Union Budget 2026 Expectations Live Updates: The Annual Union Budget is nearing and is set to be tabled on February 1 by the Finance Minster Nirmala Sitharaman. Indian markets — the NSE and BSE — will also remain open on Sunday as the Union Budget is presented.
As the common man awaits announcements on tax relief, market participants are hoping for an easing of capital market taxation, including a higher exemption limit on long-term capital gains.
Budget expectations this year
In its budget wishlist, JM Financial Services recommended that the government should raise the tax-free exemption limit for equity LTCG from Rs 1.25 lakh to Rs 2 lakh.
ICRA expects the Centre to cap the fiscal deficit at 4.3% of GDP in FY27, marginally lower than the 4.4% budgeted for FY26. This would be the lowest fiscal deficit ratio since FY19.
The focus will be on-
- Further tax relief announcements
- A range-bound budget increase for Railways is likely, according to ICRA
- Announcements for the textile and other sectors hit by US tariffs
- An announcement to increase the Budget allocation for the defence sector
- Balancing fiscal consolidation with growth support
Budget Expectations 2026 LIVE Updates: Focus on infra, rural housing to drive 6–7% cement demand growth: ICRA
“The likely sustained focus on infrastructure development, rural economy, and affordable housing in the upcoming Union Budget FY2027 is expected to augur well for the cement sector and ICRA projects 6–7% cement demand growth in FY2027. Currently, rural housing and infrastructure together account for 50–55% of cement consumption, underscoring their importance to the sector. Increased Government allocations towards roads, railways, metro projects, and urban infrastructure should translate into healthy volume visibility for cement manufacturers. While the full impact of GST rate rationalisation remains to be seen, sustained infrastructure spending and policy stability are expected to provide earnings visibility for cement companies.” Maitri Vira, Assistant Vice President & Sector Head of ICRA said.
Budget Expectations 2026 LIVE Updates: Budget should prioritise data-driven water management
"The Union Budget presents a unique opportunity to shift from reactive spending on water shortages to proactive investment in monitoring, analytics and smart infrastructure. By investing in data-driven water management solutions, we can detect leaks before they become crises, optimise usage in cities and industries and safeguard livelihoods dependent on water security." Gokul Krishna Govindu, Co-Founder, SmartTerra said stressing the need of real-time data and measurement. He highlighted that about 600 million Indians currently face high to extreme water stress, affecting households, farms and industries alike.
Budget Expectations 2026 LIVE Updates: Focus shpuld be on sustainability as next phase of Make in India
"Over the last few years, the government has established a robust foundation for India’s manufacturing growth through infrastructure investments, support for MSMEs, and a sustained push for domestic production, including in Tier II and Tier III regions." Bharat Gite, MD & CEO of Taural India said.
"As we move into the next phase of Make in India, the focus must expand from building capacity to building global competitiveness. With carbon-border mechanisms such as the EU’s CBAM coming into effect, sustainability is becoming a critical condition for market access. For strategic materials like aluminium, central to sectors such as energy, defence, and healthcare, incentivising the production and adoption of green aluminium, alongside low-carbon, traceable, and high-quality manufacturing, will increasingly define India’s position in global supply chains," he noted.
"We are hopeful that the Union Budget 2026–27 will accelerate this transition by supporting clean energy, sustainable mining, carbon-intelligent production, and wider MSME participation enabling India to scale sustainable manufacturing, strengthen export competitiveness, and emerge as a trusted global industrial partner," he added.
Budget Expectations 2026 LIVE Updates: Industry seeks support for D2C beauty brands to help scale indigenous players
"For beauty brands, rationalisation of GST and easing import duties on specialised ingredients and packaging will be critical to reduce margin pressures and encourage innovation. At the same time, targeted support for direct-to-consumer (D2C) players can help scale indigenous brands build stronger footprints nationally and internationally." Astha Katpitia, Head of Shankara Naturals India said.
"A forward-looking Budget can catalyse this transformation, ensuring the sector contributes meaningfully to both economic growth and consumer health." she added.
Budget Expectations 2026 LIVE Updates: Electronics industry duty relief on crititical components
Arjun Bajaj, Director of Videotex, says that while earlier GST rationalisation provided some relief, persistent challenges such as limited display fab availability, volatility in memory prices, rupee depreciation and ongoing semiconductor supply constraints have diluted its impact.
“Although the government has taken important steps to build a domestic ecosystem for critical components, semiconductors, and display fabs, a stronger and more coordinated ecosystem push is needed to truly encourage domestic manufacturing.” he added.
Bajaj adds that in the interim, the industry hopes this Budget considers temporary duty relief and targeted support for critical components to improve supply stability, cost competitiveness, and support the long-term growth of India’s TV manufacturing industry.
“Additionally, export-focused measures such as duty drawbacks, logistics support, and rationalised trade barriers will be critical to enhance competitiveness, enable scale beyond the domestic market, and strengthen India’s position in global electronics and television exports." he elaborates.
Budget Expectations 2026 LIVE Updates: Renewable Energy sector expects policy support
Yogesh Kudale, Co-Founder & CEO, TAYPRO, said the Union Budget for 2026 is expected to be a game-changer for the clean energy sector, given the government’s previous priorities of enhancing domestic renewable energy capacity.
“From schemes that strengthen renewable technology companies and empower them to scale to supporting technological developments such as high-tech automation, robotics and patented binary solutions, we also expect the government policies to be clear and simplified, as well as the introduction of a fast-track approval mechanism and an aligned funding framework,” Kudale said.
He added that preference to the areas of sustainable technology, local production and industry-specific acceleration on the budgetary side will certainly play a major role in the process of innovation-driven growth and opening of markets.
Budget Expectations 2026 LIVE Updates: NBFCs seek smoother funding, easier refinancing and parity under SARFAESI
Umesh Revankar, Executive Vice Chairman of Shriram Finance expects continued support for India’s growth priorities with a strong focus on implementation.
"With large infrastructure projects already identified, timely execution, smoother coordination, and reduced approval friction will be key to ensuring that spending translates into durable assets that improve productivity, particularly in logistics and connectivity," he said.
"From an NBFC ecosystem perspective, industry discussions have centered on incremental enabling measures rather than headline announcements—such as improving operational efficiency in funding flows, making refinancing channels more accessible, and providing a level playing field in the use of SARFAESI—while staying aligned with responsible lending and strong underwriting practices," he noted
"MSME credit typically strengthens when infrastructure momentum and funding stability for lenders improve together, especially in semi-urban and rural clusters. Given the importance of exports for MSMEs to diversify and scale, targeted budgetary support can play a meaningful role in strengthening the sector while maintaining a prudent, customer-centric approach to lending,” he added further.
Budget Expectations 2026 LIVE Updates: Why Budget 2026 may finally rethink STT
As retail investing becomes mainstream, Budget 2026 is expected to revisit Securities Transaction Tax (STT), which continues to inflate trading costs despite the return of long-term capital gains tax in 2018. Investors today pay STT even on loss-making trades, and it cannot be deducted while computing capital gains.
Market participants are pushing for STT to be reduced or scrapped for delivery-based trades, or at least allowed as a deductible expense. Another option under discussion is lowering equity capital gains tax rates back to 10% and 15%, especially for small investors.
Read More: Long-term capital gains in focus: What Indian investors expect from Budget 2026
With a more protectionist US stance reshaping trade flows, Budget 2026 is expected to expand the Rs 25,060-crore Export Promotion Mission. Measures under consideration include interest subvention on rupee export credit, government-backed collateral guarantees covering up to 85% of loans for small exporters, and funding for BharatTradeNet to cut logistics and compliance costs.
Labour-intensive sectors such as textiles, leather and toys may also get targeted support to cushion potential tariff hikes and protect MSME-linked export jobs.
Read More: ‘Trump-proofing’ India: How Budget 2026 plans to tackle US tariffs & trade wars
Budget Expectations 2026 LIVE Updates: Budget 2026 to bankroll defence tech shift
As India doubles down on defence indigenisation, Budget 2026-27 is expected to allocate initial capital for the HAL–GE fighter jet engine facility under the F414 technology transfer pact, which targets 80% localisation.
It is also likely to fund early delivery tranches of the Rs 32,000-crore MQ-9B Predator drone deal and a domestic MRO hub to support US-origin hardware. A carve-out from the Rs 1-lakh-crore R&D fund is also expected to back MSMEs working on AI-led warfare systems and autonomous platforms.
Read More: ‘Trump-proofing’ India: How Budget 2026 plans to tackle US tariffs & trade wars
Budget Expectations 2026 LIVE Updates: 'Unlikely to arrest earnings downgrades despite growth support,' says Nuvama
From a market perspective, Nuvama expects the FY27 Budget to be marginally growth supportive, but not strong enough to reverse the ongoing earnings downgrade cycle.
"FY27 budget is likely to be somewhat growth supportive– a welcome change. However, the recovery is still likely to be modest and unlikely to stall the earnings downgrade cycle. We maintain that for FY27, margin mean reversion rather than top line remains key risk to earnings," Nuvama noted.
Budget Expectations 2026 LIVE Updates: Capex and development spend to pick up
Nuvama projects total government spending to grow 10% YoY in FY27, led by a rebound in capital expenditure and development-oriented outlays.
Central government capex may rise ~13% YoY to about Rs 12 trillion, while development spending could grow 15% YoY, up from 7% in FY26. Analysts say PSUs must also step up investments, as PSU capex-to-GDP has halved since pre-COVID levels, as per the report.
Budget Expectations 2026 LIVE Updates: Fiscal drag likely to end in FY27
India’s fiscal consolidation may pause in FY27, with the government expected to retain the fiscal deficit target at 4.4% of GDP, the same as FY26, as per Nuvama. This could mark the end of five years of fiscal drag, turning the fiscal impulse neutral.
The Nuvama report further added that the removal of the GST compensation cess may add ~0.2% of GDP support to the economy. However, a big stimulus is unlikely as the government stays committed to debt reduction and deleveraging, the report added.
Motilal Oswal expects defence capital outlay to rise by around 15% in FY27 as the government looks to build domestic capabilities, support start-ups and strengthen strategic self-reliance.
Overall, the total expenditure is projected to grow by about 7% year-on-year in FY27.
Capex on the other hand, is projected to rise 10.3% year-on-year(YoY,) to Rs 12.4 trillion, or about 3.1% of GDP.
Borrowing requirements, according to Motilal Oswal, are expected to remain heavy.
Read more: Budget 2026: Motilal Oswal sees 15% hike in defence spend and RBI dividend windfall
Budget Expectations 2026 LIVE Updates: Rail safety spending set to rise
The upcoming Union Budget is likely to raise allocation for the Kavach automatic train protection system by about 25% in FY27, signalling a sharper focus on rail safety, sources told Financial Express.
The push comes as the railways prepare an 18,000-km tender for Kavach 4.0, requiring sustained investment. Funding for LHB coaches, advanced signalling and Namo Bharat Rapid Rail is also expected to increase, even as overall rail capex may remain flat.
Read More: Budget 2026: Railways to allocate higher funds for advanced coaches, safety systems
Budget Expectations 2026 Live Updates: HSBC expects push on deregulation, capex diversification and trade reforms
HSBC said it expects the government to focus on two pillars during such time – restraint and reforms. "On the domestic front, we expect the state and centre deregulation drive to continue, manufacturing incentives for small firms, capex diversification to favour capex loans to states, and some rationalisation in subsidy and centrally sponsored schemes. On the external front, we expect a significant exercise to rationalise customs duties, continued withdrawals of non-tariff barriers, and more openness to FDI across sectors."
Nuvama expects defence capex to grow by around 8% year-on-year(YoY), with increased allocations towards R&D, UAVs and drones, anti-drone systems and allied technologies.
"The incremental budget will be sought in the backdrop of Operation Sindoor as well as some key large programmes in pipeline-such as QRSAM, P-75I and Pinaka—are likely to materialise, skewed towards Air Force and Navy," Nuvama noted
Nuvama also said, “Likely hike in the FY27 defence budget would be structurally positive for the sector, accelerating the transition towards execution-led earnings.”
For FY27, HSBC forecasts a further consolidation, with the fiscal deficit narrowing to 4.2% of GDP. The brokerage forecasts nominal GDP growth of around 10% in FY27, supported by a recovery in inflation and steady real growth.
“With some pruning of expenses, we forecast a fiscal deficit of 4.2% of GDP in FY27, on path to meeting the central government’s FY31 public debt target,” a report by HSBC said.
Budget Expectations 2026 Live Updates: EVM India’s pre-Budget pitch to govt
“Over the past few years, the government’s consistent policy push has helped India’s electronics manufacturing ecosystem come of age. At a time when global storage and memory prices are under pressure, a continued focus in the upcoming Budget on local value addition, strengthening testing capabilities and promoting quality-led manufacturing can go a long way in reinforcing India’s position as a dependable and competitive base for consumer electronics,” said Aatish Hundia, Director, EVM India, a Made-in-India consumer electronics brand focused on value-for-money products.
Budget Expectations 2026 Live Updates: Luxury housing sector calls for stamp duty cuts, capital gains reform
Ahead of the Union Budget 2026-27, luxury real estate developers have urged the government to sharpen its focus on taxation reforms, access to capital and regulatory clarity to sustain momentum in the premium housing segment.
Manish Agarwal, Managing Director of Satya Group and President of CREDAI Haryana, said luxury homebuyers are entering 2026 with more evolved expectations, seeking curated, investment-grade living experiences rather than just high-end homes.
Agarwal said the upcoming Budget should prioritise rationalising stamp duty, enhancing tax benefits on home loan interest and improving access to low-cost financing to boost end-user demand and investor confidence. He also called for revisiting the Rs 10 crore cap on capital gains reinvestment under Sections 54 and 54F, resolving TDS-related hurdles faced by NRI buyers, and enabling fractional ownership in marquee assets.
According to him, these measures would unlock high-value transactions, accelerate ultra-premium project execution and reinforce India’s position as one of the world’s fastest-growing luxury housing markets.
Budget Expectations 2026 Live Updates: 'Policy has moved from intent to execution,’ says Jaquar Group
As preparations gather pace for the Union Budget 2026-27, industry leaders are calling for continuity in manufacturing-focused reforms to sustain India’s industrial momentum. Rajesh Mehra, Director and Promoter of Jaquar Group, said the past year had marked a turning point for the sector, with policy intent translating into execution on the ground.
Mehra noted that the shift from the National Manufacturing Policy to the National Manufacturing Mission in FY 2025-26 had reinforced manufacturing as a central driver of economic growth. “This policy momentum strengthened the core foundations of the Make in India initiative, resulting in expanding production hubs across India,” he added.
Looking ahead to the upcoming Budget, Mehra said manufacturing would remain pivotal to India’s next growth phase, with the sector projected to contribute nearly 25% of GDP by 2027. “With manufacturing expected to reach the $1-trillion milestone, sustained focus on reforms such as Production-Linked Incentive schemes and Make in India will be critical to deepen domestic value addition, catalyse investments, and generate high-quality employment. We see the upcoming budget as an opportunity to strengthen innovation-led and sustainable manufacturing as defining pillars of India’s globally competitive growth story,” Mehra further said.
Budget Expectations 2026 Live Updates: Expectations from Pharmaceutical sector
Satish Reddy, Chairman of Dr. Reddy’s Laboratories, said the upcoming budget is expected to prioritise strengthening innovation and R&D in India’s pharmaceutical sector. He noted that deeper investment in research would help expand patient access by enabling the development of complex, high-value therapies.
He also highlighted the importance of creating a supportive ecosystem that ensures sustained financing for pharmaceutical innovation. According to Reddy, regulatory reforms, especially those aimed at encouraging greater participation from start-ups, would be a crucial step in reinforcing India’s life sciences innovation landscape.
Beyond rate cuts, individuals are pressing for easier compliance, quicker refunds and a uniform capital gains framework across assets. Higher deductions for housing, healthcare and senior citizens, along with clarity on digital asset taxation, top the wishlist ahead of one of India’s biggest tax overhauls in decades.
Read More: Budget 2026-27: 5 big income tax changes taxpayers are eagerly waiting for
Budget Expectations 2026 Live Updates: Old tax regime users seek parity after big new-regime relief
After last year’s Budget raised tax-free income to Rs 12 lakh under the new regime, salaried taxpayers sticking to the old system are seeking higher exemption limits and bigger deductions under Sections 80C and 80D. Many continue to prefer the old regime for home loan, EPF and insurance benefits.
Read More: Budget 2026-27: 5 big income tax changes taxpayers are eagerly waiting for
Budget Expectations 2026 Live Updates: Philips Indian says budget healthcare sector should focus on AI innovation
According to Dev Tripathy, Head of Finance, Philips Indian Subcontinent, the upcoming budget should focus on AI led innovation in the healthcare sector.
“To establish India as a medical device export hub, we need a sustainable ecosystem for MedTech manufacturing. New PLI schemes should encourage holistic development, ensuring comprehensive growth across the industry,” Tripathy added.
Overall the healthcare industry highlighted the need for focused spending on R&D in the sector and also establishing India as a medical devices hub.
Budget Expectations 2026 Live Updates: Middle class eyes relief as new Income Tax law nears rollout
With the new Income Tax Act set to take effect from April 2026, taxpayers are hoping Budget 2026 will bridge the transition with higher exemptions, faster refunds and simpler compliance.
Expectations centre on parity between the old and new regimes and clarity on how the revamped law will reshape filing and assessments.
Read More: Budget 2026-27: 5 big income tax changes taxpayers are eagerly waiting for
Budget Expectations 2026 LIVE Updates: Poly Medicure flags GST imbalance and high ITC
Himanshu Baid, Managing Director, Poly Medicure, highlighted that manay finished devices attract a 5% duty under the current GST regime. Also most inputs and input services attract an 18% duty, which leads to the accumulation of large input tax credits and high working-capital pressures for manufacturers.
“Addressing this imbalance is essential. Aligning the job-work GST rate for medical devices with the concessional 5% applied in the pharmaceutical sector and revising the refund formula to include ITC on input services and capital goods would offer immediate relief and bring greater parity across the healthcare manufacturing ecosystem,” Baid said in a note.
Budget Expectations 2026 LIVE Updates: Nasscom flags cloud tax, ESOP hurdles in Budget wishlist
India’s IT industry body Nasscom has urged the government to prioritise tax certainty for the digital economy in the Union Budget, warning that ambiguity around cloud infrastructure, cross-border digital taxation and employee stock options is beginning to affect investment decisions.
It sought clarity on whether foreign cloud providers using Indian data centres risk creating a taxable presence, and on profit attribution rules under the Significant Economic Presence framework. Nasscom also asked for wider ESOP tax relief for start-ups, deduction clarity for employers, and a lower TDS rate on software royalty payments, alongside faster dispute resolution and refunds to ease compliance pressures on the technology sector.
Budget Expectations 2026 LIVE Updates: Raninbow Children recommends focusing on paediatrics in healthcare
Dr Ramesh Kancharla, Founding Chairman of Rainbow Children’s Medicare, has said that the forthcoming budget needs to focus on expanding the child welfare budget.
He said that with the country’s large paediatric population, the country's long term goal of child-focused expenditure should be set towards 5% of GDP, with a significant portion of that towards child healthcare.
Kancharla has suggested that increasing the number of postgraduate training positions in paediatrics, along with tax deductions for essential check-ups, and expanding the network of dedicated paediatric hospitals will help improve the overall sector.
Budget Expectations 2026 LIVE Updates: Morgan Stanley sees lower deficit, Consumption-led growth
As India heads into Union Budget 2026, Morgan Stanley expects a steady fiscal consolidation with a fiscal deficit target of 4.2% for FY27, down from 4.4% in FY26.
The investment bank forecasts average GDP growth of 6.5%, driven largely by domestic consumption amid global uncertainty. Improved tax buoyancy, targeted spending on jobs and social infrastructure, and controlled inflation near the RBI’s 4% target are seen supporting the recovery. While capex is expected to pick up with demand, external risks remain a watch point.
Read more: Morgan Stanley sees FY27 fiscal deficit target at 4.2%, consumption push and stable inflation