Union Budget 2026–27: Sector-wise Summary of Key Announcements

By Metalsbuy Editorial Desk ·

Union Budget 2026–27: Sector-wise Summary of Key Announcements

The Union Budget 2026–27, presented on 1 February 2026, outlines the Government of India’s fiscal strategy and sectoral priorities for the coming financial year amid a stable domestic growth outlook and persistent global uncertainty. The Budget places strong emphasis on capital expenditure, fiscal consolidation, and structural reforms rather than short-term stimulus or populist relief. For core industries, commodities, and infrastructure-linked sectors, the Budget’s relevance lies not in isolated announcements but in the scale and direction of public investment, tax and compliance reforms, and the initial steps toward industrial decarbonisation. This article presents a sector-wise, fact-based summary of what was officially announced in the Union Budget 2026–27, highlighting financial allocations, key policy measures, and areas where no changes were made.

Sector-wise Summary: What Was Announced

1. Macro & Fiscal Framework

  • Fiscal deficit for FY27 set at 4.3% of GDP.

  • Commitment to fiscal consolidation reiterated.

  • No deviation from the medium-term fiscal glide path announced.

  • Capital expenditure retained as the principal growth driver.

2. Capital Expenditure (Overall)

  • Capital expenditure for FY27 budgeted at ~₹12.2 lakh crore.

  • Capex growth maintained at a higher rate than revenue expenditure.

  • Major focus on transport infrastructure, power, defence, and urban development.

  • Asset monetisation proceeds to be recycled into fresh infrastructure investment.

3. Support to States

  • Continuation of 50-year interest-free loans to states for capital expenditure.

  • Allocation maintained in the ₹1.8–2.0 lakh crore range.

  • Funds restricted strictly to asset creation and infrastructure projects.

4. Direct Taxation (Personal Income Tax)

  • No change in personal income tax slabs or rates.

  • No new deductions or exemptions announced.

  • Standard deduction unchanged.

5. New Income-Tax Act

  • New Income-Tax Act, 2025 to come into effect from 1 April 2026.

  • Focus on simplification, clarity, and reduction in litigation.

  • No tax rate changes proposed under the new law.

  • No immediate revenue impact estimated for FY27.

6. TDS / TCS Reforms

  • Rationalisation of multiple TDS and TCS rates.

  • TCS on foreign education and medical remittances reduced to 2%.

  • TCS on select goods categories rationalised into fewer slabs to ease compliance and improve liquidity.

7. Securities Transaction Tax (STT)

  • STT on futures and options increased.

  • No change announced for cash equity transactions.

  • Measure aimed at moderating excessive speculative activity.

8. Roads & Highways

  • Allocation for roads and highways maintained at ₹2.7 lakh crore+ (MoRTH and NHAI combined).

  • Continued focus on economic corridors and industrial connectivity.

  • Emphasis on faster execution of ongoing and approved projects.

9. Railways

  • Railway capital expenditure at ~₹2.5–2.6 lakh crore.

  • Development of new high-speed rail corridors.

  • Expansion of Dedicated Freight Corridors (DFCs).

  • Continued station redevelopment and capacity enhancement initiatives.

10. Ports, Shipping & Waterways

  • Allocation for ports, shipping, and waterways in the ₹20,000+ crore range.

  • Expansion of the national waterways network.

  • Introduction of viability gap funding (VGF) for seaplane services.

  • Continued port modernisation initiatives.

11. Power & Energy

  • Power sector allocation maintained at ₹25,000+ crore, including transmission infrastructure.

  • Focus on grid modernisation and reliability.

  • Continued support for renewable energy integration and energy storage.

12. Manufacturing & Industrial Policy

  • Continued implementation of existing Production-Linked Incentive (PLI) schemes.

  • No new PLI schemes announced; existing multi-year outlay of ~₹1.97 lakh crore remains unchanged.

  • Policy focus on capital goods, electronics, and advanced manufacturing.

13. MSMEs

  • ₹10,000 crore SME Growth Fund announced.

  • Revival of 200 legacy industrial clusters.

  • Strengthening of credit access through guarantee and financing mechanisms.

14. Steel Sector

  • No standalone steel-specific package announced.

  • Steel sector demand supported indirectly through infrastructure capex of ~₹12.2 lakh crore.

  • Steel identified as a hard-to-abate sector under climate-related initiatives.

  • Continuity of the Specialty Steel PLI scheme; no dilution announced.

15. Carbon Capture & Climate Initiatives

  • ₹20,000 crore allocation announced for Carbon Capture, Utilisation and Storage (CCUS) over multiple years.

  • Applicable to hard-to-abate sectors including steel, cement, power, refineries, and chemicals.

  • Focus on industrial decarbonisation rather than blanket subsidies.

16. Mining & Minerals

  • No consolidated sector-specific allocation announced.

  • Policy emphasis on:

    • Domestic beneficiation

    • Processing of critical and strategic minerals

  • Support driven through regulatory and policy measures rather than direct subsidies.

17. Defence & Strategic Manufacturing

  • Defence allocation at ~₹6.2 lakh crore.

  • Capital outlay focused on domestic procurement.

  • Continued push for defence manufacturing, shipbuilding, and aerospace.

18. Agriculture & Allied Sectors

  • Allocation for agriculture and allied activities at ₹1.5 lakh crore+.

  • Introduction of digital agriculture initiatives using AI-based tools.

  • Continued support for fisheries, dairy, and agri-exports.

19. Health & Pharmaceuticals

  • Health sector allocation at ₹95,000+ crore.

  • Development of medical tourism hubs.

  • Expansion of clinical trial infrastructure.

  • Measures to reduce costs of select critical drugs.

20. Education & Skills

  • Education sector allocation at ₹1.2 lakh crore+.

  • Establishment of AVGC content creator labs in 15,000 schools and 500 colleges.

  • Continued focus on digital education and STEM learning.

21. Financial Sector & Capital Markets

  • Proposal for an Infrastructure Risk Guarantee Fund (initial corpus to be notified).

  • Measures to deepen corporate bond markets.

  • Continued support for municipal bond issuances.

22. Governance & Ease of Doing Business

  • No separate allocation announced.

  • Emphasis on:

    • Simplification of laws

    • Digitisation of compliance

    • Reduction in litigation through clearer frameworks

23. Tourism & Culture

  • Tourism sector allocation in the ₹2,500–3,000 crore range.

  • Development of select heritage and archaeological sites.

  • Skill development initiatives for tourism services.

24. What Was Not Announced

  • No income tax slab relief.

  • No export incentives for metals.

  • No safeguard or anti-dumping duty changes.

  • No large-scale sector-specific subsidy packages.

The Union Budget 2026–27 reflects a measured and continuity-driven policy approach, prioritising capital investment, fiscal discipline, and structural reform over short-term relief measures. While headline sector-specific announcements are limited, the scale of infrastructure spending, continuation of manufacturing incentives, and introduction of targeted climate initiatives form the backbone of the Budget’s economic strategy. For core industries and commodities, the impact is largely indirect, driven by sustained public investment and regulatory clarity rather than explicit fiscal support. The Budget also demonstrates deliberate restraint in areas where expectations were elevated, reinforcing the government’s focus on long-term outcomes over immediate stimulus. A detailed assessment of implications for steel and mining will be presented separately in a follow-up analysis.