With the aim to boost domestic production, the Union Budget has made several announcements to facilitate investment, access to capital and markets and promote cost-efficiency and innovation across key sectors. Auto and auto components, fertilisers and textile as well as the transport sector stand to benefit the most from the policy measures. However, sectors such as BFSI, healthcare and pharma may not be impacted much, according to a sectoral impact analysis by CareEdge

Power and Renewable Energy

Impact: Positive

Potential amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act will likely facilitate private-sector participation in the nuclear sector. A dedicated research and development initiative for Small Modular Reactors (SMRs) will be launched with an outlay of Rs 20,000 crore. As part of this mission, at least five indigenously developed SMRs are expected to be operational by 2033. These measures are likely to boost nuclear power capacity addition.

The proposed national manufacturing and critical mineral mission will aid backward integration in the domestic manufacture of solar power plants, wind turbines and grid-scale battery solutions. Given that China controls most of the clean tech supply chain, this step helps create a secure alternate supply chain for domestic and global markets. 

The continuation of 0.5% additional borrowing limits for states undertaking discom reforms augurs well for the domestic power sector.

Fertilisers

Impact: Positive

After the addition of a sizeable capacity for urea production in the recent past, India’s import dependency on urea has significantly declined. With the announcement of a new urea plant with an annual capacity of 12.70 lakh metric tonne at Namrup, Assam, import dependency is expected to remain under check. The aggregate subsidy budget for FY26 at `1,67,900 crore (Urea subsidy of Rs 1,18,900 crore and Nutrient Based Subsidy of `49,000 crore) compared to the subsidy budget for FY25 (RE) at `1,71,310 crore could be sufficient if key input prices remain within the prevailing range.

Textiles

Impact: Positive

Allocation of `500 crore towards the ‘Mission for Cotton Productivity’ will extend science and technology support to farmers to improve the productivity and sustainability of cotton farming and promote extra-long-staple cotton varieties. This shall ensure a steady supply of quality cotton. Exemption of Basic Custom Duty (BCD) on shuttle-less looms shall encourage domestic production of technical textile products.

Higher allocation towards Remission of Duties and Taxes on Exported Products (RoDTEP) and Rebate of State & Central Taxes and Levies (RoSCTL) shall boost export-oriented sectors like textiles. Apart from incentivising fresh investment in the industry, a sizable allocation towards the production linked incentive (PLI) scheme allows timely disbursement of incentives to the players.

Auto and auto components

Impact: Positive

The measures for the auto sector are aligned with India’s push for green mobility. The full exemption of customs duty on cobalt powder, lithium-ion battery scrap, lead, zinc, and 12 other critical minerals is expected to ensure their availability for domestic manufacturing. Full exemption of customs duty on 35 capital goods/ machinery for use in the manufacturing of lithium-ion batteries is likely to boost lithium-ion battery manufacturing in India and simultaneously lower its manufacturing costs, leading to a reduction in the prices of EVs. The PLI scheme will foster the growth of the auto and auto components industry. In addition, the PM e-Bus Sewa scheme and the PM e-DRIVE schemes are anticipated to accelerate the adoption of EVs. Reduction in tax rates under the new regime is expected to enhance disposable income in urban and rural regions, thereby driving demand for two-wheelers, entry-level passenger vehicles and tractors.

Hospitality

Impact: Positive

The Budget is setting up a strong foundation for boosting tourism and hospitality in India, mainly through strategic partnerships with states and a focus on specific tourism segments. By developing the top 50 tourist destinations, the government is improving infrastructure and promoting a more diverse and rich tourist experience. The PLI will encourage states to take a proactive role in destination management, which could lead to more sustainable and well-curated tourism offerings and boost the hospitality sector.

Focusing on niche segments like spiritual and medical tourism could attract those seeking cultural and spiritual experiences and health tourism. By improving regional connectivity and port infrastructure, tourism can become more accessible, with even lesser-known destinations seeing increased footfall, supporting the hospitality sector.

Healthcare and Pharma

Impact: Neutral

The increase in Budget allocation towards health by about 12% would strengthen and improve the much-needed rural and semi-urban health infrastructure, such as the modernisation of existing hospitals, the addition of new hospitals and an increase in the strength of doctors. Higher allocation towards PMJAY would lead to the quick release of funds to hospitals to treat the patients covered under the scheme.

An increase in the budget allocation towards Production Incentive Schemes would promote domestic production of bulk drugs to reduce the reliance on imports.

BFSI

Impact: Neutral

Enhanced investment/ turnover limits for MSMEs and a double credit guarantee cover will extend MSME benefits to more enterprises and provide funds for capex/ working capital at competitive terms. Kisan Credit Cards (KCC) to facilitate short-term loans while increasing the loan limit to Rs 5 lakh would provide greater financial support for agricultural production.

NaBFID will set up a ‘Partial Credit Enhancement Facility’ for infrastructure bonds. This scheme is anticipated to overcome old PCG schemes’ challenges and give infrastructure players better access to the bond market. SWFs and pension funds provide a high quantum of patient capital required for infrastructure financing. Hence, tax benefits have been extended for them. An increase in the FDI limit in the insurance sector to 100% would attract global players and improve penetration. Long-term funding remains a key requirement for capex.

Non-Ferrous Metals

Impact: Neutral

Basic Customs Duty (BCD) on waste and scrap of non-ferrous metals (NFM) such as copper, zinc and lead has now been fully exempted (2.5-5% to nil); the move will benefit mainly import-dependent secondary/recycling players with lowering of key input cost, thereby also reducing the impact of forex fluctuations on small and mid-sized players, largely MSMEs. Owing to the reduction in key input cost, the competitiveness of the secondary NFM manufacturers is likely to improve and benefit in terms of increased production from these players, further enhancing domestic availability.

Real Estate

Impact: Positive

SWAMIH Fund 2.0 aims to boost liquidity for stalled affordable and mid-income housing projects, accelerating completion. Revised tax slabs and increased rebates are expected to drive housing demand, while tax simplifications for self-occupied properties and rentals may spur residential investment. The government’s plan to introduce a National Framework for global capability centres (GCC), aimed at guiding states in promoting GCC expansion in tier 2 cities, is expected to drive the creation of new leasing hubs and the development of commercial parks.

Focus on strengthening India’s position as global manufacturing hub is likely to augur well for Grade A warehouse leasing.

Transport Infrastructure – Roads, Air and Shipping

Impact: Positive

Capital expenditure is poised to be maintained for roads and railways while that for airports and shipping will be increased. A likely shift in projects from EPC to PPP variants in the road sector shall support project award momentum. Revamped Shipbuilding Financial Assistance (SFA) Scheme shall attract private sector investments in shipbuilding entities while inclusion in HML and establishment of maritime fund shall augment long-term funding avenues for the shipping sector at competitive rates. An increased thrust on airport infrastructure through modified Udaan 2.0 shall boost regional air connectivity. Meanwhile, urban infrastructure development too gains prominence through dedicated funds in addition to increased budgetary support towards state capex outlay.