Union Budget 2026 Highlights: Key Part-A Announcements

On 1st February 2026, the Government of India presented the Union Budget 2026 in the Parliament. The Budget was tabled by the Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman, and marked a significant step in shaping India’s economic path forward. The Union Budget 2026 India was prepared in the newly established Kartavya Bhawan and draws inspiration from three carefully articulated “kartavyas” that guide both policy and expenditure priorities, forming the core Budget 2026 highlights.

The Three Kartavyas - A Visionary Framework

The Union Budget 2026 India is built around three key tasks or “kartavyas” that reflect the government’s overarching goals:

Sustaining and Accelerating Growth: Focus on enhancing productivity, competitiveness, and resilience in a dynamic global economic environment.

Fulfilling Aspirations: Strengthening capacities of citizens so that every individual can meaningfully participate in the nation’s prosperity.

Inclusive Development: Ensuring that resources, amenities, and opportunities reach every family, region, and sector, truly embodying the ethos of Sabka Sath, Sabka Vikas under the broader Make in India budget framework.

Budget Estimates and Fiscal Strategy

Under the estimates for the forthcoming financial year as outlined in the Union Budget 2026:

• Total non-debt receipts (excluding borrowings) are placed at approximately ₹36.5 lakh crore.
  
  
• Total expenditure for the year is projected at ₹53.5 lakh crore, reflecting significant commitment toward capital investment and welfare.
  
  
• Net tax receipts are estimated at ₹28.7 lakh crore, indicating sustained tax buoyancy.
  
  
• The fiscal deficit for 2026-27 is targeted at 4.3% of GDP, signaling a focus on fiscal consolidation.
  
  
• The debt-to-GDP ratio is projected to moderate to 55.6% compared to the previous year’s level.

These figures underline a balanced approach, blending development expenditure with prudent fiscal management, with the Capital expenditure budget 2026 positioned as a key driver of economic growth.

First Kartavya: Accelerating Growth Through Strategic Interventions

Under the first kartavya accelerating and sustaining growth the Budget 2026 highlights detail six major interventions aligned with the Manufacturing sector budget 2026:

1. Scaling Up Manufacturing

• Biopharma SHAKTI: A flagship initiative with a dedicated outlay of ₹10,000 crore over the next five years to establish India as a global biopharmaceutical manufacturing hub under the Make in India budget.
  
  
• Establishment of three new NIPERs (National Institutes of Pharmaceutical Education and Research) along with upgrades to existing institutions.
  
  
• Creation of over 1,000 accredited clinical trial sites to support domestic research and global clinical programs.

2. India Semiconductor Mission 2.0

The Government will launch ISM 2.0 to develop a comprehensive semiconductor ecosystem covering materials, equipment, design capabilities, and workforce skills, reinforcing the Manufacturing sector budget 2026.

3. Electronics Components Manufacturing Boost

The outlay for electronics component production has been increased to ₹40,000 crore, providing strong support to domestic value chains and reinforcing the objectives of the Make in India budget.

4. Rare Earth Mineral Corridors

Dedicated mineral corridors will be developed across Odisha, Kerala, Andhra Pradesh, and Tamil Nadu to strengthen critical mineral supply chains and reduce import dependence.

5. Chemical Park Development

Support will be extended to States for setting up three chemical parks through challenge-mode funding, promoting industrial clustering.

6. Capital Goods Manufacturing Enhancement

Focused initiatives will strengthen machinery, tool rooms, and infrastructure equipment manufacturing, supporting long-term industrial growth under the Manufacturing sector budget 2026.

Additionally, a Scheme for Container Manufacturing with over ₹10,000 crore in support has been announced to expand India’s logistics manufacturing capacity.

Integrated Initiatives and Sectoral Focus

The Union Budget 2026 India also announces integrated sectoral initiatives:

• National Fibre Scheme to support the textile sector across natural and man-made fibres.
  
  
• Textile Expansion and Employment Scheme for modernising clusters and improving certifications.
  
  
• Establishment of Mega Textile Parks to drive scale and employment.

Legacy industrial clusters will be revitalised, while a ₹10,000 crore SME Growth Fund strengthens the MSME budget 2026, enabling easier access to growth capital for small and medium enterprises.

Infrastructure Push and Regional Development

A strong Infrastructure budget India focus is evident through:

• Public capital expenditure enhanced to ₹12.2 lakh crore, supported by an Infrastructure Risk Guarantee Fund to crowd-in private investments.
  
  
• Expansion of Dedicated Freight Corridors, including the Dankuni-Surat route.
  
  
• Operationalisation of 20 new National Waterways over five years and a Coastal Cargo Promotion Scheme.
  
  
• Development of seven High-Speed Rail corridors connecting major economic hubs.

These measures reinforce the scale and intent of the Capital expenditure budget 2026.

Energy Security and Urban Economic Development

To support sustainable growth:

• A ₹20,000 crore CCUS fund will accelerate adoption of carbon capture technologies.
  
  
• ₹5,000 crore over five years is allocated for City Economic Regions, promoting urban economic clusters under performance-based incentives.

Tax System Reforms and the New Income Tax Act 2026

A major reform announced in the Union Budget 2026 is the introduction of the New Income Tax Act 2026, aimed at simplifying tax laws, improving clarity, and reducing litigation.

While Income Tax slabs FY 2026-27 remain broadly unchanged, the new legislation is expected to modernise India’s tax administration and compliance ecosystem.

Trade, MSMEs, and Customs Reforms

Aligned with the MSME budget 2026 and export growth objectives:

• Export-related exemptions for India’s Exclusive Economic Zone are extended.
  
  
• Removal of value caps on low-value courier exports supports MSME participation in global trade.
  
  
• Select Customs duty changes 2026 are introduced to improve trade facilitation and reduce input costs.

Capital Markets and Corporate Tax Measures

The Union Budget 2026 India introduces notable capital market measures:

• STT increase on derivatives to rationalise taxation across equity and derivative instruments.
  
  
• Reforms enabling MAT rate reduction through improved MAT credit utilisation in line with the evolving tax regime.

Manufacturing and Make in India Alignment

The Manufacturing sector budget 2026 reinforces India’s long-term industrial vision through:

• Expansion of high-tech tool rooms.
  
  
• Support for construction and infrastructure equipment manufacturing.
  
  
• Integration of sports goods, technical textiles, and specialised manufacturing segments.

These initiatives are closely aligned with the broader Make in India budget, aimed at strengthening domestic capabilities and global competitiveness.

Conclusion

The Union Budget 2026 Part-A lays out a clear roadmap focused on industrial growth, infrastructure expansion, MSME empowerment, and structural tax reforms. With a strong push through the Capital expenditure budget 2026, enhanced Infrastructure budget India, and targeted manufacturing initiatives, the Budget balances fiscal discipline with long-term economic transformation.