Prem Rajani, Managing Partner, Rajani Associates
Budget 2026 draws mixed reactions. It aims to set the agenda for development across MSMEs, infrastructure, technology, healthcare, defence, tourism, and key sectors like semiconductors, electronics, textiles, mining, and logistics. By providing clarity and strategic direction, it opens up targeted opportunities for corporate India to capitalise on growth and competitiveness.
From a corporate India perspective, below are some key observations made:
1. Bond market: The Union Budget 2026 takes a strategic step to deepen India’s corporate and municipal bond markets. By introducing a market-making framework with access to funds and derivatives on corporate bond indices, alongside Total Return Swaps (TRS), the reforms enhance risk management, price discovery, and secondary market liquidity, attracting institutional and foreign investors. Municipal finance is also strengthened, promoting infrastructure capital-raising, transparency, and financial discipline across urban local bodies.
2. Foreign investments: The Union Budget 2026 advances measured liberalisation of foreign participation in Indian equity markets under the Portfolio Investment Scheme. Key reforms include enhanced investment limits for Persons Resident Outside India (PROIs) and Persons of Indian Origin (PIOs), with individual caps increased from 5% to 10% and aggregate limits from 10% to 24% in PMS and equity investments. These changes are expected to deepen capital markets and strengthen diaspora participation. While the Budget provides retrospective immunity for non-disclosure of foreign assets, the clarity on limits and compliance framework unlocks opportunities for NRIs, angel investors, asset managers, PE/VC funds, and infrastructure and real estate platforms. Robust advisory will remain critical for tax planning, fund structuring, regulatory compliance, and transaction execution.
3. Banking and Finance: Finance Minister announced the introduction of Total Return Swaps on corporate bonds to deepen bond market liquidity and signalled an intent to modernise the FEMA framework governing foreign investment in her Union Budget 2026 speech. It focuses on deepening bond markets, strengthening risk-management tools, and advancing CPSE asset monetisation through REITs and InvITs to unlock value and diversify long-term financing. The measures are expected to benefit banks, NBFCs, asset managers, investment banks, and foreign investors, with advisory demand rising across REIT/InvIT structuring, SEBI-RBI compliance, and corporate bond and derivatives regulation.
4. SMEs and MSMEs: A ₹10,000 crore SME Growth Fund will provide equity, liquidity, and governance support, while a comprehensive liquidity package, including mandatory TReDS for CPSE purchases, CGTMSE credit guarantees, GeM-TReDS integration, and a secondary market for trade receivables. Through targeted equity, liquidity, and professional support, MSMEs are poised to become globally competitive ‘Champions of Growth’, driving scalable, job-creating enterprises. Additionally, the Budget also touched upon the growth within the Animation, Visual Effects, Gaming, and Comics (AVGC) sector, formalising MSMEs, improving credit, governance, and positioning India as a global creative and digital talent hub.
5. Infrastructure: The FM emphasised upon next-generation infrastructure reforms, attracting private capital, reducing logistics costs, and promoting sustainable transport. Key initiatives include an Infrastructure Risk Guarantee Fund, REITs for CPSEs, seven high-speed rail corridors, and enhanced multi-modal connectivity, supporting MSMEs and economic growth. Positive impacts are expected for infrastructure developers, smart city solution providers, EPC firms, and urban transport projects however companies will need to pay close attention to PPP/concession agreements, project structuring, financing and guarantees.
6. Logistics: Budget 2026 strengthens resilient, export-oriented manufacturing and logistics through precision manufacturing, localising equipment, container expansion, and enhanced freight connectivity. Key initiatives such as dedicated freight corridors, will reduce logistics costs, improve turnaround, and boost multimodal transport. This will be a positive initiative for 3PL providers, cold-chain operators, shipping, warehousing, and infrastructure developers however, it will be important to be mindful of drafting multimodal contracts, shipping compliance and PPP/EPC agreements.
7. Mining & Minerals: The FM elucidated upon the Rare Earth Permanent Magnets Scheme, in integrated rare earth corridors for mining, processing, research, and manufacturing. Opportunities span rare earth mining, EV battery materials, metallurgy, and advanced materials, while traditional miners face environmental, land, and ESG risks. Companies will need to closely manage mining licenses, ensure EIA compliance, structure JV/PPP arrangements effectively, and mitigate ESG risks. Additionally, by excluding the value of Biogas and paid taxes from the transaction value of blended CNG for excise duty calculations, the government is providing a fiscal incentive for waste-to-energy startups to strengthen rural bio-energy infrastructure.
8. Semi-Conductors: The Union Budget 2026 increases the Electronics Components Manufacturing Scheme outlay to ₹40,000 crores under ISM 2.0, boosting supply chains, component availability, and semiconductor manufacturing. Industry-led research and training centres will advance technology and skills, benefiting electronics manufacturers, equipment providers, and allied sectors.
9. Healthcare: The Union Budget 2026 advances a comprehensive health ecosystem across traditional medicine, mental health, biopharma, medical tourism, animal husbandry, and disability empowerment. Key initiatives include five regional medical tourism hubs, Divyangjan Skill and Sahara Schemes, Biopharma SHAKTI (₹10,000 crores), clinical trial expansion, AI diagnostics, and allied health development. These measures enhance treatment access, boost employment, and position India as a biopharma and medical tourism hub, though advisory on telemedicine, AI liability, clinical trial compliance, PPPs, and risk management will be critical.
10. Technology: The Union Budget 2026 streamlines the tax landscape for the technology sector by consolidating various services into a single “Information Technology Services” category with a 15.5% safe harbour margin and introducing a fast-track process to conclude Unilateral Advance Pricing Agreements within two years. These reforms aim to provide significant tax certainty and shift toward a trust-based system, allowing global technology firms to prioritize innovation over prolonged legal disputes. Additionally, a tax holiday till 2047 for foreign cloud providers acts as a long-term strategic “hook” to attract global tech giants by ensuring fiscal stability and reducing the cost of operation for data centres, thereby accelerating India’s transformation into a premier global digital hub. For companies within the sector, this in turn will build emphasis on AI ethics, data privacy, cross-border data, IP structuring, transfer pricing, cybersecurity, and regulatory compliance.
Conclusion
While reforms across MSMEs, infrastructure, technology, healthcare, and tourism, along with deeper capital markets and liberalised foreign investment, create opportunities for corporate India, the Budget remains silent on disinvestments, privatisation, and pressing national challenges like climate change and pollution. As always maintained, a careful review of the budget’s details is essential for stakeholders to fully understand its opportunities, challenges, and potential implications across industries.
