India’s Union Budget for the 2026–27 financial year sets out a growth-focused strategy while adopting a cautious fiscal stance amid rising global economic and geopolitical uncertainty.
The government has framed the Budget around three broad priorities: accelerating economic growth, meeting citizen aspirations and promoting inclusive development. This comes at a time when the global economy is undergoing structural change, marked by geopolitical fragmentation and the increasing use of trade, technology and capital as policy tools.
Major economies are tightening controls on strategic sectors. The United States has imposed restrictions on advanced semiconductors, artificial intelligence chips and manufacturing equipment, while China has tightened access to rare earths and critical minerals. Sanctions linked to Russia continue to disrupt energy, defence and financial supply chains. In parallel, climate-linked trade measures such as the European Union’s Carbon Border Adjustment Mechanism, due to take effect in 2026, are reshaping global value chains and adding uncertainty for export-driven economies.
Against this backdrop, the Budget aims to sustain real GDP growth of around 7% through a series of targeted interventions. These include expanding manufacturing in priority sectors, revitalising traditional industries, supporting high-performing MSMEs, accelerating infrastructure spending and strengthening energy security. The development of City Economic Regions is positioned as a way to promote decentralised growth beyond major urban centres.
One of the key announcements is the Biopharma SHAKTI initiative, with a proposed outlay of ₹10,000 crore over five years. The programme seeks to position India as a global hub for biologics and advanced therapeutics, reflecting a shift towards higher-value pharmaceutical manufacturing as global healthcare supply chains diversify.
The Budget also makes several calibrated tax and regulatory changes. Higher transaction taxes on derivatives aim to curb speculative activity, while changes to buyback taxation are expected to influence corporate capital return strategies. Adjustments to Tax Collection at Source rates seek to balance revenue protection with compliance efficiency.
Overall, the Budget signals India’s intent to navigate global realignments by strengthening domestic manufacturing, healthcare capacity and productivity, while maintaining macroeconomic stability in an increasingly fragmented world economy.
