India's budget aims to ramp up domestic manufacturing in a volatile environment
India's Finance Minister Nirmala Sitharaman presented the 2026/2027 budget to parliament on Sunday aiming to lift manufacturing and generate jobs in the world's most populous country.
Here are the highlights:
* Finance Minister says India faces disruptive external environment, must stay deeply integrated with global markets
* Says to sustain reform momentum, focus on strong finance sector and new technology
*Economic survey report ahead of budget projects 6.8%-7.2% growth for 2026/27
DEBT TO GDP, FISCAL DEFICIT
* Federal government's debt to GDP ratio target for 2026/27 set at 55.6%, down from estimated 56.1% of GDP in current fiscal year
*Fiscal deficit target for 2026/27 set at 4.3% of GDP against 4.4% for current fiscal year
*Gross federal government borrowing for 2026/27 seen at 17.2 trillion rupees ($187.63 billion)
*Net federal government borrowing for 2026/27 seen at 11.7 trillion rupees
INCREASE IN SPENDING
*Proposes to increase capital spending to 12.2 trillion rupees ($133.08 billion) in 2026/27 from revised 11.0 trillion rupees in 2025/26
*To scale up manufacturing in seven sectors, push infrastructure
* To develop India as global pharma manufacturing hub
* To allocate 100 billion rupees for bio-pharma over 5 years
* Proposes to increase 400 billion rupees spending for semi-conductor manufacturing
* Proposes to develop seven high-speed rail corridors
* Proposes spending 200 billion rupees for carbon emission cutting programmes over 5 years
* Proposes to set up 100 billion rupees growth fund to support small businesses
ECONOMIC REFORMS
* To set up high level committee to suggest banking reforms
* Proposes allowing people outside India to invest in equity of listed companies
* To increase investment limit for individual PROIs (Persons resident outside India) to 10% from 5%
* Overall investment limit for all PROIs raised to 24% from 10%
* Proposes new framework with suitable access to funds and derivatives on corporate bond indices
($1 = 91.6710 Indian rupees)
CUT IN IMPORT TARIFFS
* Proposes to raise limit for duty free imports for processing seafood exports to 3%
*Extend Basic customs duty (BCD) exemption to capital goods used to manufacture lithium ion batteries
*Provide BCD exemption to capital goods for processing critical minerals in India
FUNDS FOR STATES
* Federal government to share 41% of common tax pool with states for 2026/31 period, as recommended by the finance commission
($1 = 91.6710 Indian rupees)
