Budget 2026 Expectations: India Inc Seeks Infra, MSME & Regulatory Boost Amid Global Uncertainty

As Budget 2026 nears, industry and economists signal rising confidence, calling for higher capex, regulatory reforms, infra push and support for MSMEs, agriculture and critical minerals.

Industry is no doubt pinning hopes on India’s growth prospects, noting that real GDP grew by 6.5 per cent in FY25.

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Budget 2026 Expectations: Ahead of Union Budget 2006, India Inc, economists and other key stakeholders are riding high on a fresh wave of business confidence amidst signals of the next wave of reforms to be unveiled by Finance Minister Nirmala Sitharaman on February 1, aimed at sustaining India’s growth story even as the Indian economy demonstrates resilience against a double whammy of geopolitical turbulence and tariff wars. 

While optimism around demand, profitability, and investment conditions abounds, higher capex,  regulatory, agri and ease of doing business reforms, focus on infrastructure development, and critical minerals dominate the industry’s wishlist and expectations of economists for the Finance   

“We believe that macro stability will continue to be the priority in FY27, with most of the measures in the budget likely to be focused on reforms, sector-specific support programmes and ease of doing business. Potential focus areas could include regulatory reforms, accelerated depreciation for targeted sectors and a further push on critical minerals supply chain resilience,” suggest Nomura economists Sonal Varma and Aurodeep Nandi. 

Business Confidence Rises

Chandrajit Banerjee, Director General, CII, views the industry’s ability to navigate external headwinds, anchored by resilient domestic demand and a robust reform agenda, as key to the steady rise in CII’s business confidence index. 

“We are confident that the reform momentum will continue in the forthcoming Union Budget,” says Banerjee, who sees scope for simplifying and modernising regulation, expanding opportunities for households and strengthening the innovation capacity of industry, which should poise India to unshackle its economic potential even further. 

A survey on business outlook over the next 12 months by the Associated Chambers of Commerce & Industry of India (Assocham) also finds a sizeable 55 per cent of respondents optimistic, while 32 per cent maintain a neutral stance and only 13 per cent expressed a pessimistic outlook.

Industry is no doubt pinning hopes on India’s growth prospects, noting that real GDP grew by 6.5 per cent in FY25, and according to the latest RBI’s estimates, growth is expected to edge up slightly to 6.8 per cent this fiscal year. The economy continues to outperform most major advanced and emerging peers and is steadily progressing toward the near 8 per cent growth trajectory required to realise the vision of a Viksit Bharat by 2047. 

Budget recommendations of key industry bodies, however, also mirror unanimous concern over significant downside risks to global growth with rising protectionist measures, especially the expanding use of tariff and non-tariff barriers, continuing to dampen investment confidence and disrupt supply chains. 

According to Varma and Nandi, the Budget could bring in a slew of regulatory reforms and comprehensive ease-of-doing-business measures, which could include amendments to the Insolvency and Bankruptcy Code. The focus is likely to be on deregulation and decriminalisation, streamlining approvals for agricultural inputs and reducing compliance burden across sectors. 

For the industry, the Budget focus will be on credit guarantee, interest subvention, MUDRA loan programmes, improved MSME cashflows, along with regulatory amendments to the Companies Act, and ease of doing business reforms to reduce compliance burden.

Capex & Infra 

A key demand from industry centres around sustaining capital expenditure, with CII making a pitch for the launch of a revitalised Rs 150 lakh crore National Infrastructure Pipeline (NIP) 2.0 with a focus on shovel-ready, revenue-generating projects and streamlined dispute-resolution mechanisms to accelerate infrastructure delivery and crowd-in private investment. 

This is important from the investment perspective, as, according to FICCI, growth in gross fixed capital formation in India moderated from 8.8 per cent in 2023–24 to 7.1 per cent in 2024–25. Yet encouragingly, GFCF as a share of GDP increased to 33.7 per cent in 2024-25, up from 33.5 per cent in the previous year. 

This capital formation has been largely driven by the government’s strong emphasis on capital expenditure, which grew by 7.3 per cent in FY25 (Union Budget FY26 estimates), and FICCI expects this to witness 10.1 per cent growth in FY26. 

A boost in government capex would be timely, as looking ahead, FICCI expects private investment to gain momentum as well, supported by healthier bank and corporate balance sheets together with recent GST reforms and a stable, low-inflation environment that is helping to boost consumption demand and improve investment prospects.

Banerjee also calls for an India Development and Strategic Fund (IDSF) to enhance India’s long-term competitiveness in the form of a sovereign-anchored platform to mobilise large pools of institutional capital and foreign investment. 

The IDSF could operate through two complementary arms - a developmental arm to support domestic priorities such as MSMEs, energy transition, and human capital; and a strategic arm to enable overseas acquisitions and partnerships that secure India’s long-term economic and security interests. 

Jagannarayan Padmanabhan, Senior Director, Crisil Intelligence, expects India’s Union Budget 2026 to sustain the infrastructure-led growth trajectory with a capex outlay near ₹12 lakh crore, reinforcing roads, railways and logistics to unlock economic multipliers. 

“The Budget should also accelerate the launch of National Monetisation Pipeline (NMP 2.0) with an ambitious ₹10 lakh crore target over FY26-30, unlocking brownfield asset value to fund new projects. These measures will drive private investment, reduce logistics costs and position India as a global clean-energy and infrastructure hub,” says Padmanabhan. 

The CRISIL expert also forecasts a continued priority for marquee programmes, including Bharatmala Pariyojana Phase 2.0, to expand national corridors and boost freight efficiency. 

Maitri Vira, Assistant Vice President & Sector Head, ICRA, foresees a likely sustained focus on infrastructure development, rural economy and affordable housing in the upcoming Union Budget FY2027, which bodes well for the cement sector set for a 6–7 per cent demand growth in FY2027. 

The rating agency also anticipates a range-bound increase in Railways’ budgetary allocation for FY2026–27, given the trend seen over the past two years. With electrification nearly complete, focus will remain on decongestion through capacity augmentation, new routes, gauge conversion, track doubling and dedicated freight corridors. 

With India emerging as the world’s leading hub for global capability centres (GCCs) hosting more than 1,600 centres that deliver advanced digital, engineering, R&D, analytics, cybersecurity, automation and global business services for multinational enterprises, Devendra Kumar Pant, Chief Economist and Head Public Finance, Ind-Ra flags the need for policies that are conducive to attract more investments and integrate India in the global supply chain. 

“Global capability centres (GCCs) are attracting huge investments in India. Global tech players such as Microsoft, Amazon, and Google either have established or are in the process of opening GCCs in India. The country has attracted investments in electronics, especially mobile manufacturing, and exported Apple's iPhones worth over USD10 billion in 1HFY26,” points out Pant. 

Electronics & Agriculture

Pant’s observation finds echo in FICCI’s Budget proposal for establishing ‘Mega Electronics Industrial Park’ to create India’s largest, world-class ecosystem for electronics manufacturing by co-locating OEMs and component suppliers to build scale, deepen the value chain, and enhance global competitiveness. 

The Electronics Industrial Park can focus on enhancing manufacturing scale and value chain depth by localising key components near OEMs/EMS, boost global competitiveness by emulating dense supplier ecosystems like in Shenzhen and Bac Ninh (strategic industrial hub in northern Vietnam), promote inclusive growth by supporting MSMEs with shared infrastructure, test labs and logistics, and ensure sustainability through green energy, water reuse, and safe worker housing, suggests FICCI.

Nomura’s Varma and Nandi predict greater focus on agri-productivity and rural employment in the Budget, with a focus on technology expansion of Digital Agricultural Mission for AI in farming and an increase in agri credit target by 15-20 per cent. Sitharaman’s Budget may see a cash transfer increase in annual assistance to farmers under PM Kisan to Rs 8000 from Rs 6000 currently. “10-15 per cent increase in fertiliser subsidy outlay to Rs 1.8 trillion from Rs 1.67 trillion is likely in FY26, along with focus on controlling food subsidy bill, particularly around high cost of storage of grains,” project Varma and Nandi.

Stakeholders in FICCI have also joined the chorus for regulatory streamlining of approvals for agri inputs through a ‘One Nation One License system. The current regulatory framework governing the marketing and licensing of agricultural inputs (such as seeds, fertilisers, and pesticides) is fragmented, and companies need to navigate complex, state-specific processes. 

Firms operating in multiple districts or states need to obtain multiple licenses across different regions. Also, the process of developing and registering new products is a lengthy and time-consuming endeavour that often spans several years. The new system can simplify and standardise licensing requirements across states for agri inputs to help the industry alleviate the challenges, proposes FICCI.

Critical Minerals 

Atmanirbharta for Critical Minerals is also likely to be a key budgetary proposal in the 2026 exercise. Varma and Nandi hint at a clearer policy push on critical minerals supply chains via dedicated financing and extended moratoriums, including to start-ups and MSMEs engaged in mineral recovery. 

This also finds support in FICCI’s pitch for a dedicated ‘India Critical Minerals Tailings Recovery Programme’ to facilitate the recovery of critical minerals from mine tailings. While India’s primary geological reserves are limited, the country possesses large volumes of potentially valuable critical minerals locked in mine tailings, overburden, fly ash, red mud, and other mining and industrial waste streams. 

The National Critical Minerals Mission (NCMM), approved in 2024 with an outlay of ₹16,300 crore, provides a strong strategic foundation to secure these materials. However, India now needs a focused operational framework to accelerate recovery of critical minerals from tailings, like successful models implemented by Canada and Australia, suggests FICCI. 

At the same time, the industry has called for regulatory clarity. India’s Budget 2026 could clearly define revenue-sharing models, royalty treatment, third-party access and streamlined approvals for projects that combine reprocessing with environmental remediation. Predictable rules will be crucial to crowd in private capital and international technology partnerships, suggests FICCI.

(Mukherjee is a contributing writer for ABP Live English. A business journalist for more than 15 years, she has written extensively on the economy, policy, and international relations in Indian newspapers and magazines)

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