Perspective: Budget 2026 Expectations | 21 January, 2026

Summary

As India prepares for its 2026 Union Budget, experts discuss key expectations and challenges for various sectors. Focus areas include boosting infrastructure, supporting MSMEs with easier credit and faster payments, advancing mobile manufacturing, and addressing export barriers amid global uncertainties. Experts also highlight the need for innovation and R&D incentives, especially in the electronics sector. With a target of $2 trillion in exports by 2030, the budget must provide robust support to continue India’s rapid economic growth and help the country move closer to its vision of becoming a 'Viksit Bharat' by 2047.

Takeaways

• 😀 The Union Budget 2026 will focus on maintaining India's growth trajectory despite global challenges and uncertainties.
• 😀 Finance Minister Nirmala Sitharaman's 9th consecutive budget is expected to continue the trend of stability and predictability in policies.
• 😀 Infrastructure development (physical, digital, and social) will be a major priority to boost economic competitiveness and attract global investment.
• 😀 The MSME sector, especially in industries like textiles, footwear, and automobiles, is struggling due to global trade issues and needs targeted support.
• 😀 The Indian government aims to achieve $2 trillion in exports by 2030, focusing on exploring new markets beyond traditional ones like the U.S.
• 😀 Mobile manufacturing has been a success story in India, and the focus will shift from assembly to deep manufacturing to create more value domestically.
• 😀 The PLI (Production-Linked Incentive) scheme for mobile manufacturing will be extended beyond March 2026, with a call for reduced duties on key components.
• 😀 MSMEs need easier access to credit, lower compliance burdens, and faster payments to thrive and drive India's economic growth.
• 😀 A major push for **agriculture technology** and **irrigation infrastructure** is crucial to improve productivity on small land holdings and reduce dependency on monsoons.
• 😀 Exporters face challenges like U.S. tariffs, and there's a call for targeted support, including expanding the interest equalization scheme to include the service sector.

Q & A

What are the main expectations from the Union Budget 2026, according to the experts?

The main expectations from the Union Budget 2026 include a focus on strengthening infrastructure (physical, digital, and social), providing support for MSMEs through easier access to finance and technology, increasing exports, and sustaining India's growth momentum despite global challenges.

How has the Indian economy demonstrated resilience amid global uncertainties?

The Indian economy has shown remarkable resilience by maintaining a growth rate of 7.3% to 7.4%, despite global challenges like geopolitical issues and US tariffs. This resilience is supported by strong domestic consumption, which has shielded India from external shocks.

What role does infrastructure play in India's economic growth, according to the experts?

Infrastructure is seen as a key driver of economic growth, with a particular focus on physical, digital, and social infrastructure. High-quality infrastructure enhances logistics efficiency, making India globally competitive and attracting more investment.

What specific measures are suggested for supporting the MSME sector in the Union Budget 2026?

Experts suggest easier access to credit, reduced compliance burdens, faster payments, and lower interest rates for MSMEs. They also recommend a reduction in duties on certain components needed for manufacturing, as well as improved access to technology upgrades to remain competitive in global markets.

Why is the mobile phone manufacturing industry considered a success story for India?

India's mobile phone manufacturing industry has grown significantly, achieving a remarkable increase from a 10% share to 49% between 2015 and 2025. The government's Production-Linked Incentive (PLI) scheme played a critical role in this success, and experts recommend moving from assembly to deeper manufacturing.

What are the challenges faced by the MSME sector, and how can the budget address them?

MSMEs face challenges such as high interest rates, delayed payments, and cumbersome compliance processes. Experts recommend policy interventions like easy access to microcredit, simplified loan documentation, and a focus on faster payment systems to reduce operational burdens.

How can India build upon its success in mobile phone manufacturing?

India can build upon its success in mobile phone manufacturing by focusing on deep manufacturing, not just assembly. Experts suggest reducing duties on certain components and facilitating value-added production, thus moving towards self-sufficiency and higher-value exports.

What role do Free Trade Agreements (FTAs) play in India's export strategy?

FTAs, such as those with the UK, Oman, New Zealand, and potentially the EU, are seen as critical in opening new markets for Indian exports. These agreements can help mitigate the impact of global trade barriers and provide access to billions of new consumers.

What is the importance of sustainability for India's MSMEs, especially in light of the EU FTA?

Sustainability is a critical factor for MSMEs to maintain competitiveness in global markets, especially in Europe. With the upcoming EU FTA, experts highlight the need for MSMEs to adopt sustainable practices and upgrade their technology to meet global standards.

What measures could be included in the Union Budget to support the electronics and IT manufacturing sectors?

Measures could include continued support for the mobile manufacturing sector, reduction in duties on essential components, a push for research and development (R&D) incentives, and investment in electronics repair outsourcing (ERSO) to tap into a $20 billion market.