The countdown to Budget 2026 has started. Steps that the government may take in terms of continuing the consumption boost and the demand revival cycle is something that the street is watching out for, no doubt, but that’s not all. Govt incentives and measures that are likely to be announced for specifics sectors like defence, clean energy, technology are also in focus.
In Budget 2025, defence received the highest allocation at Rs 4,91,732 crore, while IT and telecom were allocated Rs 81,174 crore and energy received Rs 65,553 crore. In her Budget 2025 speech, Finance Minister Nirmala Sitharaman said that power, mining and the financial sector were among the six domains that would augment India’s growth potential and global competitiveness. Key consultancy firm, Deloitte has outlined a series of expectations that they believe could improve tax efficiency, ease compliance burdens and unlocking private investment, particularly in capital-intensive and infrastructure-heavy sectors.
Budget expectations for Renewable sector: Group tax consolidation in renewable energy
Deloitte has recommended the introduction of a group tax consolidation regime for renewable energy companies. Under the proposal, a group comprising wholly owned or majority-owned subsidiaries, including trusts and collaborative structures, would be allowed to be treated as a single tax entity.
This would enable consolidated tax filing, allow losses to be offset across group companies, and exclude intra-group transactions for tax computation. Deloitte said the move would help reduce the group’s effective tax rate, eliminate double taxation, improve utilisation of tax losses and depreciation, and significantly lower compliance and administrative costs.
The advisory firm noted that renewable energy projects are typically structured through multiple special purpose vehicles (SPVs), which often leads to tax inefficiencies and cash flow challenges. A consolidation framework would streamline tax administration, improve capital allocation, and align India’s tax regime with OECD best practices.
Budget expectations for nuclear start-ups: Direct tax incentives sought
The nuclear energy sector is also in focus, given India’s push for clean energy and energy self sufficiency. Deloitte has also called for targeted direct tax incentives for nuclear start-ups and manufacturers, citing the sector’s high capital intensity and long gestation periods.
The recommendations include accelerated depreciation, R&D tax credits, and easier access to Section 80-IAC benefits for DPIIT-recognised nuclear start-ups through a dedicated approval mechanism. According to Deloitte, these measures would improve project viability, encourage private investment, and support indigenous development of advanced nuclear technologies.
The firm said extending fiscal support to nuclear energy would bring it on par with other strategic sectors such as renewables and defence, while strengthening India’s clean and reliable energy mix.
In Budget 2025, the FM said development of at least 100 GW of nuclear energy by 2047 is essential for India’s energy transition efforts. For an active partnership with the private sector towards this goal, amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act will be taken up.
A Nuclear Energy Mission for research and development of Small Modular Reactors (SMRs), with an outlay of approximately Rs 20,000 crore, will be set up. At least five indigenously developed SMRs will be operationalised by 2033.
Budget expectation: Tax and GST relief for battery energy storage systems (BESS)
To support grid-scale energy storage, Deloitte has proposed extending Section 35AD benefits to Battery Energy Storage Systems (BESS), allowing full deduction of capital expenditure incurred in setting up such projects.
It has also recommended amending Section 79 to protect the carry-forward of losses in cases of shareholding changes, transfers to Infrastructure Investment Trusts (InvITs), or refinancing-related restructuring. This, Deloitte said, would provide tax certainty and encourage reinvestment in infrastructure assets.
On the GST front, while lithium-ion batteries used in BESS projects are taxed at 18% under GST 2.0, Deloitte has sought a further reduction to 5% for grid-scale BESS projects to improve overall project viability. Lower GST, it said, would reduce working capital blockage, simplify compliance, and speed up deployment of energy storage infrastructure.
Budget expectation: Tech sector in focus
In the previous Budget of 2025–2026, availability of technology was one of the focus areas of the government to boost ‘Make in India’.
The budget allocated Rs 20,000 crore for private sector-driven research and development, aimed at encouraging industry-led innovation, deep technology development, and global-scale product creation.
To strengthen India’s deep tech ecosystem, the government also announced a Deep Tech Fund of Funds to support startups working in frontier areas such as artificial intelligence, semiconductors, robotics, and emerging digital technologies.
Artificial intelligence also received focused attention with the announcement of a Centre of Excellence in AI for education, backed by an outlay of Rs 500 crore.
Support for the tech startup ecosystem was further strengthened through the Rs 10,000 crore Fund of Funds for Startups, along with enhanced credit guarantee mechanisms.
Budget expectation: Power sector incentives likely?
For the power sector, the government incentivised electricity distribution reforms and augmentation of intra-state transmission capacity by states aiming to improve the financial health and capacity of electricity companies. Additional borrowing of 0.5% of GSDP was also allowed to states, contingent on these reforms. The big question is if there would be additional sops announced in the February Budget.
Budget Expectations: Outlook for critical minerals
The critical minerals is another key focus area fahead of the Budget. The exectations is would the Government follow-up on sops given the supply side bottlenecks seen earlier this year after China put an export curb. In the 2025 Budget, the FM had proposed to fully exempt cobalt powder and waste, scrap of lithium-ion batteries, lead, zinc, and 12 more critical minerals. This was aimed at securing their availability for manufacturing in India and promoting more jobs for youth.
In the July 2024 Budget, BCD was removed on 25 critical minerals that are not domestically available, and on two other such minerals, to provide a major fillip to their processing, especially by MSMEs.
All in all, corporate India is watching out for key incentives that could help further boost the consumption story and also offer impetus to the ‘Make In India’ push.