Finance Minister Nirmala Sitharaman on Sunday announced measures to boost manufacturing, offered long-term tax incentives for global data centres, and support for agriculture and tourism as she unveiled a Rs 53.5 lakh crore Union Budget for 2026-27, seen as a long-term blueprint for sustaining growth amid rising global risks. Shunning populist measures despite five key states, including West Bengal and Tamil Nadu, heading to polls, the Budget signalled continued fiscal consolidation and infrastructure spending.
But a hike in securities transaction tax on equity derivatives rattled equity markets, with key indices plunging as much as 2 per cent in the special budget-day trading session, before recovering some ground.
Presenting her record ninth consecutive Budget, Sitharaman, in her nearly 90-minute speech in the Lok Sabha, announced detailed anchor schemes for becoming ‘Viksit Bharat’ – boosting employment, while combining technologies of the future with legacy industries.
Maintaining emphasis on infrastructure development, capital expenditure has been raised to Rs 12.2 lakh crore next year from an already record-high Rs 11.2 lakh crore in FY26. Among the many infrastructure projects announced by the minister was a plan to build 7 high-speed rail corridors, while defence expenditure is up by about a fifth on the year.
Amid geopolitical concerns, fragmentation, and financial tightening across the globe, she said manufacturing will be scaled up across seven priority sectors – pharmaceuticals, semiconductors, rare-earth magnets, chemicals, capital goods, textiles and sports goods – with an emphasis on job creation and technology-driven development. The success of Apple iPhone manufacturing prompted doubling of outlay on electronics manufacturing to Rs 40,000 crore, and a second iteration of the semiconductor mission was mentioned to help build the supply chain. While there were no major changes to personal income-tax slabs, the government announced tax and incentive measures aimed at boosting investment and ease of compliance for the industry.
Sitharaman announced a Rs 10,000 crore investment over five years to develop India as a biopharma manufacturing hub, rare earth corridors, textile parks, more container manufacturing, chemical parks, measures to strengthen capital goods manufacturing and efforts to revive 200 legacy industrial clusters, among others, to boost industry.
A major announcement was a 20-year tax holiday for overseas firms providing global data centre services from India, along with a 15 per cent safe harbour on costs for data centre services provided by related entities of foreign cloud firms. The move is expected to provide tax certainty and operational efficiency for global cloud players, as India attracts large-scale investments from firms, such as Google, Microsoft and Amazon Web Services, which have committed about USD 40 billion in 2025 alone.
