Infrastructure development is central to India’s economic growth. In the previous Budget 2025, the finance minister announced several measures to improve infrastructure across the country in sectors such as railways, roads and highways, education, among others. However, analysts and industry experts say challenges remain, and continued support is required to sustain the infrastructure push. From aviation to railways, here are the key expectations of industry leaders from Budget 2026.
Current Scenario and challenges: PPP model evolves, but BoT projects struggle
India has made significant progress over the past decades and refined its public-private partnership (PPP) models. However, the scale of needs — given the size of the economy, population and growth momentum — means infrastructure development must continue and expand rapidly.
Deloitte in its report noted that challenges remain in sectors such as railways and water, where projects on a build-operate-transfer (BoT) basis have seen slow traction.
Asset monetisation has been a key focus for the government, but most activity has been in roads, highways and coal. Railways, power distribution and other sectors are yet to fully realise their monetisation potential.
Infrastructure gap is visible in new areas such as digital — including data centres, fibre networks and towers — are emerging as priority segments. India generates over 15% of global data but has less than 5% of global data centre capacity.
Along with expansion, quality maintenance and environmental sustainability remain key challenges as the country works towards its net-zero goal.
Industry experts recommend: Tax clarity on contingent payments
Deloitte said that a clear tax rules on contingent payments is important.Investors often agree to pay extra money later if the business performs well. Currently, it’s unclear when this extra money should be taxed. Experts expect Budget 2026 to specify that contingent consideration should be taxed as capital gains only when it is received, not when the underlying transaction occurs.
This, they say, would improve tax certainty for both promoters and investors.
Industry experts recommend: Rationalisation of tax
Experts also recommend Budget 2026 to focus on improving the tax and regulatory framework for investment vehicles such as sovereign wealth funds (SWFs), pension funds and Infrastructure Investment Trusts (InvITs).
Deloitte recommend to
- Extend tax exemptions on investment income for holding companies set up before April 1, 2021.
- Provide relief under indirect transfer provisions for notified SWFs/PFs.
- Broaden capital gains exemptions for assets migrating into InvIT structures.
- Introduce safeguards on loss carry-forward provisions when SPVs move into InvITs.
- Create a clear tax and regulatory framework for mergers of InvITs to improve scale and liquidity.
Experts also asks relaxation in the GST levy on corporate guarantees, which currently imposes an 18% tax on 1% per annum of the guarantee amount. They say lowering this burden or taxing only the utilised amount can reduce project costs and drive faster infrastructure financing.
Industry experts predict: Railways capex to rise modestly
ICRA expects the Railways’ budget allocation for FY2026–27 to rise only modestly, in line with the trend of the past two years, with a focus on infrastructure modernisation.
“With electrification nearly complete, the focus will remain on decongestion through capacity augmentation—new routes, gauge conversion, track doubling, and dedicated freight corridors. Infrastructure modernisation, including rolling stock upgrades and station redevelopment, alongside safety enhancements, will remain critical. Within capacity expansion, economic corridors (e.g. ports and mineral logistics), coupled with the accelerated deployment of Kavach 4.0 and advanced signalling across the network, are expected to dominate both budgetary priorities and execution strategies,” said Suprio Banerjee, Vice President & Co-Group Head, ICRA.
Industry experts predict: New airports, bigger capacities
For the aviation sector’s infrastructure, ICRA said the focus will likely be on setting up new airports and expanding existing airport capacities at some key locations to address the current infrastructure constraints faced by airlines and improve connectivity to underserved and unserved destinations to boost tourism.
Kotak expects capex growth at 9% with focus on defence and Railway
Conclusion
As the union budgt 2026 is expected to be focused towards capital expenditure, infrastructure remain the critical area across sector that analyst believes require attention. While allocations matter, the focus is also shifting to improving policy clarity, enhancing private participation, supporting new-age infrastructure and making tax and regulatory frameworks more investment-friendly.