BUDGET 2026 REFLECTS a series of strategic steps the government has taken over the past 12 years. These measures aim to reduce strategic dependence on other nations, enhance the ease of living for people and achieve economic, digital and technological sovereignty to reach the ultimate goal of an “Atmanirbhar and Viksit Bharat 2047”.
The ongoing plan to improve the ease of living for people is reflected in this budget through targeted initiatives and enhanced allocations to the health, education and skilling sectors. An allocation of Rs1,06,530 crore to the health sector aims to develop a domestic biopharma ecosystem to tackle rising non-communicable diseases (such as cancer, diabetes, autoimmune disorders, and rare diseases). It further strengthens the care ecosystem by expanding emergency and trauma care capacity in district hospitals by 50 per cent, training 1.5 lakh multiskilled health workers, scaling the Ayush ecosystem and addressing mental health challenges. Additionally, duty exemptions on drugs for cancer and rare diseases seek to improve affordability, alongside continued support for flagship schemes like Ayushman Bharat and PM-JAY.
The ongoing AI and Semiconductor Mission has received a booster dose of Rs76,000 crore, alongside long-term tax incentives for data centres. The focus remains on localising the storage of national data assets, expanding domestic production of electronic components and semiconductor equipment, and developing full-stack Indian intellectual property. Recognising the use of AI in development of research-driven innovation and its possible impact on employment growth, the budget proposes a research driven innovation ecosystem platform, such as ‘Bharat VISTAAR’, to deploy multilingual AI in agriculture & rural advisory services besides the setting up of a high-power committee to examine the impact of AI on employment and skilling of AI compatible workforce. To connect education with employment, the budget highlights the ‘orange economy’ by supporting the Indian Institute of Creative Technology, Mumbai, to set up content creator labs across 15,000 secondary schools and 500 colleges. These efforts are aimed towards building digital sovereignty for the country.
The government maintains that domestic, reliable and affordable access to critical minerals—especially rare earth elements—is vital for sovereignty and security. These minerals are essential for multiple strategic sectors—from clean energy and electric vehicles to medical devices and digital infrastructure, including AI servers, smartphones, semiconductor, satellites and optical fibre networks, as well as defence systems such as fighter jets and RADAR. Following mining reforms initiated in 2015, the government identified 30 critical minerals necessary for spurring domestic manufacturing and strategic requirements and set up Critical Mineral Mission with an outlay of Rs34,300 crore to exploit substantial domestic critical mineral reserves (fifth largest reserve of rare earth elements). The budget aims to develop a rare earth mineral corridor across Odisha, Kerala, Andhra Pradesh and Tamil Nadu for creating a complete ecosystem of mining, processing, skilling, research and value-added manufacturing. To facilitate this, the government has scrapped basic customs duty on monazite, exempted imported capital goods for mineral processing from duty and allowed tax deductions for exploration expenditure. These efforts are designed to secure supply chains and reduce dependence on hostile economies.
The government has been taking several steps to encourage both foreign and domestic investments in high-tech industries and infrastructure—which are core components of economic sovereignty—to augment the country’s industrial capability. The budget has highlighted continuous focus on ease of doing business which is reflected in 350 reforms undertaken by the government, rationalisation of labour law and quality standard and compliance and simplification of direct tax and GST. The budget proposes simplification, clarity, certainty in tax laws, structural customs reform and trust-based tax regime.
To augment industrial capability, the budget reaffirms a commitment to infrastructure by raising public capital expenditure to Rs12.2 lakh crore. This investment focuses on roads, railways (including dedicated freight and high-speed corridors), aviation and shipping, including 20 new national waterways linking mineral-rich regions with industrial corridors and ports, water, oil & gas, power, renewable energy and telecom sectors. The budget stipulates customs duty exemptions for components used in manufacturing civilian aircraft, biogas distribution, and renewable energy inputs. To push industrial self-reliance, a new scheme for Construction and Infrastructure Equipment (CIE), with an outlay of Rs200 crore, will strengthen the manufacturing of high-value machinery such as tunnel-boring equipment for building metros and high-altitude roads. Furthermore, Rs10,000 crore has been allocated over five years to bolster domestic container manufacturing and expand capacity of Indian ship building to reduce import burden and develop a robust supply chain in the maritime sector.
The government posits that high-tech industrial growth must not come at the cost of the environment. Having achieved the target of 50 per cent clean energy share in 2025—five years ahead of schedule—the budget announces Rs20,000 crore for carbon capture and storage technology. It also extends customs duty exemptions for nuclear power projects until 2035 and for capital goods used in manufacturing Lithium-ion cells. Finally, the budget proposes removing basic customs duty on the import of Sodium Antimonate used in solar glass manufacturing to further support the renewable sector.
Therefore, while ensuring there is continuity in fiscal management, this year’s budget has a clear focus on long-term priorities, building resilience and capacity and equipping the youth.
The author is member of the Economic Advisory Council to Prime Minister Narendra Modi.