sitharaman announced that duty on goods imported for personal use will be halved from 20 per cent to 10 per cent, while patients will get relief as basic customs duty has been removed on 17 cancer drugs.

To drive manufacturing, duties are being cut on select electronic parts too. Special Economic Zones units will get one-time relief to sell limited output in the domestic market at lower rates, and biogas will be excluded from excise calculations on biogas-blended compressed natural gas (CNG).

Budget 2026: Items that will cost less 

• Solar panels
• Personal-use items
• 17 cancer drugs
• Seven rare disease drugs
• Electric vehicle batteries
• Aircraft components
• Sports equipment
• Smartphones
• Leather products
• Microwave ovens
• Lithium battery components

Union Budget 2026: What will become costlier?

While numerous essential products will experience a reduction or exemption in customs duties, certain goods, particularly among luxury and imported products, will see higher costs.

Sitharaman also added that exemptions on items that are now made in India or rarely imported will be withdrawn. “To continue weeding out long continuing customs duty exemptions, I propose to remove certain exemptions on items which are being manufactured in India or where the imports are negligible,” she said. 

According to the Union Budget 2026, the government has withdrawn duty exemptions on coffee roasting, brewing and vending machines. As a result, imported coffee machines will become more expensive, whether used at cafés or at home.

Additionally, fertilisers are also likely to become costlier. The government has ended import duty exemptions on chemicals such as ammonium phosphate and ammonium nitrophosphate, which are used to make fertilisers and complex fertilisers. 

Television equipment, cameras and other filmmaking gear imported from abroad will also attract higher taxes.

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The INR 20,000 crore commitment to Carbon Capture, Utilisation and Storage (CCUS) over five years is a particularly important signal. It directly addresses the competitiveness challenge Indian industry faces under mechanisms such as the EU’s Carbon Border Adjustment Mechanism and provides a credible pathway for hard-to-abate sectors like steel and cement to remain globally competitive while decarbonising.

Equally significant is the focus on building domestic capability across the critical minerals value chain from exploration to processing. Duty exemptions on capital goods for critical mineral processing, along with support for rare-earth corridors in mineral-rich states, will strengthen urban mining and large-scale resource recovery.

For industries engaged in recovering value from end-of-life materials, this recognition of secondary resources as strategic assets is both timely and overdue.

The extension of duty exemptions for lithium-ion cell manufacturing in battery energy storage systems, and the rationalisation of excise duty on biogas-blended CNG, reflect a sophisticated understanding of how clean energy transition and circularity reinforce each other. These measures will unlock investment in recovery infrastructure and accelerate the shift from linear to circular industrial models.

By placing execution, scale, and infrastructure at the centre of its approach, this Budget positions circularity as foundational to India’s manufacturing resilience and its Viksit Bharat ambitions—giving industry the confidence to invest boldly in sustainable technologies.

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Speaking to the reporters at a post-Budget press conference, she noted the Budget is designed to create long-term benefits by linking technology, infrastructure and social welfare with growth. 

A key focus of the Budget is infrastructure spending. The government has set capital expenditure at ₹12.2 trillion in FY27, which is about 4.4 per cent of gross domestic product (GDP). Sitharaman said projects such as dedicated freight corridors, seven high-speed rail corridors and planned national waterways passing through areas rich in critical minerals will improve connectivity and also help industry and jobs.

To push regional growth, the government will develop special economic regions, with an allocation of ₹5,000 crore per city over five years. Sitharaman said that the focus will be on tier-2 and tier-3 cities so that growth is not limited to big metros. These regions are expected to boost local businesses and attract investment.

2026 Budget offers strong push to manufacturing

The Budget also gives a strong push to manufacturing and infrastructure. Support for electronics manufacturing has been doubled to ₹40,000 crore. The government also plans to set up rare earth corridors in states, including Odisha, Kerala, Andhra Pradesh and Tamil Nadu, to reduce dependence on imports.

Support for chemical parks, container manufacturing and making construction equipment used in metros and tunnels will also be provided. 

In the biopharma sector, Sitharaman said the aim is to support institutions and companies capable of serious research, sending a clear message that India is ready for its next leap in pharmaceuticals. She added that this is backed by real funding and policy support.

MSMEs ‘core driver’ of growth

Sitharaman described Micro, Small, and Medium Enterprises (MSMEs) as a core driver of a “Viksit Bharat”. The finance minister said small businesses will not face any shortage of equity support. The government plans to help MSMEs with filing returns, maintaining accounts and easier compliance, so they can focus on growth.

On the social side, Sitharaman said she was “personally moved” by the proposal to exempt 17 cancer medicines from customs duty. In addition, seven more rare diseases have been added for duty-free imports, bringing relief to patients and their families.

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Equally significant is the government’s move to accelerate asset monetisation through dedicated Real Estate Investment Trusts (REITs) for  Central Public Sector Enterprise (CPSE) owned real estate. This will unlock dormant capital, enhance liquidity in the system, and catalyse a new wave of investments across allied sectors like logistics, housing, and industrial infrastructure.

Complementing these reforms, the Budget’s thrust on industrial infrastructure through the Chemical Park and bulk drug park, Biopharma Shakti schemes enhances India’s manufacturing and innovation ecosystem. The Chemical Park and bulk drug park will create plug-and-play clusters to boost domestic chemical production and reduce imports, while the ₹10,000 crore Biopharma Shakti initiative aims to build a globally competitive biopharma ecosystem through new NIPERs, clinical trial networks, and upgraded regulatory standards.

Finally, with a proposed capital expenditure of ₹12.2 lakh crore for FY 2026-27, the Budget reaffirms infrastructure as the backbone of India’s economic momentum. These measures together create a balanced ecosystem, de-risked, capital-efficient, and geared towards sustainable, high-velocity growth. For developers like Ramky Infrastructure, this paves the way for deeper partnerships in nation-building.

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Specifically for general insurance industry, the compassionate exemption of TDS (and full tax) on Motor Accident Claims Tribunal interest awards stands out as a victim-friendly relief, ensuring faster, untaxed access to compensation for those in distress a thoughtful step toward ease of living.

A particularly positive move for investors and corporates is the revised taxation of share buybacks: proceeds are now taxed as capital gains for all shareholders, addressing past anomalies and aligning buybacks more equitably with other equity distributions. This promotes fairness for minority shareholders while curbing potential tax arbitrage—corporate promoters face an effective 22% rate, non-corporate at 30% via additional levies. Overall, it streamlines corporate capital allocation, reduces differential treatment, and could encourage more transparent shareholder returns without excessive complexity.

On the flip side, the hike in Securities Transaction Tax (STT) on futures and options—futures to 0.05% (from 0.02%) and options premium/exercise to 0.15% (from 0.1%/0.125%)—is a negative for active traders and the derivatives ecosystem. It raises transaction costs, potentially curbing speculative volumes, impacting liquidity in F&O, and contributing to immediate market pressure (e.g., Sensex/Nifty drops post-announcement). While aimed at moderating excessive derivatives activity and boosting revenue, it could dampen retail participation in a bull phase and affect broking revenues short-term.

Net-net, this is a growth-focused, simplification-heavy budget with strong welfare and infra underpinnings—balanced by prudent revenue measures. The buyback tweak is a clear win for equity market health, while the STT increase tempers enthusiasm in high-frequency trading circles. Execution and market adaptation will define its success in the coming year.”

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The ongoing fiscal discipline and general move towards tax harmonisation is welcome. Adding more heft and focus on education in a world where AI is changing the rules also makes sense. Perhaps the biggest surprise to me was the increases in Securities Transaction Tax (STT) on futures and options premium by 150% and 50% respectively.

The Government doesn’t like that 90%+ people lose money in F&O so have chosen to make it more expensive. In my view this is the wrong lever to this problem. Better to look at education and AI rather than risk collateral damage from a reduction in big volume players causing liquidity to shrink. The overall market needs this to function.

Inputs by Ankur Mittal, Co-Founder, Inflection Point Ventures 

India’s service led economy can get disrupted with strong gains in AI and hence govt focus on building India as a powerhouse of strong AI talent is a great step to retain our continued growth in the world economy. This will also increase great flow of capital to India from global tech giants to take advantage of the talent pool while also supporting the indian startup ecosystem. IPV startups like CTPL can really support the government in this initiative.

Inputs by Anil Joshi, Managing Partner, Unicorn India Ventures
‘Indian Semicon is at a very nascent stage and needs a lot of hand holding and policy support, ISM 2.0 will certainly help in mushrooming genuine Semicon use cases and will make India self reliant. Additionally ₹ 40000 CR deployment for electronic components will help resolving supply issues for development. Both the initiatives will help the industry a lot, great policy decision by FM

The launch of Bharat Vistaar will go a long way in helping the farming sector, the combination of real time data from satellite and AI application can help farmers take informed decisions in improvings farm productivity and also different mix of produce. The announcement of 4 telescope centres will be a big help to astro physics and study the celestial objects and built India’s own self reliant mechanism to study the space and development of respective projects’

Manu Iyer, General Partner and Co-founder, Bluehill.VC 

‘The launch of India Semiconductor Mission 2.0 in the Union Budget 2026-27 is a watershed moment for India’s technology and manufacturing landscape. By significantly expanding support for domestic semiconductor equipment, materials, design, and supply-chain capabilities, ISM 2.0 will accelerate India’s journey towards self-reliance in advanced chips and position the country as a globally competitive semiconductor hub.

Coupled with the strategic decision to establish dedicated rare earth corridors across mineral-rich states strengthening mining, processing, research and manufacturing of critical minerals this Budget not only deepens the foundation for high-tech growth but also enhances supply-chain resilience in sectors from electronics to defense and clean energy. Together, these initiatives will drive innovation, high-skilled employment, and India’s role in resilient global value chains’

Inputs by Hitesh Jirawla, Founder & CEO, Cubictree 

‘There has been a huge push from the Govt of India to digitise the courts in India, Now with the legal sector standing at the junction of a quantum leap. The convergence of the India AI Mission with ₹ 10,000 Cr+ and the government’s aggressive push for R&D allows us to tackle the ‘Iron Triangle of legal tech: Cost, Speed and Accuracy. Having navigated this landscape for a decade and a half, we see the government’s multiple AI Innovation Fund is not just as a fund, but as a validation that Legal AI is the new infrastructure of a developed India’

Cybersecurity : Inputs by Pankit Desai, Co founder CEO, Sequretek:
“The Union Budget 2026 made the growth of India’s digital economy as one of the core focus area of growth of the economy. With strong GDP numbers already released, the FM focused on several initiatives that can bring more capital in the country. The announcement on raising the safe harbour limit to Rs 2000 crore for IT and ITES companies will benefit the sector immensely.
For IT companies with overseas group entities, the higher ₹300 crore threshold expands access to safe harbour provisions, reducing transfer pricing litigation and tax disputes. In effect, if transactions with overseas affiliates are priced in line with prescribed arm’s-length norms, tax authorities will not challenge the pricing methodology—bringing greater certainty, lower compliance risk, and fewer legal issues.

Additionally, the tax holiday for setting up data centres in India by foreign cloud companies gives out a strong signal as the world looks at India as a major GCC centre. This will also strengthen our technological sovereignty.

The Make in India, Make for the World, has received a further impetus with the ₹10,000 crore SME Growth Fund that will empower the growth engine of our economy to adopt emerging tech, meet risk capital requirements to become globally competitive. In a nutshell, the Budget this year attempts to lay a path for India to become a global tech powerhouse across manufacturing, services and much more”.

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From a banking perspective, this improves cash-flow visibility, shortens working-capital cycles, and enables safer, receivable-backed lending rather than collateral-heavy approaches.

Also the  proposed ₹10,000 crore SME Growth Fund complements traditional bank credit by addressing the equity gap for scalable MSMEs. This is positive for banks as better-capitalised enterprises typically demonstrate stronger repayment capacity and lower credit risk, creating opportunities for long-term lending and cross-sell. Expanded credit guarantee coverage further strengthens lender confidence, particularly for micro and small enterprises, supporting both growth and priority sector objectives.

The Budget also reinforces data-led credit delivery, with integration across platforms such as GeM, GST, and TReDS, allowing banks to sharpen underwriting, pricing, and early-warning mechanisms. Overall, Budget 2026 moves MSME banking from volume-driven lending to cash-flow-based, digitally enabled, and risk-calibrated financing, while placing strong emphasis on formalisation, resilience, and sustainable growth of the MSME ecosystem.”

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However, he expressed concern that critical ground-level challenges faced by traders have not been adequately addressed. Traders play a pivotal role as drivers of employment generation, GST revenue, and supply-chain efficiency, yet continue to remain under represented in policy focus and consultations.

Highlighting GST-related issues, Sri Prakash stated that frequent notices, return mismatches, fear of penalties, and delays in input tax credit refunds are severely impacting traders’ working capital. He urged the government to introduce quarterly GST returns for small traders, ensure faster and automated refunds, and establish trader-friendly GST help desks.

He further pointed out that compliance requirements are disproportionately burdensome, with small traders facing the same regulatory load as large corporations with turnovers running into hundreds of crores. Simplified compliance norms for traders with smaller turnovers are urgently required.

Beyond GST, traders continue to bear hidden taxation burdens in the form of multiple local taxes, licenses, renewal fees, and inspections, often leading to harassment. The Federation demanded a single annual license system for traders, supported by a dedicated online platform.

Rising costs of doing business due to increased electricity tariffs, transportation and logistics expenses, and compliance costs—are shrinking margins for traders. In this context, the Federation strongly demanded a power tariff subsidy for commercial traders.

A major concern raised was the unfair competition from large e-commerce platforms, where deep discounting practices and weak enforcement of e-commerce rules are adversely impacting small and retail traders. The Federation called for strict implementation of e-commerce policies to ensure a level playing field between online and offline trade.

Sri Prakash emphasized that traders are rarely consulted before policy formulation, leading to a disconnect between policy assumptions and local market realities. He proposed the formation of National and State-level Traders’ Advisory Councils to institutionalize dialogue.

He also highlighted the neglect of urban market infrastructure, including parking, warehousing, fire safety, sanitation, and digital facilities. To improve awareness and access, he recommended a separate dedicated portal for traders covering subsidies, credit schemes, and government support programs. The Federation sought interest subsidies on loans for small traders.

Concluding, he stressed that announcements alone do not translate into outcomes. Traders are partners in economic growth, not merely taxpayers. Ease of Doing Business must reach the shop floor. The Federation demanded interest subvention on working capital loans, power tariff and municipal tax support, digital adoption incentives, insurance premium subsidies, and comprehensive market infrastructure development.“Traders are the backbone of the economy—creating jobs, sustaining supply chains, and contributing significant tax revenue.

Growth-oriented policies must be matched with ground-level implementation, fair competition, and meaningful consultation. Ease of Doing Business should be felt at the shop floor, not just reflected in policy documents.” Said, Ammanabolu Prakash, President, Telangana State Federation of Chambers of Commerce & Trade.

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