India Budget 2026 Top Highlights: Here's what FM Sitharaman Announced

On February 1, 2026, Finance Minister Nirmala Sitharaman presented the Union Budget 2026–27 in Parliament. The Budget continues India’s journey towards Viksit Bharat by 2047, with strong focus on fiscal discipline, infrastructure-led growth, job creation and revival of manufacturing, even as global economic uncertainties persist.

The total size of the Union Budget for 2026 to 27 is Rs 53.5 lakh crore, reflecting the government’s spending priorities for the year.
In this blog, we will break down the key highlights of Union Budget 2026–27.

Macroeconomic Framework and Fiscal Roadmap

Budget maintains focus on fiscal consolidation while boosting investments.

• Fiscal Deficit: Projected at 4.3% of GDP for FY 2026-27 which is down from 4.4% in FY 2025-26 (Revised Estimates). This reflects continued commitment to reducing the deficit.
• Debt to GDP Ratio: Estimated at 55.6% for FY 2026 to 27 which is slightly improved from 56.1% in the previous year's revised estimates.

Sources: NDTV

Tax and Revenue Measures

The budget avoids sweeping changes to personal income tax slabs but introduces targeted reforms for competitiveness & compliance.

• No major changes were announced in the new income tax slabs, continuing relief for middle-class taxpayers. However, revised ITR filing timelines have been introduced, July 31 for ITR-1 and ITR-2 and August 31 for non-audit businesses and trusts.
• Tax Holiday for Data Centres: Foreign companies setting up data centres in India for global cloud services get a tax holiday until 2047, a big boost for digital infrastructure and IT exports.
• Customs and Indirect Taxes: Import duties on personal-use medicines, life-saving drugs and certain critical minerals have been reduced from 20% to 10% to support affordable healthcare.
• STT  Hiked on Futures & Options: STT has been increased across derivatives on futures (0.05% from the current 0.02%), options (0.15% from the current 0.10%) and option exercise (0.15% from the current  0.125%).
• Taxation on Share Buybacks: Buybacks will now be taxed as capital gains for all shareholders. To prevent tax misuse, promoters will pay an additional buyback tax, raising the effective tax to 22% for corporate promoters and 30% for non-corporate promoters.
• Higher Investment Limits for Persons of Indian Origin (PIO): Finance Ministry has raised investment limits while doubling the individual PIO shareholding cap in listed companies from 5% to 10% and increasing the combined ownership limit for all PIOs (PROIs) from 10% to 24%, alongside opening a direct equity investment route for overseas individuals through Portfolio Investment Scheme (PIS).
• Rationalized TDS/TCS Rates: TCS on overseas education and medical treatment has been reduced from 5% to 2%, while TCS on overseas tour packages has been cut to a flat 2% with no threshold.

These steps aim to attract investment, ease compliance and protect domestic industries.

Sources: Times of India

Defence Sector:

• Total Allocation: The Ministry of Defence has been provided ₹7.8 lakh crore for FY 2026-27, a 15% rise over the previous year.
• Key Exemptions: Basic customs duty is exempted on raw materials for aircraft parts used in maintenance, repair or overhaul by defence sector units.
• Other Reductions: Civil defence allocation saw a marginal cut of 0.45%, coming down from Rs 28,554.61 crore in the previous year.
• Upcoming Projects: The government plans to finalise major defence contracts, including Rafale fighter jets, submarines and unmanned aerial vehicles (UAVs).

The FM also proposed reducing tariffs on dutiable goods for personal use from 20% to 10% in response to US tariffs.

Sources: Times of India, LiveMint, Hindustan Times

Healthcare Sector

Emphasis on workforce development, innovation and affordability in healthcare:

• Budget Allocations Trend: Healthcare spending under Department of Health and Family Welfare/Research rose from Rs 80,694 crore in FY21 to Rs 99,859 crore in BE FY26.
• Biopharma Shakti: Rs 10,000 crore initiative over five years to boost research, manufacturing and innovation in biotechnology and pharmaceuticals.
• Duty Waivers: Basic customs duty exempted on 17 cancer drugs; 7 more rare diseases added for import duty exemptions on drugs, medicines and special medical foods.
• Infrastructure Boost: Proposed development of NIMHANS 2.0 in North India and a 50% expansion in district hospital capacity through new emergency and trauma care centres, improving access to critical care.
• Traditional Medicine: 3 new All India Institutes of Ayurveda; upgrades to AYUSH pharmacies and drug testing labs; enhancement of WHO Global Traditional Medicine Centre in Jamnagar.
• Healthcare Workforce Expansion: Additional 1 lakh allied health professionals will be trained over 5 years across 10 key disciplines supported by upgradation of existing institutions and establishment of new ones in both government and private sectors. Further, 1.5 lakh multi-skilled caregivers will be trained in the coming year, integrating caregiving with wellness, yoga and medical assistive technologies.

Sources: Times of India, LiveMint, Hindustan Times

Infrastructure Sector

A major push for sustainable and future-ready infrastructure:

• Capex: Set capital expenditure (capex) at ₹12.22 lakh crore, a roughly 9-10% increase over the previous year, highlighting the government's infrastructure push.
• Rail Corridors: 7 environmentally sustainable passenger rail corridors; new dedicated east-west freight corridor from Dankuni to Surat.
• Freight and Waterways: The government aims to raise share of inland waterways and coastal shipping from the current 6% to 12% by 2047 through the Coastal Cargo Promotion Scheme. 20 new National Waterways are proposed to be developed over the next five years.
• Other Initiatives: The Budget announces a Seaplane VGF scheme, an Infrastructure Risk Guarantee Fund for lenders and Rs 5,000 crore over five years to develop City Economic Regions in Tier-II and Tier-III cities.
• Rare Earth Corridors: In Odisha, Kerala andhra Pradesh and Tamil Nadu for mining, processing, research and manufacturing.

Sources: Times of India, LiveMint, Hindustan Times

Agriculture and Rural Development

The Budget targets rural income diversification with 20,000 veterinary professionals to be trained through loan-linked capital subsidies, credit-linked support to modernise dairy, poultry and livestock value chains and fisheries development covering 500 reservoirs and Amrit Sarovars, duty-free fish catch beyond territorial waters, export status for foreign port landings and higher duty-free import limits for seafood inputs from 1% to 3% of FOB value.

Crop measures include coconut replanting, support for cashew, cocoa and sandalwood, rejuvenation of hilly orchards and high density walnut, almond and pine nut cultivation with youth-led value addition. The Budget also rolls out Bharat Vistar, a multilingual agri-stack AI tool and highlights that livestock contributes 16% of farm income.

Sources: Times of India, LiveMint, Hindustan Times

Education and Skills Development

The Budget places strong emphasis on future-ready skills.:

• AVGC (Animation, Visual Effects, Gaming, Comics): Support for Indian Institute of Creative Technologies, Mumbai, to set up labs in 15,000 secondary schools and 500 colleges (projected need: 2 million professionals by 2030).
• Design Education: A new National Institute of Design will be established in eastern India.
• Sports: Khelo India Mission will help to transform the sector over a decade.
• Divyangjan (Persons with Disabilities): The Divyangjan Skill Scheme will provide industry-relevant training, while the Divyang Sahara Scheme will strengthen ALIMCO’s production, research and development and AI integration.
• Higher Education: The Budget proposes new institutes, university townships and girls’ hostels in every district, with a special focus on STEM fields such as astrophysics and astronomy, supported by improved telescope infrastructure.
• She MARTS: Community-owned retail outlets to help women transition from credit-linked livelihoods to enterprise ownership (building on Lakpati Didi program).

Sources: Times of India, LiveMint, Hindustan Times

Manufacturing and Industry

Strengthening self-reliance in key sectors:

• India Semiconductor Mission 2.0 (ISM 2.0) launched: Builds on Phase 1 success; focuses on equipment & materials production, full-stack Indian chip design, domestic IP development and stronger supply chains.
• Electronics Components Manufacturing Scheme outlay increased: Raised significantly to ₹40,000 crore (from earlier ₹22,999 crore) to accelerate investment and capacity building in electronic components.
• Container Manufacturing Scheme introduced a new ₹10,000 crore scheme spread over five years to develop a competitive domestic container manufacturing ecosystem (currently ~95% dominated by China).
• Textiles: The Budget announces an integrated five-part programme for the textile sector, like the National Fibre Scheme, Textile Expansion and Employment Scheme, National Handloom and Handicraft Programme, Text-ECON and SAMARTH 2.0. The Budget also proposes mega textile parks and launches Mahatma Gandhi Gram Swaraj for handloom growth.
• Leather and Exports: Duty-free imports extended to shoe uppers and export period for leather/textile products was extended from 6 months to 1 year.

Sources: Times of India, LiveMint, Hindustan Times

Other Key Announcements

• Lokpal Allocation: The Budget provides Rs 30 crore for FY27, lower than the Rs 32 crore revised estimate of the current year.
• CVC Allocation: The Central Vigilance Commission has been allocated Rs 54.56 crore for FY27.
• High-Powered Committee: A committee on Education to Employment and Enterprise will be constituted for the services sector to work towards a 10% share in global services by 2047 and to evaluate the impact of AI on jobs and skills.
• Technology Missions: The Budget announces focused missions in AI, quantum technologies, along with support for the Anusandhan National Research Fund and enhanced R&D and innovation funding.
• Market Reaction: On Budget day, Nifty, gold and silver prices saw sharp corrections.

Sources: Times of India, LiveMint, Hindustan Times

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