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India's annual budget made a fresh bet on the country's manufacturing sector as Finance Minister Nirmala Sitharaman laid out priorities for Asia's third-biggest economy and pledged to accelerate growth amid a volatile global environment.

COMMENTARY:

UPASNA BHARDWAJ, CHIEF ECONOMIST, KOTAK MAHINDRA BANK, MUMBAI

"The government has continued to focus on fiscal consolidation. The FY27 fiscal deficit at 4.3% and net borrowing are in line with our expectations."

"However, the sharply higher-than-expected gross borrowing of 17.2 trillion rupees ($187.63 billion) is expected to weigh heavily on market sentiments. No buybacks or switches have led to the surprise upside to the gross borrowing."

SHRIPAL SHAH, MD AND CEO, KOTAK SECURITIES, MUMBAI

"The steep increase in STT on futures and options, coming on top of last year's hike, is likely to raise impact costs for traders, hedgers, and arbitrageurs.

This could cool derivative activity and lead to a reduction in volumes. The intent appears to be volume moderation rather than revenue maximisation, as any potential revenue gain could be offset by lower derivative volumes."

SANJIV GANERIWALA, CHAIRMAN, MINING COUNCIL EASTERN INDIA ASSOCHAM, NEW DELHI

"Today's budget highlighted creating Rare Earth Corridors in Odisha, Tamil Nadu, Kerala & Andhra Pradesh for mining, manufacturing, processing and refining of rare earth and critical minerals.

This will lead to enhanced focus and development of new technologies for manufacturing of Rare Earth Magnets to be used in phones, defence & space equivalents, EVs and other modern equipments."

VARUN GUPTA, CEO, GROWW MUTUAL FUND, BENGALURU, INDIA

"The announcement of a high-level committee on banking and the proposed restructuring of PFC and REC reflect a clear intent to future-proof India's financial system for a Viksit Bharat.

Strengthening public sector NBFCs through better scale, governance and technology adoption is critical to ensuring that long-term capital reaches infrastructure and priority sectors efficiently, without compromising on financial stability or consumer protection. Thoughtful execution of these reforms can materially improve credit delivery and resilience across the system."

MANOJ PUROHIT, PARTNER & LEADER, FINANCIAL SERVICES TAX, TAX & REGULATORY SERVICES, BDO INDIA, MUMBAI

"The proposed impetus for MSMEs in Budget 2026 across various fronts will attract capital from foreign investors. Foreign investors would now look to MSMEs as an additional investment avenue, thereby making MSME IPOs more lucrative in attracting foreign capital.

The allocation of INR 10K crore to the SME Growth Fund will boost small and medium enterprises, making them the most preferred alternative to large MNC offshore institutions and making India a self-reliant economy in the coming years. This could also enhance the AIF ecosystem for investments in this segment."

AMIT ANWANI, RESEARCH ANALYST AT PRABHUDAS LILLADHER, MUMBAI

"The capex outlay for fiscal year 2027 looks a bit modest and misses market expectations slightly, but overall, a positive for manufacturing sector. It will also be good for private sector capex."

SONAM SRIVASTAVA, FOUNDER AND FUND MANAGER AT WRIGHT RESEARCH PMS, MUMBAI

"The expansion of the Portfolio Investment Scheme for overseas individuals is a meaningful signal that India wants to deepen and diversify foreign participation beyond large institutions. By allowing Persons Resident Outside (PRO) India to invest directly in equity instruments and by doubling the per-investor limit from 5% to 10%, the government is clearly trying to widen the ownership base of Indian equities while keeping systemic risks contained through an overall cap."

"Increasing the aggregate cap from 10% to 24% meaningfully expands headroom, especially in mid- and large-cap names where foreign ownership limits often become binding constraints. Over time, this can improve liquidity, reduce volatility at the margin, and support better price discovery."

SARTHAK SARIN, PARTNER, KHAITAN & CO, DELHI

"Semicon Mission 2.0 will be a key milestone in India's semiconductor growth story as it aims to develop a robust, end-to-end semiconductor, electronic component manufacturing and display ecosystem, which will be backed by a resilient, self-sustaining supply chain and a strong focus on advancing next-generation technologies for high-value applications across defence, electric mobility, telecom, AI, and computing."

VIVEK IYER, PARTNER AND FINANCIAL SERVICES RISK LEADER, GRANT THORNTON BHARAT, MUMBAI

"With a strong focus on financial stability, inclusion, and consumer protection, the banking sector's priorities need to be re?examined to support economic growth and achieve the vision of Viksit Bharat. The proposed reforms will span commercial and co?operative banks alike, and the establishment of a high?level committee on banking will help drive this agenda. Overall, this is a significant credit?positive development for the banking sector."

DIVAM SHARMA, CO-FOUNDER AND FUND MANAGER AT GREEN PORTFOLIO PMS, HARYANA

"The Budget's continued focus on electronics manufacturing and semiconductors is a structurally positive development. This is not just a policy announcement but a continuation of a multi-year strategy that markets tend to reward. The sustained policy push enhances earnings visibility and supports higher valuation comfort over the medium to long term."

"The emphasis on strengthening trade ties with the European Union is equally important for markets, as access to stable, high-value export destinations improves revenue durability and reduces cyclicality. For investors, this strengthens the case for export-oriented manufacturing themes, particularly companies that are already integrated into global supply chains or are in the process of scaling up."

"A notable positive from a market perspective is the focus on supply-chain resilience, including initiatives such as the rare-earth corridor. In a global environment marked by geopolitical uncertainty, securing critical minerals and inputs lowers operational risk and improves cost predictability. This has positive implications for margins and long-term competitiveness."

G. S. MADHUSUDHAN, CEO AND CO-FOUNDER AT PEAK XV-BACKED INCORE SEMICONDUCTORS, CHENNAI

"The amount of support is good, but the key is where it is spent. We need to establish a process development entity and funding is needed for that. Funding and incentives are needed for semiconductor equipment companies. But we need more smaller, older node and speciality fabs, and using funds for just one or two mega fabs will not work for us."

($1 = 91.6710 Indian rupees)