Budget 2026: The Indian Union Budget to be presented on February 1 against the backdrop of growing US tariffs, geopolitical tensions and bad neighbourhood may encourage Finance Minister Nirmala Sitharaman to make massive allocations.
The 88th budget in the post-Independence history of India may consider critical factors such as elevated commodity prices, trade and geopolitical tensions, global uncertainties and worsening relations with neighbours like Bangladesh, Pakistan and China to provide sufficient headroom for dramatic reforms and strategic capex in key sectors such as rare earth minerals, indigenous innovation and defence.
What The Budget 2026 May Hold?
The Indian government may introduce and simplify the concept of R&D tax credits and accelerated depreciation for nuclear technology development. This may help nuclear manufacturers and start-ups by encouraging private investment and improving project viability in the segment advanced nuclear technologies.
Industry experts believe that the government would increase the defence-related budget allocation to at least 2.5-3.0 percent of the country’s GDP in the wake of Operation Sindoor and growing insurgency threats from neighbouring nations.
The government may push for Atmanirbhar Bharat defence equipment along with incremental allocations that may largely be directed towards arms and ammunitions, indigenization, defence electronics and drones.
The defence budget may increase by 9-12 percent as compared to last year’s budget, shifting focus more from just headline announcements to execution & order conversion. Clear guidance may be offered on faster follow-throughs on DAC (defence acquisition council) approvals, improved visibility on allocations and clearer timelines for the translation of approvals into firm orders.
Unprecedented importance may be offered to counter-UAV systems, unmanned platforms, long-range artillery, electronic warfare, radars and more balanced allocations across the Air Force, Navy and Army. Continued focus by the government on platform-based programs and long-tenure contracts may become a reality.
