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On the sacred occasion of Magha Purnima and the birth

anniversary of Guru Ravidas, I present the Budget for the year

2026-2027.

trajectory has been marked by stability, fiscal discipline, sustained

growth and moderate inflation. This is the result of conscious choices we

have made, even in times of heightened uncertainty and disruption. Our

Government, led by Hon’ble Prime Minister Modi, has decisively and

consistently chosen action over ambivalence, reform over rhetoric and

people over populism.

2. We have pursued far reaching structural reforms,

fiscal prudence and monetary stability whilst

maintaining a strong thrust on public investment.

Keeping atmanirbharta as a lodestar, we have built domestic

manufacturing capacity, energy security and reduced critical import

dependencies. Simultaneously, we have ensured that citizens benefit

from every action of the Government, undertaking reforms to support

employment generation, agricultural productivity, household purchasing

power and universal services to people.

These measures have delivered a high growth rate of around 7% and

helped us make substantial strides in poverty reduction and

improvement in the lives of our people.

3. Today, we face an external environment in which trade and

multilateralism are imperilled and access to resources and supply chains

are disrupted. New technologies are transforming production systems

while sharply increasing demands on water, energy and critical minerals.

4. India will continue to take confident steps towards Viksit Bharat,

balancing ambition with inclusion. As a growing economy with

expanding trade and capital needs, India must also remain deeply

integrated with global markets, exporting more and attracting stable

long-term investment.

standing firmly with us as we forge our way together towards becoming

one of the largest economies of the world.

6. Our aim is to transform aspiration into achievement and

potential into performance, as we ensure that the dividends of growth

reach every farmer, the scheduled caste, the scheduled tribes, the

nomads, the youth, the poor and the women.

7. In the Viksit Bharat Young Leaders Dialogue 2026, several

innovative ideas were shared with our Prime Minister, which have

inspired many of the proposals, making this a unique Yuva Shakti-driven

Budget.

8. Our Government’s ‘Sankalp’ is to focus on our poor,

underprivileged and the disadvantaged. To deliver on this Sankalp, and

given that this is the first Budget prepared in Kartavya Bhawan, we are

inspired by 3 kartavya:

9. Our first kartavya is to accelerate and sustain economic growth,

by enhancing productivity and competitiveness, and building resilience

to volatile global dynamics.

10. Our second kartavya is to fulfil aspirations of our people and

build their capacity, making them strong partners in India’s path to

prosperity.

11. Our third kartavya, aligned with our vision of Sabka Sath, Sabka

Vikas, is to ensure that every family, community, region and sector has

access to resources, amenities and opportunities for meaningful

participation.

12. This threefold approach requires a supportive ecosystem. The

first requirement is to sustain the momentum of structural reforms—

continuous, adaptive, and forward-looking. Second, a robust and

resilient financial sector is central to mobilising savings, allocating

capital efficiently and managing risks. Third, cutting-edge technologies,

including AI applications, can serve as force multipliers for better

governance.

reforms towards creating employment, boosting productivity and

accelerating growth. After the Prime Minister’s announcement on

Independence Day in 2025, over 350 reforms have been rolled out.

These include GST simplification, notification of Labour Codes, and

rationalisation of mandatory Quality Control Orders. High Level

Committees have been formed and in parallel, the Central Government

is working with the State Governments on deregulation and reducing

compliance requirements.

14. The Reform Express is well on its way and will maintain its

momentum to help us fulfil our kartavya.

I now move to the specific proposals.

15. Under our first kartavya to accelerate and sustain economic

growth, I propose interventions in six areas: i) Scaling up manufacturing

in 7 strategic and frontier sectors; ii) Rejuvenating legacy industrial

sectors; iii) Creating “Champion MSMEs”; iv) Delivering a powerful push

to Infrastructure; v) Ensuring long-term energy security and stability;

and vi) Developing City Economic Regions.

Scaling up manufacturing in 7 strategic and frontier sectors:

16. Biopharma SHAKTI (Strategy for Healthcare Advancement

through Knowledge, Technology and Innovation) – India’s disease

burden is observed to be shifting towards non-communicable diseases,

like diabetes, cancer and autoimmune disorders. Biologic medicines are

key to longevity and quality of life at affordable costs. To develop India

as a global Biopharma manufacturing hub, I propose the Biopharma

SHAKTI with an outlay of ₹ 10,000 crores over the next 5 years. This will

build the ecosystem for domestic production of biologics and

biosimilars. The Strategy will include a Biopharma-focused network with

3 new National Institutes of Pharmaceutical Education and Research

(NIPER) and upgrading 7 existing ones. It will also create a network of

over 1000 accredited India Clinical Trials sites. We propose to strengthen

the Central Drugs Standard Control Organisation to meet global

standards and approval timeframes through a dedicated scientific

review cadre and specialists.

17. India Semiconductor Mission (ISM) 1.0 expanded India’s

semiconductor sector capabilities. Building on this,

we will launch ISM 2.0 to produce equipment and materials, design

full-stack Indian IP, and fortify supply chains. We will also focus on

industry-led research and training centres to develop technology and

skilled workforce.

18. The Electronics Components Manufacturing Scheme, launched

in April 2025 with an outlay of ₹22,919 crore, already has investment

commitments at double the target. We propose to increase the outlay to

₹40,000 crore to capitalise on the momentum.

19. A Scheme for Rare Earth Permanent Magnets was launched in

November 2025. We now propose to support the mineral-rich States of

Odisha, Kerala, Andhra Pradesh and Tamil Nadu to establish dedicated

Rare Earth Corridors to promote mining, processing, research and

manufacturing.

20. To enhance domestic chemical production and reduce

import-dependency, we will launch a Scheme to support States in

establishing 3 dedicated Chemical Parks, through challenge route, on a

cluster-based plug-and-play model.

21. Strong capital goods capability is a determinant of productivity

and quality across different sectors. Towards building this capacity, I

propose the following:

(a) Hi-Tech Tool Rooms will be established by CPSEs at 2

locations as digitally enabled automated service bureaus that

locally design, test, and manufacture high-precision

components at scale and at lower cost.

(b) A Scheme for Enhancement of Construction and

Infrastructure Equipment (CIE) will be introduced to

strengthen domestic manufacturing of high-value and

technologically-advanced CIE. This can range from lifts in a

multi-story apartment, fire-fighting equipment, large and

small, to tunnel-boring equipment for building metros and

high-altitude roads.

(c) I also propose a Scheme for Container Manufacturing to

create a globally competitive container manufacturing

ecosystem, with a budgetary allocation of ₹10,000 crore over

a 5 year period.

22. For the labour-intensive Textile Sector, I propose an Integrated

Programme with 5 sub-parts:

(a) The National Fibre Scheme for self-reliance

in natural fibres such as silk, wool and jute,

man-made fibres, and new-age fibres;

(b) Textile Expansion and Employment Scheme to modernise

traditional clusters with capital support for machinery,

technology upgradation and common testing and

certification centres;

(c) A National Handloom and Handicraft programme to

integrate and strengthen existing schemes and ensure

targeted support for weavers and artisans;

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(d) Tex-Eco Initiative to promote globally competitive and

sustainable textiles and apparels;

(e) Samarth 2.0 to modernize and upgrade the textile skilling

ecosystem through collaboration with industry and

academic institutions.

23. Further, I propose to set up Mega Textile Parks in challenge

mode. They can also focus on bringing value addition to technical

textiles.

24. I propose to launch the Mahatma Gandhi Gram Swaraj initiative

to strengthen khadi, handloom and handicrafts. This will help in global

market linkage and branding. It will streamline and support training,

skilling, quality of process and production. This will benefit our weavers,

village industries, One – District – One – Product initiative and rural

youth.

25. India has the potential to emerge as a global hub for high quality,

affordable sports goods. I propose a dedicated initiative for sports goods

that will promote manufacturing, research and innovation in equipment

design as well as material sciences.

Rejuvenation of Legacy Industrial Clusters

26. I propose to introduce a Scheme to revive 200 legacy industrial

clusters to improve their cost competitiveness and efficiency through

infrastructure and technology upgradation.

Creating “Champion SMEs” and supporting micro enterprises:

27. Recognising MSMEs as a vital engine of growth, I propose a

three-pronged approach to help them grow as ‘Champions’:

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Equity Support

28. I propose to introduce a dedicated ₹10,000 crore SME Growth

Fund, to create future Champions, incentivizing enterprises based on

select criteria.

29. I also propose to top up the Self-Reliant India Fund set up in

2021, with ₹2,000 crore to continue support to micro enterprises and

maintain their access to risk capital.

Liquidity Support

30. With TReDS, more than ₹7 lakh crore has been made available to

MSMEs. To leverage its full potential, I propose 4 measures: (i) mandate

TReDS as the transaction settlement platform for all purchases from

MSMEs by CPSEs, serving as a benchmark for other corporates; (ii)

introduce a credit guarantee support mechanism through CGTMSE for

invoice discounting on TReDS platform; (iii) link GeM with TReDS for

sharing information with financiers about government purchases from

MSMEs, encouraging cheaper and quicker financing; (iv) introduce

TReDS receivables as asset-backed securities, helping develop a

secondary market, enhancing liquidity and settlement of transactions.

Professional Support

31. Government will facilitate Professional Institutions such as ICAI,

ICSI, ICMAI to design short-term, modular courses and practical tools to

develop a cadre of ‘Corporate Mitras’, especially in Tier-II and Tier-III

towns. These accredited para-professionals will help MSMEs meet

compliance requirements at affordable costs.

Infrastructure

32. During this past decade our Government has undertaken several

initiatives for large-scale enhancement of public infrastructure including

through new financing instruments such as Infrastructure Investment

Trusts (InVITs) and Real Estate Investment Trusts (REITs) and institutions

like NIIF and NABFID. We shall continue to focus on developing

infrastructure in cities with over 5 lakh population (Tier II and Tier III),

which have expanded to become growth centres.

33. Public capex has increased manifold from ₹2 lakh crore in

FY2014-15 to an allocation of ₹11.2 lakh crore in

BE 2025-26. In FY2026-27, I propose to increase it to ₹12.2 lakh crore to

continue the momentum.

34. To strengthen the confidence of private developers regarding

risks during infrastructure development and construction phase, I

propose to set up an Infrastructure Risk Guarantee Fund to provide

prudently calibrated partial credit guarantees to lenders.

35. Over the years, REITs have emerged as a successful instrument

for asset monetisation. I propose to accelerate recycling of significant

real estate assets of CPSEs through the setting up of dedicated REITs.

36. To promote environmentally sustainable movement of cargo, I

propose to: a) Establish new Dedicated Freight Corridors connecting

Dankuni in the East, to Surat in the West; b) operationalise 20 new

National Waterways (NW) over next 5 years, starting with NW-5 in

Odisha to connect mineral rich areas of Talcher and Angul and industrial

centres like Kalinga Nagar to the Ports of Paradeep and Dhamra. Training

Institutes will be set up as Regional Centres of Excellence for

development of the required manpower. This will benefit youth in the

entire stretch of the waterways to train and acquire skills.

Further, a ship repair ecosystem catering to inland waterways will also

be set up at Varanasi and Patna; c) launch a Coastal Cargo Promotion

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Scheme for incentivising a modal shift from rail and road, to increase the

share of inland waterways and coastal shipping from 6 % to 12 % by

2047.

37. To enhance last-mile and remote connectivity, and promote

tourism, I propose to give incentives to indigenize manufacturing of

seaplanes. A Seaplane VGF Scheme will be also be introduced to provide

support for operations.

Carbon Capture Utilization and Storage (CCUS)

38. Aligning with the roadmap launched in December 2025, CCUS

technologies at scale will achieve higher readiness levels in end-use

applications across five industrial sectors, including, power, steel,

cement, refineries and chemicals. An outlay of ₹20,000 crore is

proposed over the next 5 years.

City Economic Regions

39. Cities are India’s engines of growth, innovation, and

opportunities. We shall now focus on Tier II and Tier III cities, and even

temple-towns, which need modern infrastructure and basic amenities.

This Budget aims to further amplify the potential of cities to deliver the

economic power of agglomerations by mapping city economic regions

(CER), based on their specific growth drivers. An allocation of ₹ 5000

crore per CER over 5 years is proposed for implementing their plans

through a challenge mode with a reform-cum-results based financing

mechanism.

40. In order to promote environmentally sustainable passenger

systems, we will develop seven High-Speed Rail corridors between

cities as ‘growth connectors’, namely i) Mumbai-Pune, ii)

Pune-Hyderabad, iii) Hyderabad-Bengaluru, iv) Hyderabad-Chennai, v)

Chennai-Bengaluru, vi) Delhi-Varanasi, vii) Varanasi-Siliguri.

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Financial Sector

41. The Indian banking sector today is characterised by strong

balance sheets, historic highs in profitability, improved asset quality and

coverage exceeding 98% of villages in the country. At this juncture, we

are well-placed to futuristically evaluate the measures needed to

continue on the path of reform-led growth of this sector.

42. I propose setting up a “High Level Committee on Banking for

Viksit Bharat”, to comprehensively review the sector and align it with

India’s next phase of growth, while safeguarding financial stability,

inclusion and consumer protection.

43. The vision for NBFCs for Viksit Bharat has been outlined with

clear targets for credit disbursement and technology adoption. In order

to achieve scale and improve efficiency in the Public Sector NBFCs, as a

first step, it is proposed to restructure the Power Finance Corporation

and Rural Electrification Corporation.

44. I propose a comprehensive review of the Foreign Exchange

Management (Non-debt Instruments) Rules to create a more

contemporary, user-friendly framework for foreign investments,

consistent with India’s evolving economic priorities.

Corporate Bond Market

45. I propose to introduce a market making framework with suitable

access to funds and derivatives on corporate bond indices. I also

propose to introduce total return swaps on corporate bonds.

Municipal Bonds

46. To encourage the issuance of municipal bonds of higher value by

large cities, I propose an incentive of ₹100 crore for a single bond

issuance of more than ₹1000 crore. The current scheme under AMRUT

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which incentivises issuances up to ₹200 crore, will also continue to

support smaller and medium towns.

Ease of Doing Business

47. Individual Persons Resident Outside India (PROI) will be

permitted to invest in equity instruments of listed Indian companies

through the Portfolio Investment Scheme. It is also proposed to increase

the investment limit for an individual PROI under this scheme from 5%

to 10%, with an overall investment limit for all

individual PROIs to 24%, from the current 10%.

Emerging technologies, including AI

48. 21st Century is technology driven. Adoption of technology is for

the benefit of all people – farmers in the field, women in STEM, youth

keen to upskill and Divyangjan to access newer opportunities. The

Government has taken several steps to support new technologies

through AI Mission, National Quantum Mission, Anusandhan National

Research Fund, and Research, Development and Innovation Fund.

49. Our second kartavya is to fulfil aspirations and build capacity.

Close to 25 crore individuals have come out of multidimensional poverty

through a decade of our Government’s sustained and reform-oriented

efforts.

50. Our Government has therefore decided to place a renewed

emphasis on the Services Sector to provide a pathway to fulfilling

aspirations of a youthful India, with the following measures.

High-Powered ‘Education to Employment and Enterprise’ Standing

Committee

51. I propose to set up a High-Powered ‘Education to Employment

and Enterprise’ Standing Committee to recommend measures that focus

on the Services Sector as a core driver of Viksit Bharat. This will make us

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a global leader in services, with a 10% global share by 2047. The

Committee will prioritise areas to optimise the potential for growth,

employment and exports. They will also assess the impact of emerging

technologies, including AI, on jobs and skill requirements and propose

measures thereof.

Creation of Professionals for Viksit Bharat

52. To create a new range of skilled career pathways for our youth, I

propose interventions in the following sectors:

Health

53. Existing institutions for Allied Health Professionals (AHPs) will

be upgraded and new AHP Institutions established in private and

Government sectors. This will cover 10 selected disciplines, including

optometry, radiology, anesthesia, OT Technology, Applied Psychology

and Behavioural Health and add 100,000 AHPs over the

next 5 years.

54. A strong Care Ecosystem, covering geriatric and allied care

services will be built. A variety of NSQF-aligned programmes will be

developed to train multiskilled caregivers combining core care and allied

skills, such as, wellness, yoga and operation of medical and assistive

devices. In the coming year, 1.5 lakh caregivers will be trained.

Hubs for Medical Value Tourism

55. To promote India as a hub for medical tourism

services, I propose to launch a Scheme to support States in establishing

five Regional Medical Hubs, in partnership with the private sector.

These Hubs will serve as integrated healthcare complexes that combine

medical, educational and research facilities. They will have AYUSH

Centres, Medical Value Tourism Facilitation Centres and infrastructure

for diagnostics, post-care and rehabilitation. These Hubs will provide

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diverse job opportunities for health professionals including doctors and

AHPs.

AYUSH

56. Ancient Indian yoga, already respected in several parts of the

world, was given mass global recognition when Hon’ble PM took it to

the UN. Post-COVID, Ayurveda gained a similar global acceptance and

recognition.

57. Exporting quality Ayurvedic products helps farmers who grow

the herbs and the youth who process the products. To meet growing

global demand, a few more steps are being taken.

58. I propose to (i) set up 3 new All India Institutes of Ayurveda; (ii)

upgrade AYUSH pharmacies and Drug Testing Labs for higher standards

of certification ecosystem, and make available more skilled personnel;

(iii) upgrade the WHO Global Traditional Medicine Centre in Jamnagar to

bolster evidence-based research, training and awareness for traditional

medicine.

Animal Husbandry

59. Livestock contributes close to 16% of farm income, including of

poor and marginal households. To scale up availability of veterinary

professionals by more than 20,000, I propose to roll out a loan-linked

capital subsidy support scheme for establishment of veterinary and

para-vet colleges, veterinary hospitals, diagnostic laboratories and

breeding facilities in the private sector. Collaboration between Indian

and foreign institutions will also be facilitated.

Orange Economy

60. India’s Animation, Visual Effects, Gaming and Comics (AVGC)

sector is a growing industry, projected to require 2 million professionals

by 2030. I propose to support the Indian Institute of Creative

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Technologies, Mumbai in setting up AVGC Content Creator Labs

in 15,000 secondary schools and 500 colleges.

Design

61. The Indian design industry is expanding rapidly and yet there is a

shortage of Indian designers. I propose to establish through challenge

route, a new National Institute of Design to boost design education and

development in the eastern region of India.

Education

62. Our Government will support States, through challenge route, in

creating 5 University Townships in the vicinity of major industrial and

logistic corridors. These planned academic zones will host multiple

universities, colleges, research institutions, skill centres and residential

complexes.

63. In Higher Education STEM institutions, prolonged hours of study

and laboratory work pose some challenges for girl students. Through

VGF/capital support, 1 girls’ hostel will be established in every district.

64. To promote Astrophysics and Astronomy via immersive

experiences, 4 Telescope Infrastructure facilities will be set up or

upgraded – the National Large Solar Telescope, the National Large

Optical-infrared Telescope, the Himalayan Chandra Telescope and the

COSMOS-2 Planetarium.

Tourism

65. The Tourism sector has the potential to play a large role in

employment generation, forex earnings and expanding the local

economy.

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66. I propose to set up a National Institute of Hospitality by

upgrading the existing National Council for Hotel Management and

Catering Technology. It will function as a bridge between academia,

industry and the Government.

67. I also propose a pilot scheme for upskilling 10,000 guides in 20

iconic tourist sites through a standardized,

high-quality 12-week training course in hybrid mode, in collaboration

with an Indian Institute of Management.

68. A National Destination Digital Knowledge Grid will be

established to digitally document all places of significance—cultural,

spiritual and heritage. This initiative will create a new ecosystem of jobs

for local researchers, historians, content creators and technology

partners.

69. India has the potential and opportunity to offer world-class

trekking and hiking experience. We will develop ecologically sustainable

(i) Mountain trails in Himachal Pradesh, Uttarakhand and Jammu and

Kashmir; Araku Valley in the Eastern Ghats and Podhigai Malai in the

Western Ghats. (ii) Turtle Trails along key nesting sites in the coastal

areas of Odisha, Karnataka and Kerala; and (iii) Bird watching trails along

the Pulikat lake in Andhra Pradesh and Tamil Nadu.

70. Under the visionary leadership of Honorable Prime Minister, we

established the International Big Cat Alliance in 2024. This year, India is

hosting the first ever Global Big Cat Summit, where heads of

governments and ministers from 95 range countries will deliberate on

collective strategies for conservation.

Heritage and Culture Tourism

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71. I propose to develop 15 archeological sites including Lothal,

Dholavira, Rakhigarhi, Adichanallur, Sarnath, Hastinapur, and Leh Palace

into vibrant, experiential cultural destinations. Excavated landscapes will

be opened to the public through curated walkways.

Immersive storytelling skills and technologies will be introduced to help

conservation labs, interpretation centres, and guides.

Sports

72. The Sports Sector provides multiple means of employment,

skilling and job opportunities. Taking forward the systematic nurturing of

sports talent which is set in motion through the Khelo India

programme, I propose to launch a Khelo India Mission to transform the

Sports sector over the next decade.

73. The Mission will facilitate: a) An integrated talent development

pathway, supported by training centres (foundational, intermediate and

elite levels); b) systematic development of coaches and support staff; c)

integration of sports science and technology; d) competitions and

leagues to promote sports culture and provide platforms; and, e)

development of sports infrastructure for training and competition.

74. Our third kartavya aligns with our vision of Sabka Sath, Sabka

Vikas towards a Viksit Bharat.

75. This requires targeted efforts for a) Increasing farmer incomes

through productivity enhancement and entrepreneurship, with special

attention to small and marginal farmers; b) Empowering Divyangjan

through access to livelihood opportunities, training and

high-quality assistive devices; c) Empowering the vulnerable to access

mental health and trauma care; d) Focus on the Purvodaya States and

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the North-East Region to accelerate development and employment

opportunities.

Increasing Farmer Incomes

76. Fisheries: We will undertake initiatives (i) for integrated

development of 500 reservoirs and Amrit Sarovars

(ii) strengthen the fisheries value chain in coastal areas and enable

market linkages involving start-ups and women-led groups together with

Fish Farmers Producer Organisations.

77. Animal Husbandry: To provide quality employment

opportunities in rural and peri-urban areas, we will support the Animal

Husbandry Sector in entrepreneurship development through: (a) a

Credit-Linked Subsidy Programme (b) scaling-up and modernisation of

livestock enterprises (c) enhance creation of livestock, dairy and

poultry-focused integrated-value chains and (d) encourage creation of

Livestock Farmer Producers Organisations.

78. High Value Agriculture: To diversify farm outputs, increase

productivity, enhance farmers’ incomes, and create new employment

opportunities, we will support high value crops such as coconut,

sandalwood, cocoa and cashew in our coastal areas. Agar trees in North

East and nuts such as, almonds, walnuts and pine nuts in our hilly

regions will also be supported.

79. India is the world’s largest producer of coconuts.

About 30 million people, including nearly 10 million farmers, depend on

coconuts for their livelihood. To further enhance competitiveness in

coconut production, I propose a Coconut Promotion Scheme to increase

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production and enhance productivity through various interventions

including replacing old and non-productive trees with new

saplings/plants/varieties in major coconut growing States.

80. A dedicated programme is proposed for Indian cashew and cocoa

to make India self-reliant in raw cashew and cocoa production and

processing, enhance export competitiveness and transform Indian

Cashew and Indian Cocoa into premium global brands by 2030.

81. Sandalwood is closely linked to India’s social and cultural

heritage. Our Government will partner with State Governments to

promote focused cultivation and post-harvest processing to restore the

glory of the Indian Sandalwood ecosystem.

82. To rejuvenate old, low-yielding orchards and expand

high-density cultivation of walnuts, almonds and pine nuts, we will

support a dedicated programme to enhance farmer incomes and in

bringing value addition by engaging youth.

Bharat-VISTAAR (Virtually Integrated System to Access Agricultural

Resources)

83. I propose to launch Bharat-VISTAAR—a multilingual AI tool that

shall integrate the AgriStack portals and the ICAR package on agricultural

practices with AI systems. This will enhance farm productivity, enable

better decisions for farmers and reduce risk by providing customised

advisory support.

SHE-Marts for Rural Women-led Enterprises

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84. Building on the success of the Lakhpati Didi Programme, I

propose to help women take the next step from

credit-led livelihoods to being owners of enterprises.

Self-Help Entrepreneur (SHE) Marts will be set up as community-owned

retail outlets within the cluster level federations through enhanced and

innovative financing instruments.

Empowering Divyangjan

85. Divyangjan Kaushal Yojana: IT, AVGC sectors, Hospitality and

Food and Beverages sectors offer task-oriented and process-driven roles,

which are suitable for Divyangjans. We will ensure dignified livelihood

opportunities through industry-relevant and customized training specific

to each divyang group.

86. Divyang Sahara Yojana: Timely access to high-quality assistive

devices for all eligible Divyangjans is a fundamental need. I propose to (i)

support the Artificial Limbs Manufacturing Corporation of India

(ALIMCO) to scale up production of assistive devices, invest in R&D and

AI integration, (ii) strengthen PM Divyasha Kendras and support setting

up of Assistive Technology Marts as modern retail-style centres where

Divyangjans and senior citizens can see, try and purchase assistive

products.

Reaffirming our commitment to Mental Health and Trauma Care

87. There are no national institutes for mental healthcare in north

India. We will therefore set up a NIMHANS-2 and also upgrade National

Mental Health Institutes in Ranchi and Tezpur as Regional Apex

Institutions.

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88. Emergencies expose families, particularly the poor and

vulnerable, to unexpected expenditure. We will strengthen and increase

these capacities by 50% in District Hospitals by establishing Emergency

and Trauma Care Centres.

Focus on the Purvodaya States and the North-Eastern Region

89. Purvodaya: I propose the development of an integrated East

Coast Industrial Corridor with a well-connected node at Durgapur,

creation of 5 tourism destinations in the 5 Purvodaya States, and the

provision of 4,000 e-buses.

90. Buddhist Sites in North-Eastern Region: The

North-Eastern Region is a civilizational confluence of Theravada and

Mahayana/Vajrayana traditions. I propose to launch a Scheme for

Development of Buddhist Circuits in Arunachal Pradesh, Sikkim, Assam,

Manipur, Mizoram and Tripura. The Scheme will cover preservation of

temples and monasteries, pilgrimage interpretation centers,

connectivity and pilgrim amenities.

16th Finance Commission

91. On 17th November 2025, the 16th Finance Commission submitted

its report to the President. As mandated under Article 281 of the

Constitution, the Government is to lay the Report along with the

Explanatory Memorandum on the Action Taken Report on the

recommendations of the Commission in Parliament. The Government

has accepted the recommendation of the Commission to retain the

vertical share of devolution at 41%. As recommended by the

Commission, I have provided ₹1.4 lakh crore to the States for the FY

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2026-27 as Finance Commission Grants. These include Rural and Urban

Local Body and Disaster Management Grants.

Fiscal Consolidation

92. Government has been delivering on our fiscal commitments

consistently without compromising on social needs. To strive towards

accepted standards of fiscal management, in Budget 2025-26, I had

indicated that the Central Government would target reaching a

debt-to-GDP ratio of 50±1 percent by 2030-31.

93. In line with this, the debt-to-GDP ratio is estimated to be 55.6

percent of GDP in BE 2026-27, compared to 56.1 percent of GDP in RE

2025-26. A declining debt-to-GDP ratio will gradually free up resources

for priority sector expenditure by reducing the outgo on interest

payments.

94. One of the main operational instruments for debt targeting is the

fiscal deficit. I am happy to inform this august House that I have fulfilled

my commitment made in FY 2021-22 to reduce fiscal deficit below 4.5

percent of GDP by 2025-26. In RE 2025-26, the fiscal deficit has been

estimated at par with BE of 2025-26 at 4.4 percent of GDP. In line with

the new fiscal prudence path of debt consolidation, the fiscal deficit in

BE 2026-27 is estimated to be 4.3 percent of GDP.

Revised Estimates 2025-26

95. The Revised Estimates of the non-debt receipts

are ₹34 lakh crore of which the Centre’s net tax receipts

are ₹26.7 lakh crore. The Revised Estimate of the total expenditure is

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₹49.6 lakh crore, of which the capital expenditure is about

₹11 lakh crore.

Budget Estimates 2026-27

96. Coming to 2026-27, the non-debt receipts and the

total expenditure are estimated as ₹36.5 lakh crore

and ₹53.5 lakh crore respectively. The Centre’s net tax receipts are

estimated at ₹28.7 lakh crore.

97. To finance the fiscal deficit, the net market borrowings from

dated securities are estimated at ₹11.7 lakh crore. The balance financing

is expected to come from small savings and other sources. The gross

market borrowings are estimated at ₹17.2 lakh crore.

I will now move to Part B.

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PART B

Direct Taxes

Speaker Sir,

98. Now I present my proposals on Direct Taxes.

New Income Tax Act

99. In July 2024, I announced a comprehensive review of the Income

Tax Act, 1961. This was completed in a record time and the Income Tax

Act, 2025 will come into effect from 1

st April, 2026.

100. The simplified Income Tax Rules and Forms will be notified

shortly, giving adequate time to taxpayers to acquaint themselves with

its requirements.

101. The forms have been redesigned such that ordinary citizens can

comply without difficulty.

Ease of Living

102. I propose that any interest awarded by the

Motor Accident Claims Tribunal to a natural person will be exempt from

Income Tax, and any TDS on this account will be done away with.

103. I propose to reduce TCS rate on the sale of overseas tour program

package from the current 5 percent

and 20 percent to 2 percent without any stipulation of amount.

104. I propose to reduce TCS rate for pursuing education and for

medical purposes under the Liberalized Remittance Scheme (LRS) from 5

percent to 2 percent.

105. Supply of manpower services is proposed to be specifically

brought within the ambit of payment to contractors for the purpose of

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TDS to avoid ambiguity. Thus, TDS on these services will be at the rate of

either 1 percent or 2 percent only.

106. I propose a scheme for small taxpayers wherein

a rule-based automated process will enable obtaining a lower or nil

deduction certificate instead of filing an application with the assessing

officer.

107. For the ease of taxpayers holding securities in multiple

companies, I propose to enable depositories to accept Form 15G or Form

15H from the investor and provide it directly to various relevant

companies.

108. I propose to extend time available for revising returns from 31st

December to up to 31st March with the payment of a nominal fee.

109. I also propose to stagger the timeline for filing of tax returns.

Individuals with ITR 1 and ITR 2 returns will continue to file till 31st

July

and non-audit business cases or trusts are proposed to be allowed

timetill 31st August.

110. TDS on the sale of immovable property by a

non-resident is proposed to be deducted and deposited through resident

buyer’s PAN based challan instead of requiring TAN.

111. To address practical issues of small taxpayers like students, young

professionals, tech employees, relocated NRIs, and such others, I

propose to introduce a one-time 6-month foreign asset disclosure

scheme for these taxpayers to disclose income or assets below a certain

size.

112. This scheme would be applicable for two categories of taxpayers

namely,

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(A) who did not disclose their overseas income or asset and

(B) who disclosed their overseas income and/or paid due tax, but could

not declare the asset acquired.

For category (A), the limit of undisclosed income/asset is proposed to be

up to 1 crore rupees. They need to pay 30 percent of Fair Market Value

of asset or 30 percent of undisclosed income as tax and 30 percent as

additional income tax in lieu of penalty and would thereby get immunity

from prosecution.

For category (B), asset value is proposed to be

up to 5 crore rupees. Here, immunity from both penalty and prosecution

will be available with the payment of fee

of 1 lakh rupees.

Rationalizing Penalty and Prosecution

113. Multiplicity of proceedings are a hindrance to the ease of doing

business. I propose to integrate assessment & penalty proceedings by

way of a common order for both. There will be no interest liability on the

taxpayer on the penalty amount for the period of appeal before the first

appellate authority irrespective of the outcome of appeal process.

Further, quantum of pre-payment is being reduced from 20 percent to

10 percent and will continue to be calculated only on core tax demand.

114. As an additional measure for reducing litigation,

I propose to allow taxpayers to update their returns even after

reassessment proceedings have been initiated, at an additional 10

percent tax rate over and above the rate applicable for the relevant year.

The assessing officer will then use only this updated return in his

proceedings.

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115. There is already a framework for immunity from penalty and

prosecution in the cases of underreporting. I propose to apply this

framework of immunity to misreporting too. However, in such a case the

taxpayer will need to pay 100 percent of the tax amount as an additional

income tax over and above the tax and interest due.

116. Penalties for certain technical defaults such as failure to get

accounts audited, non-furnishing of transfer pricing audit report and

default in furnishing statement for financial transactions, are proposed

to be converted into fee.

117. I propose to rationalise prosecution framework under the Income

Tax Act while maintaining a careful balance for deterrence in some

serious offences.

118. Non-production of books of account and documents, and

requirement of TDS payment, where payment is made in kind, are being

decriminalised. Further, minor offences will attract fine only.

119. The remaining prosecutions will be graded commensurate with

the quantum of offence. They will entail only simple imprisonment, with

maximum imprisonment reduced to two years, and power to courts to

convert even those into fine.

120. There is no penalty presently for non-disclosure of

non-immovable foreign assets with aggregate value less than 20 lakh

rupees. I propose to also provide them with immunity from prosecution

with retrospective effect from 1.10.2024.

Cooperatives

121. Deduction is already allowed to a primary cooperative society

engaged in supplying milk, oilseeds, fruits or vegetables raised or grown

by its members. I propose to extend this deduction to also include

supply of cattle feed and cotton seed produced by its members.

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122. I propose to allow inter-cooperative society dividend income as

deduction under the new tax regime to the extent it is further

distributed to its members.

123. I further propose to allow exemption for a period

of 3 years, to dividend income received by a notified national

co-operative federation, on their investments made in companies up to

31.1.2026. This exemption would be allowed only for dividends further

distributed to its member co-operatives.

Supporting IT sector as India’s growth engine

124. India is a global leader in software development services, IT

enabled services, knowledge process outsourcing services and contract

R&D services relating to software development. These business

segments are quite inter-connected with each other.

125. All these services are proposed to be clubbed under a single

category of Information Technology Services

with a common safe harbour margin of 15.5 percent applicable to all.

126. The threshold for availing safe harbour for IT services is being

enhanced substantially from 300 crore rupees to 2,000 crore rupees.

127. Safe harbour for IT services shall be approved by an automated

rule-driven process without any need for tax officer to examine and

accept the application. Once applied by an IT Services company, the

same safe harbour can be continued for a period of 5 years at a stretch

at its choice.

128. For IT services companies who want to conclude Advance Pricing

Agreement (APA), I propose to fast track Unilateral APA process for IT

services and endeavour to conclude it within a period of 2 years. The

period of 2 years can be extended by a further period of 6 months on

taxpayer’s request.

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129. I propose to extend the facility of modified returns available to

the entity entering APA to its associated entities also.

Attracting global business and investment

130. Recognising the need to enable critical infrastructure and boost

investment in data centres, I propose to provide tax holiday till 2047 to

any foreign company that provides cloud services to customers globally

by using data centre services from India. It will, however, need to provide

services to Indian customers through an Indian reseller entity.

131. I also propose to provide a safe harbour of 15 percent on cost in

case the company providing data centre services from India is a related

entity.

132. To harness the efficiency of just-in-time logistics for electronic

manufacturing, I propose to provide safe harbour to non-residents for

component warehousing in a bonded warehouse at a profit margin of 2

percent of the invoice value. The resultant tax of about 0.7 percent will

be much lower than in competing jurisdictions.

133. To provide fillip to toll manufacturing in India,

I propose to provide exemption from income tax

for 5 years, to any non-resident who provides capital goods, equipment

or tooling, to any toll manufacturer in a bonded zone.

134. To encourage vast pool of global talent to work in India for a

longer period of time, I propose to provide exemption to global

(non-India sourced) income of a non-resident expert, for a stay period of

5 years under notified schemes.

135. I propose to provide exemption from Minimum Alternate Tax

(MAT) to all non-residents who pay tax on presumptive basis.

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Tax administration

136. I propose to constitute a Joint Committee of Ministry of

Corporate Affairs and Central Board of Direct Taxes for incorporating the

requirements of Income Computation and Disclosure Standards (ICDS) in

the Indian Accounting Standards (IndAS) itself. Separate accounting

requirement based on ICDS will be done away with from the tax year

2027-28.

137. To support PM Modi’s vision of home-grown accounting and

advisory firms to become global leaders, I propose to rationalise the

definition of accountant for the purposes of Safe Harbour Rules.

Other Tax proposals

138. Change in taxation of buyback was brought in to address the

improper use of buyback route by promoters. In the interest of minority

shareholders, I propose to tax buyback for all types of shareholders as

Capital Gains. However, to disincentivize misuse of tax arbitrage,

promoters will pay an additional buyback tax. This will make effective tax

22 percent for corporate promoters. For non-corporate promoters the

effective tax will be 30 percent.

139. TCS rate for sellers of specific goods namely alcoholic liquor, scrap

and minerals will be rationalized to 2 percent and that on tendu leaves

will be reduced from 5 percent to 2 percent.

140. I propose to raise the STT on Futures to 0.05 percent from

present 0.02 percent. STT on options premium and exercise of options

are both proposed to be raised to 0.15 percent from the present rate of

0.1 percent and 0.125 percent respectively.

141. We reformed the taxation landscape for corporates in 2019 by

providing them a simplified regime with lower tax rate so that they could

productively focus on business rather than on claim of deductions and

exemptions.

142. To encourage companies to shift to the new regime, set-off of

brought forward MAT credit is proposed to be allowed to companies only

in the new regime. Set-off using available MAT credit is proposed to be

allowed to an extent of 1/4th of the tax liability in the new regime.

143. MAT is proposed to be made final tax. So, there will be no further

credit accumulation from 1

st April 2026.

In line with this change, the rate of final tax is being reduced to 14

percent from the current MAT rate

of 15 percent. The brought forward MAT credit of taxpayers accumulated

till 31st March 2026, will continue to be available to them for set-off as

above.

Indirect Taxes

144. I shall now take up proposals related to Indirect Taxes. My

proposals for Customs and Central Excise

aim to further simplify the tariff structure, support domestic

manufacturing, promote export competitiveness, and correct inversion

in duty.

Review of exemptions and tariff simplification

145. To continue weeding out long continuing customs duty

exemptions, I propose to remove certain exemptions on items which are

being manufactured in India or where the imports are negligible.

Similarly, to further simplify the process of ascertaining the rate of duty

applicable on a particular item, I propose to incorporate certain effective

rates in various customs notifications to the tariff schedule itself.

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146. I shall now take up sector specific proposals.

Promotion of exports of marine, leather, and textile products

147. I propose to increase the limit for duty-free imports of specified

inputs used for processing seafood products for export, from the current

1 per cent to 3 per cent of the FOB value of the previous year’s export

turnover.

148. I also propose to allow duty-free imports of specified inputs,

which is currently available for exports of leather or synthetic footwear,

to exports of Shoe Uppers as well.

149. I propose to extend the time period for export of final product

from the existing 6 months to 1 year, for exporters of leather or textile

garments, leather or synthetic footwear and other leather products.

Energy transition and security

150. I propose to extend the basic customs duty exemption given to

capital goods used for manufacturing Lithium-Ion Cells for batteries, to

those used for manufacturing Lithium-Ion Cells for battery energy

storage systems too.

151. I propose to exempt basic customs duty on import of sodium

antimonate for use in manufacture of solar glass.

Nuclear Power

152. I propose to extend the existing basic customs duty exemption on

imports of goods required for Nuclear Power Projects till the year 2035

and expand it for all nuclear plants irrespective of their capacity.

Critical Minerals

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153. It is proposed to provide basic customs duty exemption to the

import of capital goods required for processing of critical minerals in

India.

Biogas blended CNG

154. I propose to exclude the entire value of biogas

while calculating the Central Excise duty payable on biogas blended CNG.

Civil and Defence Aviation

155. I propose to exempt basic customs duty on components and

parts required for the manufacture of civilian, training and other

aircrafts.

156. It is proposed to exempt basic customs duty on raw materials

imported for manufacture of parts of aircraft to be used in maintenance,

repair, or overhaul requirements by Units in the Defence sector.

Electronics

157. To deepen value addition in the consumer electronics sector, I

propose to exempt basic customs duty on specified parts used in the

manufacture of microwave ovens.

Special Economic Zone

158. To address the concerns arising about utilization of capacities by

manufacturing units in the Special Economic Zones due to global trade

disruptions, I propose, as a special one-time measure, to facilitate sales

by eligible manufacturing units in SEZs to the Domestic Tariff Area (DTA)

at concessional rates of duty. The quantity of such sales will be limited to

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a prescribed proportion of their exports. Necessary regulatory changes

will be undertaken to operationalise these measures while ensuring

level-playing field for the units working in the DTA.

Ease of Living

159. To rationalize the customs duty structure for goods imported for

personal use, I propose to reduce the tariff rate on all dutiable goods

imported for personal use from 20 per cent to 10 per cent.

160. To provide relief to patients, particularly those suffering from

cancer, I propose to exempt basic customs duty on 17 drugs or

medicines.

161. I also propose to add 7 more rare diseases for the purposes of

exempting import duties on personal imports of drugs, medicines and

Food for Special Medical Purposes (FSMP) used in their treatment.

Customs Process

162. India’s role and share in global trade is poised for a major leap, in

line with our ambition and journey towards ‘Viksit Bharat’. In this regard,

I propose many measures for custom processes to have minimal

intervention for smoother and faster movement of goods and greater

certainty to the trade.

Trust-based systems

163. I propose to enhance duty deferral period for

Tier 2 and Tier 3 Authorised Economic Operators, known as AEOs, from

15 days to 30 days.

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164. I propose to provide eligible manufacturer-importers the same

duty deferral facility. This should encourage them to get themselves

accredited as a full-fledged Tier 3- AEO in due course.

165. To provide greater certainty and for better business planning, I

propose to extend validity period of advance ruling, binding on Customs,

from the present 3 years to 5 years.

166. In the spirit of whole-of-the-government approach, Government

agencies will be encouraged to leverage AEO accreditation for

preferential treatment in clearing their cargo.

167. Regular importers with trusted longstanding supply chains will be

recognized in the risk system, so that the need for verification of their

cargo every time can be minimized. Export cargo using electronic sealing

will be provided through clearance from the factory premises to the ship.

168. For import of goods not needing any compliance, filing of bill of

entry by a trusted importer, and arrival of goods will automatically notify

Customs for completing their clearance formalities. This will enable

goods to be released immediately on arrival.

169. The Customs warehousing framework will be transformed into a

warehouse operator-centric system with self-declarations, electronic

tracking and risk-based audit. These reforms will move away from the

current system of officer-dependent approvals, and reduce transaction

delays and compliance costs.

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Ease of Doing Business

170. Approvals required for cargo clearance from various Government

agencies will be seamlessly processed through a single and

interconnected digital window by the end of the financial year. Processes

involved in clearance of food, drugs, plant, animal & wild life products,

accounting for around 70 percent of interdicted cargo, will be

operationalised on this system by April 2026 itself.

171. For goods not having any compliance requirement, clearance will

be done by Customs immediately after online registration is completed

by the importer, subject to the payment of duty.

172. Customs Integrated System (CIS) will be rolled out

in 2 years as a single, integrated and scalable platform for all the customs

processes.

173. Utilization of non-intrusive scanning with advanced imaging and

AI technology for risk assessment will be expanded in a phased manner

with the objective to scan every container across all the major ports.

New export opportunities

174. To support Indian fishermen to fully harness the economic value

of marine resources beyond our territorial waters, the following

measures will be taken.

a. Fish catch by an Indian fishing vessel in Exclusive Economic Zone

(EEZ) or on the High Seas will be made free of duty.

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b. Landing of such fish on foreign port will be treated as export of

goods.

Safeguards will be put in place to prevent misuse during fish catch,

transit and transshipment.

175. To support aspirations of India’s small businesses, artisans and

start-ups to access global markets through e-commerce, I am pleased to

announce complete removal of the current value cap of ₹10 lakh per

consignment on courier exports. In addition, handling of rejected and

returned consignments will be improved with effective use of technology

for identifying such consignments.

Ease of Living

176. I propose to revise provisions governing baggage clearance

during international travel to address genuine concerns of passengers.

The revised rules will enhance duty-free allowances in line with the

present-day travel realities and provide clarity in temporary carriage of

goods brought in or taken out.

177. There are honest taxpayers who are willing to settle disputes by

paying all their dues. But they get deterred due to negative connotation

associated with penalty. They will now be able close cases by paying an

additional amount in lieu of penalty.

Honourable Speaker Sir, with this, I commend the Budget to this august

House.

Jai Hind!