07 FEBRUARY 2026

www.businessworld.inUNION BUDGET 2026-27EMPOWERINGGROWTHWith Rs 53.5 lakh crore spending, Rs 12.2 lakh crore capex and a 4.3 per cent fiscal deficit, Budget signals stabilityINDIA-EU FTA SLICED & DICEDINSIDE: INDIA-US INTERIM DEAL LOWERS TARIFFSRs 200SUBSCRIBER’S COPY NOT FOR RESALE RNI NO. 39847/81 I 07 FEBRUARY 2026

4 | BW BUSINESSWORLD | 07 February 2026IN THIS SPECIAL EDITION we decode Union Budget 2026–27. Through expert insights and data-backed analysis, we examine how it could reshape manufacturing competitiveness, accelerate energy transition, deepen digital adoption and influence consumption and investment cycles in the years ahead. We decipher its economic intent, implications for industry and the strategic signals it sends to markets, businesses and consumers. The 1 February proposals placed in Parliament by the Union finance minister arrive at a defining moment, just as India navigates persisting global uncertainty while pursuing its long-term ambition of becoming a resilient, technology-led economic powerhouse. At its core, the Budget reflects a conscious shift from headline-grabbing announcements to structural reforms and a commitment to execute them. It reinforces continuity of the strategies in motion, while fine-tuning instruments that matter, like capital allocation, competitiveness of the manufacturing sector, energy transition, digital infrastructure and fiscal stability. Across sectors, the Budget underscores a strong push towards strengthening the foundations of the economy. Higher capital expenditure reaffirms the government’s commitment to building infrastructure as a growth multiplier. Targeted support for manufacturing, particularly electronics, semiconductors, clean energy, and components, signals a deliberate effort to embed India deeper into global value chains. Reforms in power financing, distribution efficiency, and the digital public infrastructure, similarly highlight the government’s intent to modernise systems that quietly but decisively enhance productivity. For industry, the emphasis on policy predictability and long-term clarity stands out. Rationalised tax frameworks, stable duty structures and focused incentives provide businesses the confidence to commit capital, invest in technology, and plan multi-year expansion strategies. The MSMEs, often an unseen engine of innovation and employment, find renewed attention through improved access to credit, risk capital and ecosystem support. We also bring to you quick reports on two long-pending trade agreements that fructified in quick succession in February, the first with the European Union and the second with India’s largest trading partner, the United States. India’s free trade agreement with the European Union opens up access to a combined market of nearly $24 trillion across 27 countries, with preferential treatment for the vast majority of Indian exports. The interim trade arrangement with the United States lowers tariff barriers and sets the stage for a broader bilateral pact, signalling deeper supply chain integration and technology cooperation between the two economies. Together, these agreements point to a renewed emphasis on market access, strategic alignment and export competitiveness.ANNURAG BATRA [email protected] GROWTHEDITOR-IN-CHIEF’S NOTE

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8 | BW BUSINESSWORLD | 07 February 2026MAILBOXYOUR COMMENTSTALK BACKwww.businessworld.in RNI NO. 39847/81 I 24 JANUARY 2026INSIDE: BW FINANCE 40 UNDER 40 SPECIALTRILLION DOLLAR STARTUP ECONOMYA decade-old ‘Startup India’ is building towards a trillion-dollar contribution by 2031Rs 200INDIGENOUS TECHNOLOGY This refers to the editorial (“The Long Arc of India’s Startup Story,” BW January 24). The author rightly points out that since the past five years capital is increasingly flowing towards core technology sectors that address long-term national and global priorities. Deeptech, climate technology, AI, biotechnology and semiconductor-adjacent innovation are no longer peripheral themes. They are becoming central to India’s startup narrative. It is good to know that climate-tech investments, spanning energy storage, electric mobility infrastructure, green hydrogen and carbon markets, have accelerated as India aligns its startup ambitions with decarbonisation goals. Another plus is that AI-led enterprises, particularly in enterprise automation, logistics optimisation and applied machine learning, are attracting both domestic and global investors.RENUKA TIWARI, EMAILFOCUS ON DEEPTECHThis refers to the editorial (“India’s Deeptech Moment: From Intelligence to Impact”, BW, January 24). The article highlights that India is charting its course towards deeptech, characterised by science and engineering, intellectual depth, research capability, and the execution of scientific know-how. According to Tracxn, as of July 2025, Indian deeptech companies raised US$ 1.06 billion across 137 equity funding rounds, more than double of what was raised during the same period in 2024. This growth trajectory tells a clear story: investor confidence is catching up with India’s technical potential.SHWETA KULKARNI, EMAILBLIPP THIS PAGE TO GIVE US YOUR FEEDBACK INSTANTLYSubmissions to BW |Businessworldshould include the writer’s name and address and be sent by email to the editor at [email protected] or by mail to 74-75, Scindia House, Connaught Place, New Delhi-110001

10 | BW BUSINESSWORLD | 07 February 2026CONTENTSCover design by DINESH S. BANDUNIRelief, Resolve, RiskThe Union Budget 2026-27 balances targeted tax relief, big public expenditure and manufacturing ambition but leaves open questions on execution, fiscal credibility and resilience30 12JottingsCentral bank decides to give private sector-driven growth a chance; Did the lady shortchange women? The Indo-US trade tightrope; All the FM’s silks, and more14ColumnsVikas Singh (p. 14); Amit Kapoor & Darshana Gauratra (p. 16); Srinath Sridharan (p. 18); Shailesh Haribhakti (p. 20) 22FTA DecodedA graphic representation of how India and the EU stand to gain from their landmark FTA that unclocks a $24-trillion market comprising two billion people 26 Work in ProgressA scan of the fine print of the India-US interim trade deal that dramatically slashed tariffs on Indian exports46 On the MoveWith big-ticket capital expenditure, high-speed corridors and logistics reform, can India’s transport backbone finally keep pace with ambition? 54 Prime MoverHow the Union Budget 2026–27 positions logistics as a core engine of India’s manufacturing and trade competitiveness64 A Long PlayHow Budget 2026-27 shifts India decisively from policy ambition to execution, using semiconductors, AI, cloud and tax certainty to build long-term manufacturing and digital infrastructure at scalePhotograph by xxxx xxxxxxBUDGET IMPACTPhotograph courtesy: PIBVOLUME 45, ISSUE 08 07 FEBRUARY 2026

07 February 2026 | BW BUSINESSWORLD | 11The pages in BW Businessworld that are labelled BWi or Promotions contain sponsored content. They are entirely generated by an advertiser or the marketing department of BW Businessworld. Also, the inserts being distributed along with some copies of the magazine are advertorials /advertisements.These pages should not be confused with BW Businessworld’s editorial content. TOTAL NO. OF PAGES INCLUDING COVER 12478 MSMEs EmpoweredThe Union Budget 2026-27 announces a slew of reforms that places micro, small and medium enterprises (MSMEs) at the core of India’s growth strategy90 Growth GurukulsFrom skilling and research to industrylinked campuses, how Budget 2026 places education at the centre of India’s growth and services-led ambitions98 Roadmap MissingThe energy sector gets a fair amount of attention in the Union Budget, which, however, falls short of delivering a market-ready energy transition frameworkBUDGET 2026 COLUMNS44 Manish Anandani, Kenvue 50 Satish Kumar Agrawal, Kamdhenu Group52 Boman Irani, Rustomjee Group56 D.K. Srivastava, EY India58 Sunil Badala &Nirmal Nagda, KPMG in India62 Naina Lal Kidwai, India Sanitation Coalition68 CP Gurnani, AIONOS70 JS Gujral, Syrma SGS72 Monica Pirgal, Bhartiya Converge74 Ravi Nawal, Data Peace AI Technologies, 76 Jaijit Bhattacharya, Centre for Digital Economy Policy 84 Archana Jahagirdar, Rukam Capital86 Srini Sriniwasan, Kotak Alternate Asset Managers88 Rikant Pittie.EaseMyTrip96 Lohit Bhatia, Quess Corp100 N. Venu, Hitachi Energy108 Tushar Chaudhury, Motovolt Mobility110 Narayan Subramaniam, Ultraviolette Automotive112 Colin Shah, Kama Jewellery,114 Nirmal K Minda, ASSOCHAM102 Marketing VisionHow the budget’s sharp focus on AI, AVGC infrastructure and digital platforms signals strategic pivot toward intelligence-led economic systems116 Food TalkThe Karigari brass including MD Yogesh Sharma and Chef Harpal Singh Sokhi on how they are making the restaurant chain a success, and more121Last WordSunil Mittal on how he sees trade optimism, clarity and telecom sustainability as priorities as India navigates growth, investment and digital infrastructure

12 | BW BUSINESSWORLD | 07 February 2026JOTTINGSIN ITS LATEST bimonthly monetar y p o l i c y re v i e w, t h e M o n e t a r y P o l i c y Committee (MPC) of the Reserve Bank of India has once again chosen calm over drama, keeping the repurchase rate – better known as the repo rate – unchanged at 5.25 per cent. The decision, widely anticipated, suggests that the central bank is in no hurry to either slam the brakes or hit the accelerator as the economy navigates mixed global cues and a steady domestic demand.By pressing pause on rates, the MPC has signalled confidence in the inflation being under control and so,growth not having to need any monetary crutches. For the Indian industry, the message is reassuring. Stable borrowing costs allow companies to plan capital expenditure with greater certainty, especially in manufacturing, infrastructure and services, without worrying about sudden spikes in interest expenses. That said, sectors hoping for cheaper credit to kickstart aggressive expansion will have to wait a little longer.Consumers with existing loans are perhaps the quiet winners of this status quo policy. Home, auto and personal loan borrowers o n f l o a t i n g r a t e s c a n breathe easy as equated monthly instalments (EMI) are unlikely to rise in the near term. For households juggling tight budgets, predic table EMIs mean fewer unpleasant surprises a n d b e t t e r c a s h -f l o w planning. However, those hoping for immediate EMI relief via rate cuts may feel mildly disappointed. Banks, meanwhile, are under no compulsion to reduce deposit rates, keeping savers in a familiar wait-and-watch mode. With the MPC maintaining a neutral stance, future moves will hinge squarely on inflation trends and growth data – making patience, yet again, the policy’s quiet punchline. — Ashish SinhaUNION FINANCE MINISTER Nirmala Sitharaman’s Union Budget 2026-27 is framed at a critical juncture for India’s demographic trajectory. Fertility rates are falling, ageing is accelerating and the window to reap the demographic dividend is expected to narrow after 2031. Against this backdrop, spending on women and girls is not merely a social policy choice but a structural economic necessity. Yet a closer reading of the budgetary documents suggests that investments remain diffuse, uneven, and insufficiently targeted. At a headline level, the numbers appear reassuring. Total expenditure rises to Rs 53.47 lakh crore, while the gender budget grows by 12 per cent to Rs 5.01 lakh crore. Health allocations also increase by around six per cent. However, much of the gender-related Did the Budget Shortchange Women?Central Bank Decides to Give Private Sector Driven Growth a Chance spending continues to be embedded within large, general schemes, making it difficult to track outcomes specifically for women or to hold implementing agencies accountable.This dilution is especially evident in health. While overall allocations to the National Health Mission rise modestly, funding for family welfare within the programme declines slightly, alongside a reduction in capital outlays. These heads finance frontline outreach, maternal care, and access to contraception, areas that directly shape women’s health outcomes and reproductive autonomy. As Poonam Muttreja, Executive Director of the Population Foundation of India, put it, “Women-led development is not a welfare agenda; it is central to India’s economic future ...”— Abhishek SharmaPhotograph by YAY ImagesPhotograph by Satheesh Nair

07 February 2026 | BW BUSINESSWORLD | 13Photograph by ImagedbUNION FINANCE MINISTER Nirmala Sitharaman admitted at the Times Network studio on 8 February that she did not like her attire discussed. Sitharaman protested that she would rather be known for her work and there seems little doubt that she will not be. The finance minister’s tenure at North Block having coincided with a dreaded pandemic of global proportions, followed by wars , supply chain glitches and trade tensions, all of her nine financial manoeuvres to keep India on the high growth path, required great dexterity and hard work that time could scarcely ignore. Looking visibly worn during her address at NDTV on 7 February, Sitharaman did admit that geopolitical uncertainties were among her worst fears at the moment. All the FM’s Silks That Saturday evening, she was draped in a white and black silk saree with a full-sleeved black woollen accessory. On 1 February, a pink Kanjeevaram had been slung over a long, yellow woollen blouse. At the Times Network discussion, the same saree was worn over a black long-sleeved blouse. Sorry, finance minister, the strict, disciplinarian in you may not quite approve, but these long sleeved accessories – oh – so appropriate for cold Delhi springs – may just evolve into a fashion statement, somewhat like Indira Gandhi’s pearls or Sonia Gandhi’s black head-band. You may not like the comparison or the attention your beautiful hand-woven silks attract, but every high chair has its pitfalls. — Madhumita ChakrabortyThe Indo-United States Trade TightropeTHE JOINT STATEMENTS issued on 6 February and 7 February on India–United States trade ties promise momentum, market access and mutual goodwill. Scratch the surface, however, and the deal looks less like a sweeping breakthrough and more like a carefully choreographed balancing act. For the Indian economy, the positives are obvious. Easing tariffs and smoother trade rules could help exporters in textiles, pharmaceuticals, engineering goods and technology services at a time when global demand remains patchy. Lower barriers also send a comforting signal to foreign investors that India remains open, pragmatic and deal-friendly. Industry, in particular, has reason to smile. Easier access to the US market could boost volumes, margins and confidence, especially for sectors facing cost pressures at home. Yet the fine print matters. Increased imports of US industrial and agricultural products may intensify competition for domestic players, especially smaller firms that lack scale or pricing power. Farmers, meanwhile, remain the uneasy spectators. While politically sensitive crops are said to be protected, greater inflows of US agricultural and processed food products could still weigh on prices and markets of home-grown produce. For a rural economy already battling income volatility, even indirect pressure is a sore point. In essence, the trade deal walks a diplomatic tightrope – pro-growth, pro-industry, cautiously profarmer, and unmistakably pro-headline. But will it deliver substance beyond symbolism? — Ashish SinhaPhotograph by AleksTaurusPhotograph courtesy: PIB

14 | BW BUSINESSWORLD | 07 February 2026structure – specifically, speed. The announcement of seven highspeed rail corridors, including segments of the proposed “South Diamond”, marks a shift in how India views economic geography. Distance is no longer merely an inconvenience; it is a tax on productivity. By compressing travel times between manufacturing clusters, ports and urban centres, the government is betting that velocity will do more for growth than any marginal subsidy.Yet blueprint elegance rarely survives the first mile of land acquisition. While the Centre provides the capital – Rs 12.2 lakh crore in capital expenditure – the states must provide land and clearances. In a fractured political landscape, last-mile execution remains vulnerable to administrative delay and local resistance. Without a fundamental “software update” to land-titling systems and labour regulation, these corridors risk remaining lines on a map rather than engines of growth.The Strategic Silhouette: Security vs. EmploymentBeneath the speech lay a clear awareness of geopolitical risk. As global trade fragments, India seeks not to passively absorb supply-chain shifts but to shape its own industrial security. Semiconductor manufacturing and a new biopharma push signal this turn, from economic inputs to strategic assets alone. Coupled with rare-earth corridors and customs exemptions for critical minerals, the Budget outlines a strategy of selective self-sufficiency. The aim is not to produce more generic goods, but to build capabilities in complex, research-linked manufacturing that anchor India within global supply chains.However, a reality gap remains. Semiconductors and biologics are capital-intensive, not labour-intensive. While they strengthen strategic depth, they offer little for the millions entering the workforce each year. A robotised fabrication plant or high-end laboratory will not absorb surplus labour from the hinterlands. By privileging velocity and strategic depth, the Budget risks widening the gap between GDP growth and mass COLUMN By Vikas SinghNIRMALA Sitharaman’sninth Budget suggests that India believes the long taper is over and that a cautious take-off has begun. For much of the past decade, criticism of India’s economic management followed a familiar script: a government that spoke the language of transformation but governed with the instincts of a caretaker, balancing a vast electorate’s demands against the imperatives of long-term industrial growth. This year’s Union Budget signals a deliberate attempt to close that gap. It is neither a manifesto of give-aways nor a populist pre-election splurge. Instead, it reads like an engineering plan: unsentimental, fiscally restrained, and oriented toward capacity rather than consumption.The headline numbers matter. A fiscaldeficit target of 4.3 per cent, tighter than markets feared, paired with capital expenditure of Rs 12.2 lakh crore sends a clear signal. The state intends to invest, not indulge. Government borrowing has been kept lower than expected, easing concerns about crowding out private capital. The High-Speed Bet:Connectivity as Capital The centrepiece of the Budget was infraThe author is an economist and columnistFROM HANDOUTS TO HARDWAREBUDGET BETS ON SPEED, STEEL & STRATEGIC DEPTH

07 February 2026 | BW BUSINESSWORLD | 15Shifting Social PrioritiesLess remarked upon, but equally significant, is what the Budget does not emphasise. The rhetoric of rural romanticism has softened. In its place is a pragmatic acceptance of urbanisation. The focus on City Economic Regions, Tier-2 and Tier-3 cities, and closer alignment between education and employment reflects an understanding that India’s growth will be urban-led. Hard infrastructure is being paired with institutional reform, linking skills to jobs and research to production. Together, these choices suggest a state increasingly comfortable treating cities as the primary engines of economic transformation.The Verdict: From Ambition to AccountabilityThe risks are real. Execution remains India’s perennial weakness, and in 2026, global conditions are unlikely to be forgiving. With re-emerging protectionism and supply-chain fragmentation, the international trade environment has become a “slippery pitch.” Yet, the direction of travel is unmistakable. By targeting a 4.3 per cent fiscal deficit while lifting capex to Rs 12.2 lakh crore, the government has tuned the engine and upgraded the software. Yet execution is the test: land acquisition and weak Centre-State coordination threaten to turn high-speed rail and semiconductor hubs into monuments of intent. Ultimately, a faster train is of little use to a passenger who cannot afford the ticket or lacks the skills to work at the destination. The success of ‘Hardware over Handouts’ will not be measured by the miles of track laid or the chips fabricated, but by whether this new industrial skeleton can grow the “muscle” of mass employment. For the first time in years, however, the country appears willing to trade the comfort of the status quo for the rigours of a high-performance future. employment. India may be building a sophisticated engine, but it must still find a way to carry all its passengers.Finance and the Software UpdateThe emphasis on hardware is matched by a quieter software upgrade. The impending implementation of the New Income Tax Act, 2025, set to replace a six-decade-old framework, signals an overdue attempt to modernise the operating system of India’s economy.Immediate tax relief for the salaried class is modest, but the deeper reform lies in simplification and predictability. For businesses transitioning from informality to scale, a clearer tax code may prove more valuable than any single incentive. Fiscal discipline, tax reform and capital expenditure are thus complementary tools aimed at reducing uncertainty – the most corrosive tax of all.The MSME Reset & the Missing MiddleIf infrastructure is the economy’s skeleton, MSMEs are its underdeveloped muscle. This Budget recognises that India’s manufacturing weakness is structural, not numerical; the challenge isn’t a lack of enterprises, but a lack of enterprises that scale. The Rs 10,000 crore MSME Growth Fund marks a shift from debt guarantees to patient, quasi-equity capital, recognising that firms often remain small to avoid the regulatory and financial penalties of growth. ‘Corporate Mitras’ aim to ease compliance frictions. Yet critics argue the problem is less a “missing middle” than a “missing floor”: a Rs 25-trillion credit gap dwarfs these interventions. Guidance helps, but for a small entrepreneur, a bureaucracy that remains inherently suspicious is the most corrosive tax of all. The Budget’s success hinges on lowering the real cost of formality, not layering it.India’s Budget favours infrastructure and strategic industry over sops, raising growth potential but leaving unanswered whether a faster economy will employ enough peoplePhotograph by Seemantaduttaskv

16 | BW BUSINESSWORLD | 07 February 2026N RECENT TIMES, global governance has become increasingly vulnerable to domestic political cycles in major powers. The decision by the United States, under President Trump to withdraw from over 60 international institutions or the US decision to initiate a second withdrawal from the Paris Agreement, which will become effective in January 2026 is more than just a diplomatic recalibration. The US funding withdrawals and delays, after Trump’s re-election have affected global health coordination through the World Health Organisation, where the US accounted for an estimated 10-15 per cent of the budget. Washington has additionally exited the UN Human Rights Council, while development interventions across parts of Africa have faced uncertainty. Taken together, these developments point to a much broader transformation in the multilateral order. It is a signal of a deeper shift towards transactional nationalism where the collective problem solving is subordinated to short- term political calculus. The significance lies less in the retreat itself, than in what it reveals about international cooperation. Cooperation, however, is not collapsing. It is being recalibrated, shaped less by shared commitments and more by selective participation. However, multilateralism must remain functional and effective even when participation is politically contingent. Multilateral institutions despite their imperfections, remain among the few mechanisms capable of coordinating collective responses to global challenges. Global problems these institutions set out to diminish have become more complex, more interconnected and more uneven in their impact. Climate change, energy transition, public health, and development finance are classic examples of global challenges. These are problems that no country, however powerful, can solve alone. However, when institutions weaken, the costs are not evenly distributed. They often fall disproportionately on developing economies that are exposed to climate shocks, capital volatility and technology barriers. Thus, making cooperation more indispensable and valuable. Globally, according to United Nations Environment Programme estimates there will be a climate finance gap of over $4trillion by 2030 for developing counties. The economic asymmetry in a global world also explains why multilateral cooperation continues to matter materially. Multilateral development banks alone disburse more than $200 billion annually. Even BRICS’s New Development Bank has greenlit a $35 billion fund for infrastructure development. They function less as diplomatic forums and more as mechanisms of economic risk management as they can pool capital, manage risk and provide predictability in an increasingly volatile global economy. The retreat of a major power often changes the plot. However, the temptation to frame this moment as a “power vacuum” that is waiting to be filled would be misguided. Even China’s growing footprint as a leading contributor to several UN development programmes through competitive institutional dominance is no alternative. The current moment is less about succession and more about sustainability. In such a landscape, the durability of multilateral cooperation progressively depends on countries willing to invest in institutions without seeking dominance or replacement leadership. ARTHSASTRA By Amit Kapoor & Darshana Gauratra ISustaining Multilateralism When the US Steps BackClockwise from the left: Amit Kapoor & Darshana Gauratra

07 February 2026 | BW BUSINESSWORLD | 17It is in this context that the role of middle and emerging economies becomes relevant. They are not replacements for hegemonic leadership, but stabilisers of cooperation. According to the IMF, over 60 per cent of global growth this decade is expected to come from the Global South. However, these are also nations under stress to develop in a new world of climate vulnerabilities and energy transition. India’s experience helps illustrate how emerging economies respond when multilateralism is under strain rather than collapse. According to the Global Climate Risk Index, the nation consistently ranks among the world’s ten most climate vulnerable nations. Estimates also suggest that climate-related disruptions already cost India approximately between two per cent and three per cent of GDP annually through lost productivity, damaged infrastructure and agricultural stress. These vulnerabilities make multilateral cooperation less a matter of principle and more a matter of self-interest. If multilateralism is adapting rather than ending, its evolution is most visible in issue-based coalitions that prioritise delivery over unanimity. The International Solar Alliance (ISA), headquartered in India, would offer a revealing test case. The more than 100-member country alliance reflects both ambition and practical possibility. The decision of the US to step away from the ISA matters not only for symbolic reasons but for what it implies in terms of finance, technological partnerships and global signalling. The distinction here is important because it shifts the focus from who participates to what the institution delivers. Rather than undermining the alliance, the exit underscores why platforms anchored in developing country priorities must endure beyond the political cycles of any single power. Its relevance was never contingent on universal participation. It is dependent on its ability to mobilise finance, scale deployment and lower transition costs. The opportunity here is more interesting. If India can pivot the alliance decisively towards delivery by crowding in private capital, engaging multilateral and regional development banks, and experience accelerating implementation, the ISA would emerge more credible. Success of this magnitude would carry significance beyond solar energy. It would signal that effective cooperation does not require unanimity, but it does require consistency. The broader global context makes this role more consequential. The success of ISA would also demonstrate multilateral cooperation can still function effectively in a fragmented global order. India’s value proposition, then, is not ideological leadership but predictability. The US retreat from global institutions is not a catastrophe. It is an opportunity to demonstrate how an international system adapts. It is also an opportunity for countries like India not to lead loudly but steadily. Fundamentally, it is an opportunity to keep global cooperation intact at a time when it is under strain. The future of multilateralism will ultimately be shaped not by who exited, but by who stayed, adopted and delivered. The decision of the US to step away from the International Solar Alliance matters not only for symbolic reasons but for what it implies in terms of finance, technological partnerships and global signalling. The distinction here is important because it shifts the focus from who participates to what the institution deliversAmit Kapoor is Chair, Institute for CompetitivenessDarshana Gauratra is a researcher at the Institute for CompetitivenessPhotograph courtesy: PIB

18 | BW BUSINESSWORLD | 07 February 2026FTER SUCCESSIVEBudgets that attempted and could not engineer a consumption revival, the government has decisively pivoted back to the supply side of the economy. This shift is neither accidental nor ideological. The consumption push did not deliver the virtuous cycle policymakers hoped for, and private investment – the elusive lodestar of the post-pandemic recovery – remains stubbornly below pre-Covid levels.In 2025, GST rate cuts were projected as a trigger for demand, confidence, and ultimately private capex. The theory was orthodox and familiar: revive household spending, crowd in private investment, and let the State step back. Consumption recovered unevenly, savings remained precautionary, and corporate investment failed to broaden meaningfully.What replaces it is a return to supply-side management: public capital expenditure, sectoral pushes, targeted skilling, and visible infrastructure. On paper, this is sensible. In practice, it exposes the central weakness of India’s political economy today – a government willing to spend, but a private sector reluctant to commit; eager announcements without a parallel reshaping of incentives and expectations. The Budget moves resources, but it does not move belief.That absence of belief is now the most inconvenient truth of India’s economic moment. Despite macro stability, healthier corporate balance sheets, and repeated reform assurances, private capital continues to defer long-term bets. The reason is not a shortage of opportunity, but a deficit of predictability. Capital is not waiting for another incentive scheme; it is waiting for conviction – that rules will not change midstream, contracts will be enforced without friction, and commercial disputes will be resolved within reasonable timeframes. Without this, the ambition of Viksit Bharat 2047 risks resting disproportionately on public expenditure. Long-pending administrative law reform – frequently acknowledged and consistently deferred – remains the missing institutional bridge between headline growth and sustained private investment.Taken seriously, such reform would do more to reshape India’s investment climate than any fiscal stimulus. It would reengineer how entrepreneurs encounter the State – replacing discretion with discipline, negotiation with rule, and delay with certainty. Clear standards of regulatory action, time-bound approvals, reasoned orders, and effective appellate remedies ASupply Without Private Conviction(A)muse & Musings By Srinath Sridharan

07 February 2026 | BW BUSINESSWORLD | 19The sectoral emphasis sharpens this recalibration, which reflects a quiet shift in India’s development strategy. Manufacturing, long projected as the engine of mass employment and productivity convergence, has not scaled as much as its potential is sought to be. In its place is a services-led model, quicker to absorb labour and easier to scale in the near term. The focus on demand-linked skilling reflects a more grounded understanding of how jobs emerge.Yet this realism masks a deeper challenge policymakers appear reluctant to acknowledge. Across corporate boardrooms, the dominant conversation is no longer labour absorption but financial efficiency. Enterprises exist to meet shareholder expectations, and automation, AI-driven processes, and platform technologies are increasingly deployed to improve margins and reduce headcount. Emerging technologies will intensify this trend, compressing labour demand even in sectors once considered employmentrich.This has serious implications for India’s growth model. Services-led expansion, without institutional depth and productivity gains, risks generating fewer stable, high-wage jobs than headline numbers suggest. Skilling without mobility, certification without portability, and training without predictable absorption will struggle against a technological tide that favours efficiency over employment. Manufacturing, meanwhile, is itself becoming less labour-intensive. The trade-off between profitability and labour utilisation is no longer theoretical; it is becoming a central political economy challenge.This is where Budget 2026-27 feels politically evasive. It manages constraints competently and has addressed geopolitical challenges well, but avoids trade-offs. It stops short of explaining how growth, technology, and employment will coexist, or what institutional assurances will persuade firms to expand capacity rather than merely optimise costs. Reform remains incremental and managerial – careful, calibrated, and insufficient.India does not suffer from a lack of projects or ambition. It suffers from a shortage of India Inc.’s conviction about how growth will translate into opportunity in an era of automation and efficiency-driven enterprise. Until policymakers confront this reality – and articulate how they will reform their institutions and way of bureaucratic and judicial processes, not incentives alone, will mediate the coming labour-capital tradeoffs – even well-constructed Budgets will remain exercises in motion, not moments of national mission. Viksit Bharat Ambitions Cannot Rest on Public Capital Alonewould restore confidence in commercial decision-making and contract enforceability. More importantly, it would move ease of doing business away from performative rankings and dashboards to the lived realities faced daily by large firms, medium enterprises, small businesses, and nano entrepreneurs. A developed India by 2047 cannot be built on managed metrics or the assumption that corruption is incidental. It requires institutions that reduce arbitrariness, reward compliance, and make fairness routine rather than exceptional.Instead of confronting these anxieties, Budget 2026-27 falls back on a familiar substitute for reform: the State as the primary risk-taker. Public capex is once again tasked with sustaining growth, signalling momentum, and crowding in private investment. This has delivered assets and short-term activity, but its limits are clear. Governments can build infrastructure. When public spending begins to replace private risktaking rather than unlocking it, growth becomes administratively driven – dependent on approvals, allocations, and fiscal headroom – and therefore politically fragile.The writer is a corporate advisor and author of Family and DhandaPhotograph courtesy: Sansad TV

20 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACTA lower fiscal deficit, a credible glide path for reducing debt-to-GDP, and a reduced need for incremental borrowing, supported by disinvestment proceeds, together restore fiscal headroom without sacrificing growth momentum. This enhances India’s sovereign credibility Column by Shailesh HaribhaktiThe author is a chartered accountant, independent director and author of several books including Digital Professional, Audit Renaissance, AI Auditing and Sustainable Abundance, History of Mankind, and The Shailesh Haribhakti WayT HIS BUDGET MARKS a quiet but decisive shift in the philosophy of economic governance – from control to confidence, from suspicion to trust, and from discretion to data. The most important reform, in my view, is the comprehensive simplification and liberalisation of the customs and tax administration. When a nation chooses to trust its citizens, compliance rises naturally. Data-driven systems replacing discretionary prosecution will dramatically reduce litigation across customs, GST, and direct taxes. Importantly, both honest taxpayers and inadvertent defaulters are being spared the trauma of criminalisation – this is civilised governance in action. Equally significant is the Budget’s precision in investment priorities. Support for micro, small and medium enterprises (MSMEs), semiconductors, advanced manufacturing, biologicals, rare-earth corridors, carbon capture and utilisation, and strategic clean-chemistry ecosystems reflects a clear understanding of where future value will be created. This is not industrial policy by slogans, but by carefully chosen capability stacks. I am particularly encouraged by the integration of science, humanities, engineering, arts, and mathematics in mission-oriented innovation. This signals a recognition that deep technology breakthroughs require interdisciplinary thinking, not silos. On the macro front, the numbers matter. A lower fiscal deficit, a credible glide path for reducing debt-toGDP, and a reduced need for incremental borrowing, supported by disinvestment proceeds, together restore fiscal headroom without sacrificing growth momentum. This enhances India’s sovereign credibility at a time when global capital is discerning and risk-averse. Taken together, this Budget reinforces India’s strategic posture in a fractured world: Atmanirbharin critical capabilities, globally integrated by design, and governed through trust rather than fear. This is not a dramatic Budget. But it is a mature one – and maturity is exactly what this moment demands. Data-driven systems replacing discretionary prosecution will dramatically reduce litigation across customs, GST, and direct taxesSHIFT IN PHILOSOPHY OF ECONOMIC GOVERNANCEPhotograph by Subhabrata Das

07 February 2026 | BW BUSINESSWORLD | 21As global financial markets grow more complex and technology-driven, business schools must go beyond theory to prepare students for real-world decision-making. Galgotias School of Business (GSB), Galgotias University, has taken a major leap in this direction with the launch of its new, state-of-the-art Stock Simulation Lab—giving students direct exposure to stock markets, IPOs and professional trading environments.The initiative strengthens Galgotias’ position as one of India’s most future-ready business schools, combining strong placement outcomes, cutting-edge financial infrastructure and deep industry integration.The School of Business has recorded an outstanding placement season, with over 300 leading companies recruiting students across consulting, banking, finance, analytics and corporate leadership roles. Big Four firms—Deloitte, KPMG, EY and PwC—were among the major recruiters, along with global financial institutions such as JP Morgan, Barclays, ICICI Bank, Federal Bank, JK Cement, IDFC First Bank, Reliance JioBP, Ultratech Cement and OCBC Singapore, reflecting Galgotias’ growing presence in high-value global careers.What truly differentiates Galgotias is its industry-aligned academic model. Senior corporate leaders help design and continuously update the curriculum through the University’s Board of Studies, ensuring that students graduate with skills that employers actually demand. This is delivered through G-SCALE (Galgotias Student-Centered Active Learning Ecosystem), which replaces rote learning with live case studies, simulations, industry projects and data-driven Galgotias School Of Business Launches Advanced Stock Simulation Lab To Create Market-Ready Finance Professionalsdecision-making.The newly launched Stock Simulation Lab adds a powerful, career-defining dimension to this ecosystem. In the lab, students don’t just study financial markets—they experience them in real time. Using professional trading software and live market data, students learn to:n Track and trade stocks across sectorsn Analyse IPOs and investment opportunitiesn Build and manage portfoliosn Understand market volatility and riskn Apply financial models to real companiesThis immersive environment allows students to make investment decisions, test strategies and learn from outcomes in a risk-free but highly realistic market setting. The result is graduates who are financially literate, analytically strong and market-ready—qualities increasingly sought after in investment banking, equity research, wealth management, fintech and corporate finance.Entrepreneurship also remains a core focus. Through the Galgotias Incubation Centre, students receive hands-on support to convert ideas into scalable ventures, gaining experience in product development, funding strategy, market validation and startup growth while still pursuing their degrees.Backed by global academic partnerships, international case studies and project-based learning, Galgotias ensures that students are prepared not just for Indian companies, but for multinational corporations and global financial institutions.As business education worldwide evolves to meet the demands of a fast-changing economy, Galgotias School of Business is emerging as a powerful launchpad for careers in finance, consulting, entrepreneurship and global leadership—where students don’t just learn about markets, they learn to master them. For more information, visit: https://www.galgotiasuniversity.edu.inThe initiative strengthens Galgotias’ position as one of India’s most future-ready business schoolsDr Dhruv Galgotia ( left ) inaugurating the Stock Simulation Lab with Dr Mahesh Sharma, Member of Parliament ( right)

22 | BW BUSINESSWORLD | 07 February 2026Mother of All DealsBy Sangeet Kumar SanuA graphic representation of how India and the EU stand to gain from their landmark FTA that unclocks a $24-trillion market comprising two billion peopleIndia and the European Union (EU) signed a Free Trade Agreement (FTA) on 27 January, which EU Commission President Ursula von der Leyen termed as the “motherof all deals.” This deal is estimated to impact 2 billion people in India and the EU 27-member nations, with a combined market estimated at over $24 trillion, bringing opportunities for both geographies. The FTA claims market access across 97 per cent of tariff lines and for more than 99 per cent of India’s exports by trade value. Bilateral merchandise trade between India and the EU has demonstrated sustained growth, valued at approximately $135 billion in 2024-25, with India exporting roughly $77 billion to the EU. Trade in services amounted to $70.9 billion in 2024, with EU exports amounting to $30.8 billion and imports amounting to $40.1 billion. The agreement will expand opportunities for EU and Indian services suppliers and ensure a more stable and predictable trade environment.India has safeguarded sensitive sectors, including beef and poultry, dairy products, fish and seafood, cereals (especially rice and wheat), fruits and vegetables, nuts, edible oils, tea, coffee, spices, tobacco, etc., balancing export growth with domestic priorities.The EU has excluded items such as meat and meat offal, dairy products, honey, rice, sugar, and tobacco from tariff concessions. EU’s Access to Indian MarketsOverall Market AccessIndia has committed to substantial trade liberalisation to enhance bilateral economic tiesTariff Elimination & Reduction ScheduleThe offer is categorised into three primary tracks based on the speed of implementationProduct 2024 Current Future Tariffs StagingExports Tariffs($ Bn) Machinery and electrical 19.34 Up to 44% Nil for almost Up to 10 yearsequipment all products (mostly 5-7)Aircraft and spacecraft 7.59 Up to 11% Nil for almost Up to 10 yearsall products (mostly 5Optical, medical and 4.03 Up to 27.5% Nil for 90% of Up to 10 yearssurgical equipment the products (mostly EIF, 5 or 7)Plastics 2.61 Up to 16.5% Nil for almost Up to 10 yearsall products (mostly 7)Pearls, precious stones 2.49 Up to 22.5% Nil for 20% of the Up to 10 yearsproducts and tariff (mostly 5)reduction for another 36% of the products Chemicals 3.8 Up to 22% Nil for almost Up to 10 yearsall products (mostly EIF)Motor vehicles 1.90 110% 10% (quota of 250k)Iron and steel 1.78 Up to 22% Nil for almost Up to 10 yearsall products (mostly EIF, 5 or 7)Pharmaceuticals 1.30 11% Nil for almost Up to 10 yearsall products (mostly 5 or 7)Metric Coverage (%)Total tariff lines offered 92.1Total EU export value covered 97.5 Category Tariff Lines / Timeline Scope (%)Immediate 49.6 Duty-free uponelimination entry into forcePhased 39.5 Gradual removalelimination over 5, 7, or 10 yearsPhased 3.0 Partial cuts or tariffreductions rate quotas (TRQs)/ TRQs**TRQs: Specific high-value agricultural products subject to quotas include apples, pears, peaches, and Kiwi fruitPhotographs courtesy: PIB

07 February 2026 | BW BUSINESSWORLD | 23Mother of All DealsBy Sangeet Kumar SanuA graphic representation of how India and the EU stand to gain from their landmark FTA that unclocks a $24-trillion market comprising two billion peopleIndia and the European Union (EU) signed a Free Trade Agreement (FTA) on 27 January, which EU Commission President Ursula von der Leyen termed as the “motherof all deals.” This deal is estimated to impact 2 billion people in India and the EU 27-member nations, with a combined market estimated at over $24 trillion, bringing opportunities for both geographies. The FTA claims market access across 97 per cent of tariff lines and for more than 99 per cent of India’s exports by trade value. Bilateral merchandise trade between India and the EU has demonstrated sustained growth, valued at approximately $135 billion in 2024-25, with India exporting roughly $77 billion to the EU. Trade in services amounted to $70.9 billion in 2024, with EU exports amounting to $30.8 billion and imports amounting to $40.1 billion. The agreement will expand opportunities for EU and Indian services suppliers and ensure a more stable and predictable trade environment.India has safeguarded sensitive sectors, including beef and poultry, dairy products, fish and seafood, cereals (especially rice and wheat), fruits and vegetables, nuts, edible oils, tea, coffee, spices, tobacco, etc., balancing export growth with domestic priorities.The EU has excluded items such as meat and meat offal, dairy products, honey, rice, sugar, and tobacco from tariff concessions. EU’s Access to Indian MarketsOverall Market AccessIndia has committed to substantial trade liberalisation to enhance bilateral economic tiesTariff Elimination & Reduction ScheduleThe offer is categorised into three primary tracks based on the speed of implementationProduct 2024 Current Future Tariffs StagingExports Tariffs($ Bn) Machinery and electrical 19.34 Up to 44% Nil for almost Up to 10 yearsequipment all products (mostly 5-7)Aircraft and spacecraft 7.59 Up to 11% Nil for almost Up to 10 yearsall products (mostly 5Optical, medical and 4.03 Up to 27.5% Nil for 90% of Up to 10 yearssurgical equipment the products (mostly EIF, 5 or 7)Plastics 2.61 Up to 16.5% Nil for almost Up to 10 yearsall products (mostly 7)Pearls, precious stones 2.49 Up to 22.5% Nil for 20% of the Up to 10 yearsproducts and tariff (mostly 5)reduction for another 36% of the products Chemicals 3.8 Up to 22% Nil for almost Up to 10 yearsall products (mostly EIF)Motor vehicles 1.90 110% 10% (quota of 250k)Iron and steel 1.78 Up to 22% Nil for almost Up to 10 yearsall products (mostly EIF, 5 or 7)Pharmaceuticals 1.30 11% Nil for almost Up to 10 yearsall products (mostly 5 or 7)Metric Coverage (%)Total tariff lines offered 92.1Total EU export value covered 97.5 Category Tariff Lines / Timeline Scope (%)Immediate 49.6 Duty-free uponelimination entry into forcePhased 39.5 Gradual removalelimination over 5, 7, or 10 yearsPhased 3.0 Partial cuts or tariffreductions rate quotas (TRQs)/ TRQs**TRQs: Specific high-value agricultural products subject to quotas include apples, pears, peaches, and Kiwi fruit07 February 2026 | BW BUSINESSWORLD | 23

Impact & ObjectivesThe agreement is designed to be mutually beneficial by focusing on high-tech integration and supply chain resilience.DiversificationExpands India’s sources for hightechnology goods.Cost EfficiencyReduces input costs for Indian businesses, making them more competitive.Consumer Benefit Lowers prices and increases variety for Indian consumers.Global Integration Facilitates the entry of Indian businesses into Global Supply Chains (GSC).Sectoral Highlights The offer includes specific concessions for high-priority EU exportsIndustrial GoodsMost tariffs on machinery (up to 44%), chemicals (22%), and pharmaceuticals (11%)will be eliminated.Finished car duties expected to drop from 110% to 10% over time; car parts to reach zero duty within 5-10 years.Automotive Wines & SpiritsDrastic reductions from 150% down to as low as 20-40% in phases.Tariff Elimination & Timeline*TRQ: Tariff Rate Quotas (limits on the quantity of a good that can be imported at a lower tariff rate).Category % of Tariff % of India’s TimelineLines ExportsImmediate 70.4% 90.7% At entry intoElimination forcePhased 20.3% 2.9% Over 3 to 5Elimination yearsPreferential 6.1% 6.0% Reduction orAccess TRQs*Sector-specific Impact Highly labour-intensive sectors accounting are positioned for immediate growth„ Textiles & Apparel:Garments, yarns, and fabrics.„ Leather & Footwear: Finished leather goods and shoes.„ Agri Commodities: Tea, coffee, and spices.„ Consumer Goods: Sports goods and toys.„ Luxury & Marine: Gems and jewellery, certain marine products.Duties to be removed gradually over a 3–5 year period„ Food Processing: Various processed food items.„ Marine: Specific seafood products not covered in Group A.„ Security: Arms and ammunition.Partial tariff reductions or volumebased quotas„ Heavy Industry: Steel and Passenger Cars.„ Agri-Allied: Poultry products, preserved vegetables, and bakery products.„ Marine: Specific shrimp and prawn products (managed via TRQs).Group A: Immediate dutyfree access (90.7% of exports)Group B: Staged zero-duty access (2.9% of exports)Group C: Preferential Access & Quotas (6.0% of exports)Top 10 India’s exports to EU**Based on 2024-25 data$12.68 bnTotal exports:$77.1 billion$22.55 bn$2.11 bn$2.26 bn$2.27 bn $2.67 bn$2.88 bn$4.25 bn$5.68 bn$7.67 bn$12.08 bnElectrical, Electronic EquipmentOrganic ChemicalsMachinery, Nuclear Reactors, & BoilersPharmaceutical ProductsApparel & Clothing (Knit or Crocheted)Vehicles (Other than Railway/Tramway)Mineral Fuels, Oils, & Distillation Products (Petroleum)Pearls, Precious Stones, Metals, & CoinsApparel & Clothing (Not Knit or Crocheted)Other productsIron and SteelTop 10 EU exports to IndiaSource: European Commission and the Ministry of Commerce and Industry of India$3.8 billion $2.6 billion$2.5 billion$1.9 billion$1.8 billion$1.3 billion$13.0 billion$19.3 billion$7.6 billion$4.0 billionTotal $57.8 billionMachinery (including electrical)Optical, medical and surgical instrumentsPlasticsMotor vehiclesPharmaceutical productsAircraft and spacecraftChemicalsPearls, precious stones and metalsIron and steelOther productsStrategic HighlightsEmployment BoostFocuses heavily on labourintensive sectors (textiles, gems, leather) to support job creation.CompetitivenessImmediate duty removal on 90%+ of exports makes Indian goods instantly more price-competitive against global rivals.DiversificationExpands India’s footprint in European markets for high-value processed foods and engineering goods (steel/cars).24 | BW BUSINESSWORLD | 07 February 2026

Impact & ObjectivesThe agreement is designed to be mutually beneficial by focusing on high-tech integration and supply chain resilience.DiversificationExpands India’s sources for hightechnology goods.Cost EfficiencyReduces input costs for Indian businesses, making them more competitive.Consumer Benefit Lowers prices and increases variety for Indian consumers.Global Integration Facilitates the entry of Indian businesses into Global Supply Chains (GSC).Sectoral Highlights The offer includes specific concessions for high-priority EU exportsIndustrial GoodsMost tariffs on machinery (up to 44%), chemicals (22%), and pharmaceuticals (11%)will be eliminated.Finished car duties expected to drop from 110% to 10% over time; car parts to reach zero duty within 5-10 years.Automotive Wines & SpiritsDrastic reductions from 150% down to as low as 20-40% in phases.Tariff Elimination & Timeline*TRQ: Tariff Rate Quotas (limits on the quantity of a good that can be imported at a lower tariff rate).Category % of Tariff % of India’s TimelineLines ExportsImmediate 70.4% 90.7% At entry intoElimination forcePhased 20.3% 2.9% Over 3 to 5Elimination yearsPreferential 6.1% 6.0% Reduction orAccess TRQs*Sector-specific Impact Highly labour-intensive sectors accounting are positioned for immediate growth„ Textiles & Apparel:Garments, yarns, and fabrics.„ Leather & Footwear: Finished leather goods and shoes.„ Agri Commodities: Tea, coffee, and spices.„ Consumer Goods: Sports goods and toys.„ Luxury & Marine: Gems and jewellery, certain marine products.Duties to be removed gradually over a 3–5 year period„ Food Processing: Various processed food items.„ Marine: Specific seafood products not covered in Group A.„ Security: Arms and ammunition.Partial tariff reductions or volumebased quotas„ Heavy Industry: Steel and Passenger Cars.„ Agri-Allied: Poultry products, preserved vegetables, and bakery products.„ Marine: Specific shrimp and prawn products (managed via TRQs).Group A: Immediate dutyfree access (90.7% of exports)Group B: Staged zero-duty access (2.9% of exports)Group C: Preferential Access & Quotas (6.0% of exports)Top 10 India’s exports to EU**Based on 2024-25 data$12.68 bnTotal exports:$77.1 billion$22.55 bn$2.11 bn$2.26 bn$2.27 bn $2.67 bn$2.88 bn$4.25 bn$5.68 bn$7.67 bn$12.08 bnElectrical, Electronic EquipmentOrganic ChemicalsMachinery, Nuclear Reactors, & BoilersPharmaceutical ProductsApparel & Clothing (Knit or Crocheted)Vehicles (Other than Railway/Tramway)Mineral Fuels, Oils, & Distillation Products (Petroleum)Pearls, Precious Stones, Metals, & CoinsApparel & Clothing (Not Knit or Crocheted)Other productsIron and SteelTop 10 EU exports to IndiaSource: European Commission and the Ministry of Commerce and Industry of India$3.8 billion $2.6 billion$2.5 billion$1.9 billion$1.8 billion$1.3 billion$13.0 billion$19.3 billion$7.6 billion$4.0 billionTotal $57.8 billionMachinery (including electrical)Optical, medical and surgical instrumentsPlasticsMotor vehiclesPharmaceutical productsAircraft and spacecraftChemicalsPearls, precious stones and metalsIron and steelOther productsStrategic HighlightsEmployment BoostFocuses heavily on labourintensive sectors (textiles, gems, leather) to support job creation.CompetitivenessImmediate duty removal on 90%+ of exports makes Indian goods instantly more price-competitive against global rivals.DiversificationExpands India’s footprint in European markets for high-value processed foods and engineering goods (steel/cars).07 February 2026 | BW BUSINESSWORLD | 25Infographics by Raja Mourya

26 | BW BUSINESSWORLD | 07 February 2026INSIGHT Key Terms of the Interim AgreementIn the interim framework, India will eliminate or reduce tariffs on all US industrial goods and a wide range of US food and agricultural products. These include dried distillers’ grains (DDGs), red sorghum for animal feed, tree nuts, fresh and processed fruits, soybean oil, wine and spirits, and additional product categories. In return, the United States will apply a reciprocal tariff of 18 per cent on goods originating in India. The tariff structure will cover sectors such as textiles and apparel, leather and footwear, plastics and rubber, organic chemicals, home décor, artisanal products, and some machinery.Washington will also remove tariffs on specific aircraft and aircraft parts imported from India. Consistent with US national security requirements, India will receive a preferential tariff-rate quota and negotiated outcomes related to generic pharmaceuticals and their ingredients, an area where Indian manufacturers maintain a strong global presence.Both countries have committed to providing each other T THE END OF A TELEPHONE conversation with Prime Minister Narendra Modi, United States President Donald Trump announced a bilateral trade agreement between the two nations on 2 February, slashing tariffs on exports from India to 18 per cent from 25 per cent announced earlier. On 6 February, both nations released a joint statement outlining the framework of the proposed Bilateral Trade Agreement (BTA) that marks a step forward in bilateral trade ties.President Trump also claimed that New Delhi had agreed to curb purchases of Russian oil while increasing energy imports from the US and potentially Venezuela, signalling a shift that aligns with Washington’s broader energy and geopolitical priorities. In a post on his social media platform, Trump described his exchange with Prime Minister Modi as “very productive,” calling the Indian leader “one of my greatest friends and a powerful and respected leader”. The India-US trade deal came close on the heels of India’s free trade agreement (FTA) with the European Union on 27 January, fuelling speculation that Washington had accelerated negotiations to avoid losing ground in the Indian market. Dhananjay Tripathi of the South Asian University, however, viewed the development as a natural convergence between India and the United States. “India is strategically relevant to the US, and the Indian market is important for American businesses. The imposition of tariffs, including punitive measures linked to Russian oil, suggested that the Administration was not fully accounting for volatile geopolitical realities,” he said. The United States is India’s largest trading partner and as of 2024 the total bilateral goods trade had reached approximately $130 billion. The US recorded a trade deficit of about $45 billion with India that year. The total bilateral trade in services between the two nations was worth $83 billion as of 2024.A trade deal with the United States struck within days of a historic India-EU FTA, dramatically slashed tariffs on Indian exports. BW Businessworldattempts to scan the fine print of the much - awaited pact with India’s largest trading partnerBy Sangeet Kumar SanuAIndia-US Trade DealWORK IN PROGRESSPhotograph by PIB

07 February 2026 | BW BUSINESSWORLD | 27The agreement further allows either country to modify its commitments should the other alter previously agreed tariff levels, creating a mechanism to maintain balance. Negotiators will continue working toward expanded market access as discussions on the full BTA progress. The United States has affirmed that it will consider India’s request for further tariff reductions on Indian goods during upcoming negotiations.Tech CooperationThe two countries have also agreed to strengthen economic security alignment to boost supply chain resilience and innovation. The framework includes complementary actions to address non-market policies of third countries, as well as cooperation on inbound and outbound investment reviews and export controls.India has indicated its intention to purchase $500 billion worth of US energy products, aircraft and aircraft parts, precious metals, technology goods, and coking coal over the next five years. Trade in advanced technology products, including Graphics Processing Units (GPUs) and equipment used in data centres, is expected to rise significantly, alongside expanded joint technology collaboration. Both nations are also committed to addressing discriminatory or burdensome practices that hinder digital trade, aiming to establish a clear pathway toward robust and mutually beneficial digital trade rules as part of the final BTA.Officials from both countries stated that they would promptly implement the framework while working to finalise the interim agreement, with the broader objective of concluding a comprehensive and mutually beneficial trade pact consistent with the roadmap laid out in the Terms of Reference. BILATERAL TRADE AGREEMENT WITH USwith preferential market access in sectors of mutual interest on a sustained basis. The agreement establishes rules of origin to ensure that the benefits accrue primarily to producers within the US and India, preventing third-country routing. Non-Tariff BarriersA central feature of the agreement is the removal of non-tariff barriers that have historically constrained bilateral trade. India has agreed to address longstanding obstacles affecting US medical devices and eliminate restrictive import licensing procedures that delay market access or impose quantitative limits on US information and communication technology (ICT) goods.Within six months of the agreement coming into force, India will determine whether US-developed or internationally recognised standards, including testing requirements, can be accepted in identified sectors to facilitate smoother exports into the Indian market. New Delhi has also committed to resolving persistent barriers affecting US food and agricultural products.To enhance compliance with technical regulations, both sides intend to engage in discussions on standards and conformity assessment procedures for mutually agreed sectors. TRUMP TARIFFS ON INDIAn 2 APRIL, 2025The US introduces a 26% “reciprocal tariff” on multiple imports from India as part of its global ‘Liberation Day’ tariff measuresn 10 APRIL, 2025President Trump temporarily suspends the tariffs for 90 days while retaining a 10% duty on all imports into the USn 31 JULY, 2025President Trump declares a 25% tariff on all Indian goods and warns of additional penalties should India continue importing Russian oiln 7 AUGUST, 2025US Tariffs on Indian exports raised to 50% – the highest on any US trading partner – with Washington citing India’s continued purchases of Russian crude as a reasonn 2 FEBRUARY, 2026President Trump confirms that the US and India had finalised a trade pact. He says India had agreed to significantly curb Russian oil imports and boost energy purchases from the US and potentially Venezuela. Under the agreement, tariffs on Indian goods are lowered from 25% to 18%.

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30 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACTThe Union Budget 2026-27 balances targeted tax relief, big public expenditure and manufacturing ambition while leaving open questions on execution, fiscal credibility and resilience amid global uncertaintyCOVER FEATUREBIG SPENDING, BIGGER EXPECTATIONSTHE UNION Budget 2026–27, presented on 1 February, tweaks the price basket in a way that many consumers will immediately take notice, with clear tax reductions on specific items even as some discretionary spending turns pricier. On the relief side, the government cut basic customs duty on 17 life-saving cancer and critical illness drugs to zero, a move expected to directly lower treatment costs and ease pressure on patients. Import duties were also reduced or fully exempted on lithium-ion battery cells and key components used in electric vehicles, solar glass and solar manufacturing equipment, aircraft and helicopter parts, and select electronic components such as those used in microwave ovens, all aimed at lowering manufacturing costs and eventually retail prices. Personal imports also get cheaper after the customs duty on dutiable goods brought by passengers was slashed from 20 per cent to 10 per cent, offering some comfort to gadget buyers and overseas travellers. Families spending on overseas education, medical treatment and tour packages will see immediate cash-flow relief as tax collected at source on such remittances was reduced to 2 per cent, down from higher earlier rates. On the flip side, the budget nudged up costs where the intent is either curbing consumption or protecting domestic producers. Higher levies on alcohol and toBy ASHISH SINHA

07 February 2026 | BW BUSINESSWORLD | 31Sitharaman’s speech makes one thing clear: this is a budget driven by big numbers and a steady belief in spending-led growth. The Centre has set total expenditure for FY27 at Rs 53.5 lakh crore, a sharp rise from the revised Rs 49.6 lakh crore in FY26, signalling that fiscal conservatism is taking a backseat to economic momentum. A large chunk of this increase is powered by capital expenditure, which has been raised to Rs 12.2 lakh crore from Rs 11.2 lakh crore last year, reinforcing the government’s view that highways, rail corridors, ports and urban infrastructure remain the most reliable engines for jobs and demand creation. As Sitharaman noted, “Public capital expenditure has increased manifold over the last decade, and we will continue this momentum to crowd in private investment”.The revenue assumptions are equally confident. Nondebt receipts for FY27 are estimated at Rs 36.5 lakh crore, with net tax collections projected at Rs 28.7 lakh crore, up from Rs 26.7 lakh crore in FY26 revised estibacco products are likely to push up bar bills and cigarette prices, reinforcing the sin-tax approach. Customs duties were increased on items such as umbrellas and certain finished consumer goods where local manufacturing is seen as competitive, making imports less attractive. Luxury goods, including high-end watches and select premium products, also face higher effective taxation, signalling that indulgence will come at a steeper price. Overall, the price signals under Finance Minister Nirmala Sitharaman reflect a careful balancing act: make healthcare, clean energy and manufacturing-linked goods cheaper through targeted tax cuts, while letting consumers pay a little more for imports and indulgences the government would rather see moderated or made in India.Fiscal NarrativeThe Union Budget 2026–27 may speak the language of vision and reform, but Part A of Finance Minister Nirmala Union Finance Minister Nirmala Sitharaman with senior ministry officials on Budget DayPhotograph courtesy: PIB2026-27

32 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACTand forward-looking, but a closer reading of the numbers suggests a far less flattering story, argues P. Chidambaram. In a sharply worded statement issued on budget day, the former finance minister takes direct aim at what he sees as a widening gap between headline claims and fiscal reality. His core charge is simple: the government ignored the hard warnings of the Economic Survey and instead leaned on slogans, schemes and optimistic projections, without confronting the economy’s most pressing weaknesses. Chidambaram points to the government’s own revised estimates for 2025–26 to underline the fragility of the fiscal position. Revenue receipts fell short by Rs 78,086 crore, while total expenditure undershot estimates by Rs 1,00,503 crore. More tellingly, capital expenditure was cut by Rs 1,44,376 crore, split between the Centre and the States. As a share of GDP, central capital expenditure slipped from 3.2 per cent in 2024-25 to 3.1 per cent in 2025-26 — an uncomfortable statistic in a budget that repeatedly invokes infrastructure-led growth. “Even by an accountant’s standards, it was a poor account of the management of the finances,” Chidambaram remarked.The critique sharpens when it comes to spending priorities. According to the statement, revenue expenditure cuts hit sectors closest to households: rural development saw a reduction of Rs 53,067 crore, urban development Rs 39,573 crore, social welfare Rs 9,999 crore, agriculture Rs 6,985 crore, education Rs 6,701 crore and health Rs 3,686 crore. The Jal Jeevan Mission, once a flagship programme, was slashed from Rs 67,000 crore to just Rs 17,000 crore mates. The message is clear: the government expects economic activity to hold up well, tax compliance to remain strong and growth to compensate for global volatility. To bridge the fiscal gap, net market borrowings have been pegged at Rs 11.7 lakh crore, while gross borrowings stand at Rs 17.2 lakh crore—numbers that suggest borrowing will stay elevated but manageable.Beyond the headline math, the budget puts real money behind its policy priorities. Small businesses get a prominent push with a Rs 10,000 crore SME Growth Fund aimed at creating “Champion” MSMEs, alongside a Rs 2,000 crore top-up for the Self-Reliant India Fund to support micro enterprises. Infrastructure developers are offered comfort through a proposed Infrastructure Risk Guarantee Fund, designed to reduce lender anxiety during the construction phase. Climate and energy transition also find space, with Rs 20,000 crore earmarked over five years for carbon capture, utilisation and storage technologies.Cities, especially Tier-2 and Tier-3 centres, are firmly in focus. The government plans to back City Economic Regions with an allocation of Rs 5,000 crore per region over five years, betting on urban agglomerations as future growth hubs. Summing up the philosophy, Sitharaman said the budget aims “to transform aspiration into achievement and potential into performance”, and the numbers suggest the government is willing to spend generously to make that promise stick.Constructive Critique?The Union Budget 2026–27 may be dressed up as bold

07 February 2026 | BW BUSINESSWORLD | 33try: trust the taxpayer, stabilise the macro framework and keep capital spending front and centre. Speaking at a FICCI interaction, Revenue Secretary Arvind Shrivastava said the budget’s tax reforms are designed to reduce friction between citizens and the state by assuming voluntary compliance rather than default suspicion. “We believe the taxpayer would rather comply than dispute, provided the tax demand is legitimate,” he said, pointing to extended return revision timelines and the four-year updated return window. He noted that 1.22 crore taxpayers have already corrected filings, yielding Rs 13,500 crore in additional revenue. On indirect taxes, he stressed the shift towards entitybased audits under customs and a more neutral tax architecture for data centres and SEZs, adding that “the objective is a level playing field and fair competition.”Economic Affairs Secretary Anuradha Thakur struck a macro-stability note, highlighting a projected decline in debt-to-GDP to 55.6 per cent and a fiscal deficit target of 4.3 per cent. “Fiscal discipline will in the revised estimates, only to be sharply raised again in the new budget—raising uncomfortable questions about credibility and planning.On fiscal consolidation, Chidambaram is unimpressed. The revised fiscal deficit for 2025–26 remains at 4.4 per cent of GDP, while the projected reduction for 2026–27 is a token 0.1 percentage point. The revenue deficit is frozen at 1.5 per cent. “It is certainly not a bold exercise in fiscal prudence and consolidation,” he said.Perhaps his strongest criticism is reserved for the proliferation of schemes—over two dozen by his count—which he suggests may look impressive on paper but risk being forgotten by next year. His verdict is blunt: the budget, he argues, “fails the test of economic strategy and economic statesmanship”.Key Voices: GovernmentSenior economic policymakers used the Union Budget 2026-27 platforms to underline a clear message to indusARVIND SHRIVASTAVARevenue Secretary “Budget’s tax reforms are designed to reduce friction between citizens and the state by assuming voluntary compliance\"DHARMENDER TUTEJACFO, Dalmia Bharat“The finance minister has balanced economic growth, fiscal discipline, foreign capital attraction and sectoral protection reasonably well”Photograph courtesy: PIB2026-27

34 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACTIndia Inc. CommentsCorporate India has responded to the Union Budget 2026–27 with broadly positive but measured reactions, reading it as a signalheavy document that prioritises stability, manufacturing depth and long-term competitiveness over short-term fireworks. At the heart of the response is relief that policy continuity has been preserved at a time when global uncertainty is making boardrooms cautious. FICCI President Anant Goenka said the budget’s manufacturing push—from advanced technology sectors to labour-intensive export industries—offers muchneeded reassurance. “Policy clarity and reform continuity are critical when businesses are making long-gestation investment decisions,” he said, adding that the proposed high-level banking committee could strengthen India’s financial architecture at a structural level.From CII, President Rajiv Memani struck a similar tone, calling the budget a credible roadmap that balances fiscal discipline with growth impulses. He noted that targeted interventions in biopharma, semiconductors, electronics, critical minerals and advanced manufacturing reflect a deliberate strategy to build domestic capabilities that matter globally. “The consistency of direction is what will give private investors’ confidence to step in,” he said, pointing also to the renewed focus on MSMEs through the SME Growth Fund and faster bill settlements as a practical boost to supply chains.be maintained without compromising social and developmental priorities,” she said, drawing attention to the new Infrastructure Risk Guarantee Fund and the dedicated Rs 10,000 crore SME Growth Fund aimed at easing supply-chain stress. “We’ve worked through the entire value chain so industry can move forward with confidence,” she added.Expenditure Secretary V. Vualnam emphasised continuity in capital-led growth, citing higher support to states under the SASCI scheme and incentives for boosting own capex. “Fiscal discipline and macro stability have been sustained over several years,” he said, flagging Semiconductor Mission 2.0 as a model public–private effort.Financial Services Secretary M Nagaraju rounded off with banking metrics, noting 12 per cent overall credit growth and 17 per cent growth in MSME lending. “The system is strong enough to support Viksit Bharat,” he said, announcing a high-level review of future banking architecture.ANANT GOENKA,President, FICCI “Budget provides reassurance through policy clarity, reform continuity and a steady focus on macroeconomic stability”ANURADHA THAKUR,Economic Affairs Secretary -“Fiscal discipline will be maintained without compromising social and developmental priorities”

07 February 2026 | BW BUSINESSWORLD | 35Key Questions RemainThe Union Budget 2026-27 strikes a confident tone, but beneath the calm numbers lie a few uncomfortable questions the economy can’t dodge. Yes, capital expenditure is up and fiscal discipline is intact, but will public spending alone be enough if private investment stays cautious amid global turbulence? With wars dragging on, trade routes under strain and protectionism creeping back into major economies, how resilient are India’s export assumptions? The budget banks on steady tax buoyancy, but what happens if global growth slows further and demand softens? Interest payments still swallow a large chunk of revenues—can social and defence priorities be met without squeezing productive spending? There’s also the gamble on manufacturing and supply-chain realignment: will global firms move fast enough, or will geopolitical uncertainty delay decisions? And as borrowing remains elevated, will rising global interest rates tighten financial conditions at home? The budget sets direction, but execution will collide with geopolitics—can India stay on course if the world economy doesn’t cooperate? [email protected] stalwarts echoed these themes. Anand Mahindra described the budget as steady rather than sensational, arguing that strong capital expenditure and infrastructure-led growth send the right long-term signals to industry. K M Birla welcomed the emphasis on manufacturing scale, technology and skills, noting that sustained capex and regulatory predictability are what large conglomerates look for when committing capital.For telecom and digital services, Sunil Mittal highlighted the importance of measures supporting data centres, cloud services and digital infrastructure. He said the tax and regulatory framework around these areas could help India consolidate its position as a global digital and services hub, provided execution keeps pace with intent.Across sectors, India Inc appears aligned on one point: this is a budget that bets on patience. The signals are broadly welcomed, the numbers are seen as credible, and the policy direction is clear. What business now wants to see is speed and consistency on the ground—because confidence, once built, still needs delivery to turn into investment and jobs.RAJIV MEMANI, President, CII “CII welcomes the measures aimed at reinforcing India’s position as a global hub for technology and digital services”P. CHIDAMBARAMFormer FM “Budget fails the test of economic strategy and economic statesmanship”2026-27

36 | BW BUSINESSWORLD | 07 February 2026WHO WON (BUDGET TAILWINDS)Here’s where intentions (and money) are flowing:WHO MISSED OR DISAPPOINTEDSectors or expectations that saw limited action in Budget 2026Infrastructure & CapexPublic investment remains the primary growth lever, with continued focus on freight corridors, waterways and logistics infrastructureMSMEs & Champion FirmsThe Budget sharpens focus on scale-ready MSMEs through equity and liquidity support mechanismsSemiconductors &Strategic ManufacturingPolicy momentum continues behind domestic semiconductor design, equipment and supply-chain resilienceAVGC, Creative & SkillsLabs for Animation, Visual Effects, Gaming & Comics in schools & collegesMiddle-ClassTax ReliefDespite calls for personal tax relief or rebates, no change in tax slabsExport Sectors Beyond SemisBeyond semiconductors, no sector-specific export incentives were announced for traditional export industries such as steel and pharmaceuticalsAgriculture & Farm InflationSupport for agriculture remains scheme-led, without an aggregate income-support announcementGreen Energy Beyond CCUSA modest Rs 20,000 crore for CCUS tech was noted, but broader clean energy push lacks large capital poolingSignal: Creativity economy and youth skill ecosystems get policy visibility+5.3%+6.0%+3.9%+5.3%+5.3%+3.9%+8.3%+7.1%+11%+10%+7.1%+7.1%+8.9%+5.2%+4.3%+2.3%-5.3%-3.9%-8.3%-7.1%-11%-11%-10%-5.3%-3.9%-3.9%-8.3%-10%-10%-10%-8.9% -8.9%-7.1%-5.2%-5.2%-4.3%-2.3%+12%+12%+8.9%+7.1%+5.2%+5.2%-3.9%-11%-8.9% -7.1%1020.04BUDGET 2026 AT A GLANCEInterpretation: While the Budget leans on infrastructure & tech, broader consumption-side tax support and deep farm sector incentives did not feature at scale, pointing to fiscal prudence over populist concessions+5.3%+6.0%+3.9%+5.3%+5.3%+3.9%+8.3%+7.1%+11%+10%+7.1%+7.1%+8.9%+5.2%+4.3%+2.3%-5.3%-3.9%-8.3%-7.1%-11%-11%-10%-5.3%-3.9%-3.9%-8.3%-10%-10%-10%-8.9% -8.9%-7.1%-5.2%-5.2%-4.3%-2.3%+12%+8.9%+7.1%+5.2%+5.2%-3.9%-11%-8.9% -7.1%1020.04BUDGET 2026AT A GLANCEKEY NUMBERS & HIGHLIGHTSTHREE KARTAVYASBudget 2026’s backbone Accelerate and sustain economic growth Fulfil people’s aspirations through capacity building Inclusive development aligned with Sabka Sath, Sabka VikasTHE BIG NUMBERSRs 12.2 lakh crorePublic Capital Expenditure (FY27) Infrastructure remains the principal growth leverRs 10,000 croreMSME Growth Fund Equity support to create scale-ready “Champion MSMEs”Rs 2,000 croreTop-up to Self-Reliant India Fund Continued risk capital access for micro enterprisesRs 20,000 crore (5 years)Carbon Capture, Utilisation and Storage (CCUS) Industrial decarbonisation across power, steel, cement and chemicals200 clustersLegacy Industrial Clusters to be revived Infrastructure and technology upgradation for competitivenessRs 40,000 croreElectronics Components Manufacturing Scheme Outlay enhanced to scale domestic electronics supply chainsRs 10,000 crore (5 years)Biopharma Shakti Programme Building India as a global hub for biologics and biosimilarsRs 10,000 crore (5 years)Container Manufacturing Scheme Creating a globally competitive container manufacturing ecosystemRs 5,000 crore per City Economic Region (5 years)City Economic Regions (CERs) Targeted investment to unlock Tier II andTier III city growth20 National WaterwaysTo be operationalised over 5 years Modal shift in logistics and cargo movementCapex remains the core growth lever, reinforcing the Budget’s emphasis on infrastructure-led growth36 | BW BUSINESSWORLD | 07 February 2026

07 February 2026 | BW BUSINESSWORLD | 37WHO WON (BUDGET TAILWINDS)Here’s where intentions (and money) are flowing:WHO MISSED OR DISAPPOINTEDSectors or expectations that saw limited action in Budget 2026Infrastructure & CapexPublic investment remains the primary growth lever, with continued focus on freight corridors, waterways and logistics infrastructureMSMEs & Champion FirmsThe Budget sharpens focus on scale-ready MSMEs through equity and liquidity support mechanismsSemiconductors &Strategic ManufacturingPolicy momentum continues behind domestic semiconductor design, equipment and supply-chain resilienceAVGC, Creative & SkillsLabs for Animation, Visual Effects, Gaming & Comics in schools & collegesMiddle-ClassTax ReliefDespite calls for personal tax relief or rebates, no change in tax slabsExport Sectors Beyond SemisBeyond semiconductors, no sector-specific export incentives were announced for traditional export industries such as steel and pharmaceuticalsAgriculture & Farm InflationSupport for agriculture remains scheme-led, without an aggregate income-support announcementGreen Energy Beyond CCUSA modest Rs 20,000 crore for CCUS tech was noted, but broader clean energy push lacks large capital poolingSignal: Creativity economy and youth skill ecosystems get policy visibility+5.3%+6.0%+3.9%+5.3%+5.3%+3.9%+8.3%+7.1%+11%+10%+7.1%+7.1%+8.9%+5.2%+4.3%+2.3%-5.3%-3.9%-8.3%-7.1%-11%-11%-10%-5.3%-3.9%-3.9%-8.3%-10%-10%-10%-8.9% -8.9%-7.1%-5.2%-5.2%-4.3%-2.3%+12%+12%+8.9%+7.1%+5.2%+5.2%-3.9%-11%-8.9% -7.1%1020.04BUDGET 2026 AT A GLANCEInterpretation: While the Budget leans on infrastructure & tech, broader consumption-side tax support and deep farm sector incentives did not feature at scale, pointing to fiscal prudence over populist concessions+5.3%+6.0%+3.9%+5.3%+5.3%+3.9%+8.3%+7.1%+11%+10%+7.1%+7.1%+8.9%+5.2%+4.3%+2.3%-5.3%-3.9%-8.3%-7.1%-11%-11%-10%-5.3%-3.9%-3.9%-8.3%-10%-10%-10%-8.9% -8.9%-7.1%-5.2%-5.2%-4.3%-2.3%+12%+8.9%+7.1%+5.2%+5.2%-3.9%-11%-8.9% -7.1%1020.04BUDGET 2026AT A GLANCEKEY NUMBERS & HIGHLIGHTSTHREE KARTAVYASBudget 2026’s backbone Accelerate and sustain economic growth Fulfil people’s aspirations through capacity building Inclusive development aligned with Sabka Sath, Sabka VikasTHE BIG NUMBERSRs 12.2 lakh crorePublic Capital Expenditure (FY27) Infrastructure remains the principal growth leverRs 10,000 croreMSME Growth Fund Equity support to create scale-ready “Champion MSMEs”Rs 2,000 croreTop-up to Self-Reliant India Fund Continued risk capital access for micro enterprisesRs 20,000 crore (5 years)Carbon Capture, Utilisation and Storage (CCUS) Industrial decarbonisation across power, steel, cement and chemicals200 clustersLegacy Industrial Clusters to be revived Infrastructure and technology upgradation for competitivenessRs 40,000 croreElectronics Components Manufacturing Scheme Outlay enhanced to scale domestic electronics supply chainsRs 10,000 crore (5 years)Biopharma Shakti Programme Building India as a global hub for biologics and biosimilarsRs 10,000 crore (5 years)Container Manufacturing Scheme Creating a globally competitive container manufacturing ecosystemRs 5,000 crore per City Economic Region (5 years)City Economic Regions (CERs) Targeted investment to unlock Tier II andTier III city growth20 National WaterwaysTo be operationalised over 5 years Modal shift in logistics and cargo movementCapex remains the core growth lever, reinforcing the Budget’s emphasis on infrastructure-led growthInfographics by Raja Mourya

TAX TABLESIncome Tax Slabs — New Tax Regime (FY27)Note: No changes in income tax slabs, providing stability for taxpayers but also disappoints expectations of reliefOther Key Tax MeasuresNew Income Tax Act, 2025, to come into effect from April 1, 2026, replacing the old lawTCS/TDS provisions rationalised in select casesBuyback taxation order revised, uniform treatment for all shareholdersCapital over ConsumptionThe Budget prioritises public capital expenditure over direct consumption stimulusGrowth Engines ChosenInfrastructure, semiconductors, MSMEs, and creative servicesStability over DisruptionNo tax slab shake-ups; emphasis on new tax law transitionWHAT THIS BUDGET REALLY SIGNALS+5.3%+6.0%+3.9%+5.3%+5.3%+3.9%+8.3%+7.1%+11%+10%+7.1%+7.1%+8.9%+5.2%+4.3%+2.3%-5.3%-3.9%-8.3%-7.1%-11%-11%-10%-5.3%-3.9%-3.9%-8.3%-10%-10%-10%-8.9% -8.9%-7.1%-5.2%-5.2%-4.3%-2.3%+12%+12%+8.9%+7.1%+5.2%+5.2%-3.9%-11%-8.9% -7.1%1020.04BUDGET 2026 AT A GLANCETaxable Income (Rs) Tax Rate0 – 4,00,000 Nil4,00,001 – 8,00,000 5%8,00,001 – 12,00,000 10%12,00,001 – 16,00,000 15%16,00,001 – 20,00,000 20%20,00,001 – 24,00,000 25%Above 24,00,000 30%38 | BW BUSINESSWORLD | 07 February 2026

07 February 2026 | BW BUSINESSWORLD | 39For thousands on their first day of work, the classroom suddenly feels too far off. The theories memorised, the exams cleared, the degrees earned, none of them fully answers the questions the workplace asks. This moment narrates the story of Indian higher education for decades: strong on knowledge, weak on readiness. As India’s economy transformed, this gap became more visible and more urgent. For years, our universities focused on content delivery and examinations, often with no relevance to the real world of work. The outcome has been an employability paradox in which millions of graduates are coming out into the workforce every year, but employers complain that they are short of job-ready talent.Knowledge to Capability: NEP 2020 ImplementationThe National Education Policy 2020 is reshaping learning in India, shifting focus from rote theory to experiential, interdisciplinary education. While youth employability has risen to 56.35%, nearly half remainjob-unready, highlighting a persistent educationemployment gap. Integrating Industry with Campus “Industry as Campus” integrates higher education with workplaces by co-designing curricula with employers, mapping job roles, and embedding on-the-job learning across sectors, making education directly relevant to employment.For instance, in March 2025, 1.45 million workers joined the formal sector. Additionally, a recent Rs 11.7 trillion employment incentive plan is likely to create another 35 million jobs in the market by 2030. To keep pace, higher education has to rise to this challenge by tuning itself with industry at every stage – from needs assessment to curriculum innovation and course design to student assessment.Research shows seven in ten employers prefer candidates with work or internship experience, proving the earn-whileyou-learn model is both effective and economically viable.Outcome-Based Learning and Transparent Tracking The structure brings transparency for learners, educators, and employers by tracking the time and effort invested in learning and converting it into measurable, credit-based outcomes. It makes sure that the learning offered in the classrooms and workplace is equally scholarly.Meeting the Workforce of Tomorrow By 2030, India aims to pair the world’s largest workforce with high skills, creating 7.85 million nonfarm jobs annually as graduates blend technical expertise with adaptability and problem-solving. At Medhavi Skills University (MSU), we are shaping the next-generation workforce through industryintegrated learning. By incorporating the use of real-world projects, on-the-job training, as well as mentoring of the industry professionals in the degree programmes,MSU ensures that students leave with not only acquired academic knowledge but also hands-on experience and professional confidence. ‘What’s taught in the classroom’ here is ‘what’s required on the shopfloors’ in industries. This approach equips learners to contribute from day one, building a workforce that is skilled, self-reliant, and ready to drive an Atmanirbhar Bharat. REIMAGINING HIGHER EDUCATION TO BUILD ATMANIRBHAR BHARATWhy skills, employability, and industry immersion must sit at the heart of India’s education reform, writes Pravesh Dudani, Founder & Chancellor of Medhavi Skills University & Advisor to NSDCPravesh Dudani, Founder & Chancellor of Medhavi Skills University & Advisor to NSDCmall opportunities are often the Sbeginning of great enterprises.� Every single drop in the ocean counts. When talking about a progress of a developed or developing countries worldwide, we can't undermine the signi�cant role of SMEs. Undoubtedly, small and medium sized enterprises have made an indelible landmark on the economic landscape due to their premeditated importance in reengineering the industrial sector.Owing to their signi�cant inputs and involvement, SMEs assumes a pivotal responsibility in socio-economic development of India. These industries account for 95 per cent industrial units, contributing up to 40 per cent of GDP and 45 per cent of total exports. They are the second largest employers of human resources after agriculture. The scope of this sector is vast as individuals with entrepreneurial spirit but limited resources always have before them the option of initiating a business plan at the grass root level. Small �rms are reactive comfortably and more quickly to the changes in the environment. They enthuse innovation and bring into lime light new products, new methods and new ideas. S m a l l B u si n e ss is t h e s e e d b e d o f entrepreneurship. It provides an easy path for the novel entrepreneurs who wish to try their skills and wisdom to start a new venture. They have their own advantages over larger businesses. They are substantial generators of employment, and can act as shock absorbers during a catastrophic situation, responding veritably to topsy-turvy in the market. With not a complicated hierarchy, decision making is ea s y and simpler and so the ma r ket expectations can be ful�lled. They cater to provide services and a wide range of products at a�ordable prices to the consumers. This contribution is despite the sector being exposed to intensi�ed competition since liberalization of Indian economy in 1991. Small industry in India has been confronted with an increasingly competitive environment due to: (1) liberalization of the investment regime in the 1990s, favoring foreign direct investment (FDI). (2) the formation of the World Trade Organization (WTO) in 1995, forcing its member-countries (including India) to drastically scale down quantitative and nonquantitative restrictions on imports.(3) domestic economic reforms. The cumulative impact of all these developments is a remarkable transformation of the economic environment in which small industry operates, implying that the sector has no option but to 'compete or perish'.With the advent of planned economy from 1951 and the subs equent pol i c i e s by the Government of India, both planners and the law makers earmarked a special role for SMEs in the Indian economy. Due protection was accorded to both sectors, and particularly for small-scale industries from 1951 to 1991, till the nation adopted a policy of liberalization and globalization. The development of small industries is instrumental in veering the direction of industrialization to rural areas. The fact that these industries are labour-intensive and utilize less capital triggers the countries employment and supply of manpower in the rural areas. They contribute towards a better utilization of local resources and skills which may otherwise remain unde�led and might have tarnished eventually because of lack of exposure. It is a means of preserving our culture by means of encouraging people engaged in the handicrafts and �ne arts. Apart from improving standards of living by increasing the per capita income, these units hereby, assist in equitable distribution of income among the people. The sector helps the country to alleviate the generic living conditions of the people by overcoming the stigma of poverty and SMECarving Out a New Economyunemployment. One of the chief thrusts of SMEs is to regulate and provide a platform to the vulnerable groups of the society as the main drivers and empower the women and the youth to start their enterprises. Small enterprise promotion has continued to remain an important and integral part of Indian development strategy well before the First FiveYear Plan. However, the sec tors faces unforeseen challenges. Some of the most persisting constraints facing the sector, dominated by smaller units in the informal sector, include poor or non-availability of loan �nance, low levels of technology, inadequate physical and economic infrastructure and resources to invest in quality search and adopt new technology, and a policy of product reservation for small scale industries. Poor monitoring of implementation and e�ect of various small �rm policies has been an issue of concern. The larger enterprises o�er a sti� competition to the small scale units in the sale o f o u t p u t. Ap a r t fr o m t h e s e m a j o r impediments, the sector faces a number of other problems like ine�cient management, non-availability of cheap power, burden of local taxes, shortage of working capital and lack of demand for the products. The list is endless. SMEs have emerged as a vibrant tier of the economy as they have already taken over as key contributors to country's GDP. The new shout out is the Make in India Campaign. Owing to the launch of �agship Make In India Campaign, Prime Minister Narender Modi has given way to a new national program designed to facilitate investment, cultivate innovation , augment pro�ciency in skill development, protect intellectual property and build Best-in-Class manufacturing infrastructure, there has never been a better time to make in India. India's small and medium-sized industries can play a big role in making the country take the next big leap in manufacturing. India should be more focused towards novelty and innovation for these sectors. The government has to chart out plans to give special sops and privileges to these sectors.As clearly seen, the hindsight and the future vision of SME's cannot be simply considered a smaller version of their larger counterparts as they have di�erent managerial styles, scale of operations, levels of independence and decision making characteristics. However these di�erences do not eliminate the opportunities of SME's to internationalize and gain �ight in the global market. SME sector development will continue to spread its wings and be an integral part of the development thrust and promote the entrepreneurial culture.“

40 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACT By TEAM BWCorporate leaders highlight the budget’s focus on infrastructure, enterprise growth, AI-led innovation and supply-chain strengtheningINDIA INC. REACTSCAPEX, TECHNOLOGY & MSME PUSHSUDHIR SITAPATI, Managing Director & CEO, Godrej Consumer ProductsWe particularly welcome the MAT credit set-off being allowed up to 25 per cent of the tax liability under the new tax regime. This improves cash flows and makes the new tax regime smoother for companies with accumulated credits, freeing up capital for reinvestment into growth and consumption-led categories.SAUGATA GUPTA, MD & CEO, MaricoThe Union Budget 2026–27 lays out India’s growth strategy with a clear focus on sustained public investment, manufacturing scaleup, support to MSMEs, employment generation and fiscal consolidation, a decisive shift towards people-first, consumptionled growth aligned with the vision of Viksit Bharat.The continued emphasis on enhancing agricultural incomes through higher productivity and value addition is structurally positive for rural and semi-urban demand, creating sustained tailwinds for consumption.At the same time, the thrust on strengthening MSMEs and legacy industrial clusters, supported by improved access to credit and deeper formalisation, will further improve domestic supply chains, particularly across Tier-2 and Tier-3 markets. This is complemented by the public capital expenditure target of Rs 12.2 lakh crore and continued investments in freight corridors, inland waterways and multimodal logistics, which are expected to enhance distribution networks, improve supply chain efficiencies and enable faster scale up of emerging consumption hubs.The budget positions technology-backed artificial intelligence as a powerful driver of inclusive growth. Initiatives such as Bharat Vistaar are an encouraging step towards boosting farm productivity, while the expanded AI Mission and enhanced R&D focus are set to accelerate innovation and services across sectors. Collectively, these measures reflect a strong commitment to leveraging technology to bridge regional, income and capability gaps.Additionally, the simplification of compliance reflects the government’s intent to build trust-based governance.Overall, this budget reflects a consistent, reform-first approach anchored in fiscal prudence, infrastructure-led development and inclusive growth, creating a supportive ecosystem for longterm, consumption-driven growth across both urban and rural India. The emphasis is firmly on execution, competitiveness and long-term capacity building as we advance towards becoming an Atmanirbhar Bharat.

07 February 2026 | BW BUSINESSWORLD | 412026ARUNDHATI BHATTACHARYA, President & CEO, Salesforce South AsiaBudget 2026 represents India's transformation from technology consumption to AI-powered innovation, a blueprint for a $7-trillion economy built on intelligence, not just scale. The strategic architecture is balanced and long-term. The tax holiday until 2047 for cloud services is a masterstroke in data sovereignty, attracting an estimated $50 billion in data centre investments by 2030 while positioning India as the cloud hub for emerging markets.MSME reforms demonstrate sophisticated thinking. The Rs 10,000-crore SME Growth Fund, combined with the TReDs platform mandate and expanded safe harbour thresholds, creates force multipliers enabling India's 63 million MSMEs to scale from survivors to global champions.The high-powered Committee on Education to Employment targets capturing 10 per cent of global services trade by 2047 — ambitious but achievable given our demographic advantage: 65 per cent under 35, digital infrastructure like UPI and Aadhaar. AI integration is refreshingly pragmatic. Bharat-VISTAAR's multilingual agricultural platform and AI in school curricula show generational thinking, ensuring our demographic dividend becomes an intelligent dividend.We see the budget as a structural roadmap that creates an environment where technology, enterprises, and individuals can unite to collectively propel India's future advancement. However, the critical gap remains R&D investment; we risk becoming sophisticated consumers of AI rather than creators. The Union Budget's design powers national growth, driven by AI, cloud sovereignty, and innovative digital platforms. This technological foundation is key to defining the future of growth, and Salesforce fully embraces this opportunity.SUNIL KATARIA, MD & CEO, Godrej AgrovetPlacing a strong emphasis on productivity, resilience and inclusive growth, the proposals tabled in the Union Budget once again reinforce agriculture as a key pillar in India’s journey towards Viksit Bharat. The targeted attention on livestock, fisheries and allied sectors showcases a clear shift towards diversified and income-resilient farm systems. In this context, the new loan-linked capital support for veterinary education, hospitals, diagnostics and breeding infrastructure will expand capacity and high-quality services across rural India. Additionally, future science-led interventions in the areas of cattle genetics and breeding would help accelerate livestock productivity and farm incomes.It is also encouraging to see the government’s focus on leveraging technology-driven agriculture through the introduction of a multilingual AI platform. Amidst evolving climate and market conditions, delivering customised and risk-aware advisory at a scale is the need of the hour to empower farmers to make informed decisions and adapt better. We also appreciate the extension of tax deduction to primary co-operatives supplying cattle feed and cotton seed to federal cooperatives and government organisations, which will strengthen formal input supply chains and improve farmer realisation. Together, through a calibrated approach that integrates productivity, innovation, inclusion, and institutional support, this year’s Budget once again lays a strong foundation for a future-ready agricultural ecosystem and reinforces agriculture’s role as a long-term contributor to India’s economic growth.

42 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACTThe Union Budget 2026-27 underscores India’s commitment to a structural reform-led economic roadmap, driven by three core ‘kartavyas’ (duties) of sustained growth, fulfilling aspirations, and advancing the vision of inclusive progress. Notably, the pharmaceutical sector was the first to be highlighted in the Finance Minister’s presentation, signalling its strategic importance. The emphasis on biologics and biosimilars is particularly timely, as India is at the cusp of taking a global lead in this space.The Rs 10,000-crore Biopharma Shakti programme will be a key enabler for India’s journey from volume to value leadership, helping the country move from being a global supplier of quality medicines to becoming a global innovator. Alongside the expansion of the national clinical trials network and strengthening of the CDSCO with specialised scientific review and globally aligned timelines, these initiatives will enhance India’s capacity to develop complex, high-value therapies.The addition of new NIPERs and the upgrading of existing ones will expand opportunities for advanced scientific education and skills development, building the talent pipeline essential for innovation-led growth. Recognising the rising burden of non-communicable diseases, particularly cancer, the budget also provides direct relief for patients by exempting basic customs duty on 17 cancer drugs and medicines and extending import duty exemptions to seven additional rare diseases. Combined with regulatory simplification through central–state coordination, these measures are set to strengthen India’s biopharma ecosystem while ensuring patients in India and across the world continue to have access to affordable, high-quality medicines. We look forward to studying the detailed budget to further understand its impact on the pharmaceutical sector.SHARAD MALHOTRA, Managing Director, Nippon Paint (India) GroupThe Union Budget 2026-27 reinforces the government’s focus on sustaining economic momentum through higher capital expenditure, infrastructure creation and fiscal discipline. This continued emphasis on investment-led growth will be critical in supporting India’s long-term ambition of becoming the world’s third-largest economy while creating meaningful employment at scale. The proposal to support states in setting up three dedicated chemical parks through a cluster-based, plug-and-play framework is a timely step.It will strengthen domestic manufacturing capabilities, improve supply chain efficiency and reduce import dependence, which is particularly important for sectors such as paints and coatings that rely on a robust chemical ecosystem. Overall, the budget reflects a balanced approach that combines industrial growth, technological advancement and sustainability. By improving ease of doing business amid a volatile global environment, it lays the foundation for higher productivity, long-term manufacturing resilience and India’s emergence as a globally competitive industrial hub.SATISH REDDY, Chairman, Dr. Reddy’s Laboratories

07 February 2026 | BW BUSINESSWORLD | 43BUDGET IMPACT“There have been no excessive allocations or lack of expenditure control. This may not be a glamorous budget, but it is defensively strong”InterviewWhat do you think has been done well?Given the current global environment, this is a consistent and sensible budget. It focuses on priority sectors such as semiconductors, artificial intelligence, MSMEs and data centres, which is positive. The budget is clearly long-term in nature, with a vision articulated up to 2047. While there are some short-term measures, the overall orientation is towards sustained growth. The budget prioritises fiscal consolidation while targeting around 7 per cent growth. Has the government struck the right balance between prudence and growth?India is strongly positioned on growth, so there is no major concern on that front. From a fiscal perspective, prudence has been demonstrated. There have been no excessive allocations. This may not be a glamorous budget, but it is defensively strong. What is the single most important structural reform missing from this budget?Hard manufacturing is the biggest gap. If India wants to reduce imports, boost exports and stabilise the rupee, manufacturing must be scaled up significantly. Initiatives such as Make in India and Atmanirbhar Bharat are strong in intent, but implementation needs to deepen. Capital formation requires coordination across government policy, private investment, banking support and financial institutions.India is adding renewable capacity every year. Is this growth creating economic value?Despite global uncertainty, India’s renewable sector is taking a clear, forward position. The key issue is sustainable development, whether energy transition is based on the lowest cost, reliable and safe power. From that perspective, renewable energy today represents the cheapest, fastest and most scalable form of power, including solar and wind.Capital markets have seen reforms including changes to securities transaction tax (STT). How do you see investor sentiment post-budget?Indian investors are resilient. On STT, there are differing views. While the increase may have been inevitable, it could have been implemented in a more calibrated manner. Markets have absorbed such changes earlier, and one objective appears to be discouraging excessive speculation, particularly in derivatives. From that perspective, the intent is understandableThe budget leans heavily on public capex to crowd in private investment. What will determine whether private capital actually flows in?T h e g o v e r n m e n t ’s c a p e x allocation of over Rs 12 lakh crore is a strong signal. However, private sector participation in core manufacturing remains limited. Ease of doing business, tax incentives, regulatory clarity and access to capital are critical. Manufacturingfocused startups need far greater encouragement. [email protected] Photograph by Naval KishorS. Ravi, former Chairman, BSE, Founder & Managing Partner at Ravi Rajan & Co shares with BW Businessworld’s Urvi Shrivastav his assessment of what the budget gets right, and what is doesn’t. Excerpts“CLEARLY LONG-TERM IN NATURE”

44 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACTgrowth and build long-term economic stability.Mapping the ImpactOne of the standout aspects of the budget is the continued public investment with increased capital expenditure to support logistics efficiency, urban and rural development, and industrial expansion. This is expected to create jobs and stimulate demand, and will have a cascading impact on various sectors, including FMCG.Measures such as expansion of dedicated freight corridors, inland waterways, and coastal shipping will improve logistics infrastructure, connectivity, and strengthen supply chain efficiencies, thereby enhancing access to markets, particularly in rural areas, providing untapped growth opportunities for the FMCG industry. The budget also enhances regulatory frameworks to expedite approvals and trade facilitation. These measures aimed at improving the ease of doing business are commendable, as they will reduce compliance costs, improve market access and increase predictability, ultimately boosting India’s global competitiveness as an export-led economy.In addition, the proposed reduction in import duties on key raw materials is expected to alleviate cost pressures for manufacturers, including in the FMCG sector and will result in increased penetration.It is also encouraging to see the government prioritising the Indian healthcare sector, strengthening focus on primary healthcare, geriatric and allied care ecosystems, exemption of basic customs duties on critical life-saving drugs, expanded access to assistive devices, and mental health infrastructure.While such positive measures around curative health are commendable, the government’s focus on holistic health and AYUSH ecosystem aligns with rising consumer preference for preventive, wellness-led solutions, creating meaningful opportunities for the FMCG and consumer health industry.While the budget is expected to further boost consumption, the industry also urges the government to continue its efforts towards GST rationalisation, especially in personal care categories where tax can be reduced from 18 per cent to 5 per cent, along with addressing issues related to inverted duty structures, which will give further impetus to the category and contribute to a healthier India. Column by Manish AnandaniThe author is MD-India, KenvueINDIA’S fast-moving consumer goods (FMCG) sector is often considered the barometer of the Indian economy and an indicator of consumer sentiment. In recent years, the FMCG industry has grappled with various uncertainties, including geopolitical tensions, trade flows that have disrupted supply chains, high inflation, rising commodity costs, and shifting consumption patterns. Despite these challenges, the sector continues to present significant growth opportunities and plays a crucial role in job creation.After a prolonged consumption slowdown, in recent months we have seen promising signs of recovery, fuelled by government reforms including revised income tax slabs that encourage spending, measures to curb retail inflation, and GST rate rationalisation, which have renewed industry and consumer confidence.Amidst this, the Union Budget 2026-27 reaffirms the government’s commitment to a Viksit Bharat and its vision for sustained growth, blending fiscal discipline with sustained public investment and structural initiatives to promote inclusive Anandani talks about a continuityled budget that boosts confidence, revives consumption, strengthens infrastructure and healthcare, and sets the stage for resilient, competitive, long-term growthCONSUMER HEALTHCAREThe budget addresses immediate economic challenges while paving the way for sustainable growth, building resilience and competitivenessSTRENGTHENING INDIA’S GROWTH AGENDA

46 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACT By ASHISH SINHATWith big-ticket capex, high-speed corridors and logistics reform, the budget seeks to bring India’s transport backbone on par with its growth ambitionsPhotograph by NavyugproductionsRAILWAYSCAPEX DRIVES MOBILITYHE UNION Budget 2026–27 makes a strong case for continuity over novelty, signalling that India’s infrastructure engine is meant to keep running at full throttle. With a record effective capital outlay of Rs 17.14 lakh crore and infrastructure capex rising nearly 9 per cent to Rs 12.2 lakh crore, the government has once again placed transport-led investment at the centre of its economic strategy. But as allocations grow bigger and ambitions become broader, the obvious question remains: can execution keep up

07 February 2026 | BW BUSINESSWORLD | 472026with intent?Railway sits firmly at the core of this strategy. The sector has been allocated Rs 2.77 lakh crore for FY27, marking a roughly 10 per cent increase over the previous year. The budget builds on recent momentum with plans for seven new high-speed rail corridors connecting major cities, new dedicated freight corridors linking Dankuni in the east to Surat in the west, and continued spending on logistics and network decongestion. Together, these measures aim to improve both passenger mobility and freight efficiency. But with multiple mega projects already under implementation, can Indian Railways manage scale, speed and timelines simultaneously?Roads and highways remain another major beneficiary. With capex for roads rising about 8 per cent to Rs 2.94 lakh crore, the focus stays on expanding national highways, expressways and bridges, while improving last-mile connectivity to industrial clusters and logistics hubs. The government’s decade-long push on highways has already reshaped freight movement in many regions, but rising construction costs and land acquisition delays continue to pose challenges. Will higher allocations alone be enough to smoothen these bottlenecks?Big Infra PushThe budget also sharpens its focus on multimodal transport. The plan to operationalise 20 new national waterways over the next five years, along with a coastal cargo promotion scheme, aims to increase the share of inland waterways and coastal shipping from 6 per cent to 12 per cent by 2047. Lower logistics costs and reduced congestion are clear objectives. Yet, questions remain around last-mile connectivity to waterways and the readiness of supporting infrastructure. Can waterways truly emerge as a mainstream freight alternative?Photograph by Dihuk

48 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACTPorts, shipping and aviation feature prominently in the fine print. Proposals to develop ship repair ecosystems along inland waterways at locations such as Varanasi and Patna seek to reduce downtime and costs, while also building domestic capabilities. In aviation, the push to indigenise seaplane manufacturing through a viability gap funding scheme could enhance connectivity to remote and underserved locations. Customs duty exemptions on select aircraft maintenance, repair and overhaul inputs are expected to improve India’s competitiveness as an MRO hub. But will demand scale up quickly enough to justify these investments?Urban infrastructure is another critical pillar. The introduction of City Economic Regions, backed by an allocation of Rs 5,000 crore per region over five years, targets cities with populations above five lakh. Combined with incentives for large municipal bond issuances and continued support under urban renewal programmes, the aim is to strengthen urban local bodies and accelerate infrastructure development in Tier-2 and Tier-3 cities. As urbanisation gathers pace, can these cities absorb funds efficiently and deliver projects without overstretching their administrative capacity?The budget also seeks to address the financing side of infrastructure. The proposed Infrastructure Risk Guarantee Fund is expected to improve project bankability and encourage greater private participation. Measures to strengthen the InvIT and REIT ecosystem, including recycling of CPSE real estate assets, are designed to unlock capital and improve asset monetisation. However, private investors remain sensitive to regulatory uncertainty and execution risks. Will these instruments be enough to crowd in long-term capital at scale?Reinforcing StabilityIndustry stakeholders, particularly those linked to railways and transport manufacturing, view the budget as one that reinforces predictability. For technology-driven players such as Concord Control Systems, the emphasis on rail-led mobility and modernisation stands out. Gaurav Lath, Joint Managing Director, describes the budget as a defining moment for the sector, noting that the record capex and focus on high-speed connectivity and freight corridors reinforce railways as the backbone of India’s long-term mobility and logistics strategy. He points out that the emphasis on indigenisation and advanced technologies reflects a maturing industrial ecosystem. But as technology adoption accelerates, is the ecosystem prepared for the scale and complexity of next-generation rail systems?Nitin Jain, Joint Managing Director at Concord Control Systems, echoes this optimism. He says the budget firmly positions railways at the heart of India’s transport transformation, with a clear push towards intelligent, autonomous and digitally enabled networks. Strengthening control, signalling and embedded electronics will be critical, he notes, as railways move into their next phase of modernisation. The question, however, is whether skill availability and domestic supply chains can scale fast enough to support this transition.Global rail majors have also welcomed the budget’s direction. Olivier Loison, Managing Director of Alstom India, says the focus on rail infrastructure sends a strong signal of “Sustained allocation for railways provides planning confidence for the rail manufacturing ecosystem”VIVEK LOHIA, MD, Jupiter WagonsOLIVIER LOISON,MD, Alstom India “Focus on rail infrastructure sends a strong signal of long-term commitment”

07 February 2026 | BW BUSINESSWORLD | 492026infrastructure are likely to drive large-scale construction activity nationwide. Cement demand, in particular, is expected to rise as connectivity projects, industrial corridors and logistics hubs expand. Improved multimodal transport could also support long-term growth in warehousing and industrial real estate. But with input costs fluctuating and margins under pressure, can construction players sustain profitability through this cycle?The budget’s urban focus also has implications for real estate and services. Higher public capex is likely to support infrastructure-led urban expansion, boosting residential and commercial demand in emerging cities. Incentives for municipal bonds and stronger urban financing mechanisms could deepen capital markets participation. At the same time, governance standards and project transparency will be critical to maintaining investor confidence. Are urban local bodies ready for this heightened scrutiny?Shipping, aviation and data infrastructure add further layers to the transport narrative. Indigenised seaplanes could improve connectivity where runways are not viable, while support for defence and civil MRO aims to build domestic maintenance capabilities. Parallel tax incentives for data centres and global cloud service providers are expected to attract investments and strengthen India’s position as a digital and AI hub. These developments will place additional demands on power, logistics and urban infrastructure. Can coordination across ministries keep pace with this convergence?Taken together, the Union Budget 2026–27 reinforces the government’s preference for steady, execution-led infrastructure growth. The allocations underline confidence in transport-led development as a catalyst for jobs, manufacturing and competitiveness. Yet, as the scale of ambition grows, so do the risks. Land acquisition hurdles, cost inflation, skilled manpower shortages, financing constraints and coordination across agencies remain persistent challenges. With capital flowing and policy intent clear, the real test now is whether India’s transport and infrastructure ecosystem can convert budgetary numbers into on-ground outcomes—on time, at scale and with lasting efficiency gains. Will execution finally match ambition this time around? [email protected] commitment. The announcement of seven new high-speed rail corridors, he says, will “significantly boost passenger mobility,” while strengthening the wider economic ecosystem. Loison also highlights the emphasis on Tier-2 and Tier-3 cities and tourism-linked infrastructure, which he believes will enhance national railway and urban mobility. With an outlay of Rs 2.77 lakh crore in FY27, he calls railways “a key driver for national development,” adding that the budget provides momentum for modernisation, skilling and broader community impact. As domestic and export ambitions rise in parallel, can India balance cost competitiveness with worldclass quality standards?From the rolling stock and logistics manufacturing side, Jupiter Wagons sees reassurance in continuity. Vivek Lohia, Managing Director of Jupiter Wagons says the sustained allocation for railways provides planning confidence for the rail manufacturing ecosystem. He points out that policy measures such as the one-time facilitation for eligible SEZ manufacturing units to sell into the domestic market at concessional duty are particularly relevant amid global trade disruptions. According to him, these steps help improve “capacity utilisation” while maintaining a level playing field. Yet, will such transitional measures be enough if global volatility persists?Lohia also draws attention to reforms beyond headline allocations. Steps to simplify customs processes and reduce intervention, he says, will support faster movement of goods and greater trade certainty. The proposed Rs 10,000 crore container manufacturing scheme, backed by production-linked incentives for containers and battery energy storage systems, is seen as a boost to domestic manufacturing scale. “This can accelerate production capacity and localisation,” he notes. Additionally, exemptions on basic customs duty for capital goods used in lithium-ion cell manufacturing are expected to improve project viability for energy storage solutions. Challenges RemainThe challenge, however, lies in timely implementation and demand creation. Will manufacturers see offtake rise quickly enough to justify fresh investments?Beyond railways, the ripple effects of the budget are expected to spread across construction-linked sectors. Higher allocations for roads, freight corridors, waterways and urban

50 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACTindustrial capabilities. The launch of the India Semiconductor Mission 2.0 with an outlay of Rs 40,000 crore and the setting up of a dedicated rare earth corridor in mineral rich states like Odisha, Andhra Pradesh, Kerala and Tamil Nadu indicated a calculated pivot towards a self-reliant technologydriven ecosystem to power the goal of a Viksit Bharat. The focus on industrial modernisation and creation of specialised industrial corridors will not only require supporting infrastructure but also stimulate demand for steel in sectors such as semiconductors, electronics, textiles and biopharma, which traditionally relied less on structural steel.A large part of the investments will go into the creation of core infrastructure, advanced manufacturing facilities, machinery and ancillary units, all of which will require highquality structural steel and other value-added steel products. Beyond construction, steel will be critical in pipelines, storage systems, frameworks and equipment, supporting operational efficiency and durability. The 2026 budget also underscores the need for a more sustainable and eco-friendly growth with the Carbon Capture, Utilisation & Storage (CCUS) scheme. An outlay of Rs 20,000 crore has been earmarked to support decarbonisation initiatives by the industries across five sectors, including, power, steel, cement, refineries and chemicals. The availability of financial support to adopt greener manufacturing practices and equipment will give an added impetus to the steel sector as it seeks to meet domestic sustainability goals, embrace global sustainability standards and enhance its global competitiveness to create long-term opportunities in green industrial infrastructure.The Infrastructure Risk Guarantee Fund announced in the budget can be a game-changer as it seeks to provide prudently calibrated partial credit guarantees to lenders. This will strengthen the confidence of private developers to invest Column by Satish Kumar AgarwalSTEEL SECTOR ON THE UPSWINGHE Union Budget 2026-27 with a capex outlay of Rs 12.2 lakh crore paves the way for sustained economic growth through public capital expenditure. With infrastructure, manufacturing and regional development emerging as key focus areas for government spending, the steel sector is definitely in an upswing as demand for TMT bars, claddings and other valueadded steel products is set to rise.Major announcements such as seven new high-speed rail corridors connecting major economic hubs, a dedicated freight corridor connecting Dankuni to Surat, 20 new national waterways over the next five years will entail large scale infrastructure development. From laying new tracks and building bridges to constructing station infrastructure and ports, will all require the use of large volumes of structural steel and value-added steel products.The budget dubbed Tier-2 and Tier-3 cities with over 5 lakh population as growth centres. The focus is now on building modern infrastructure and basic amenities to amplify the potential of these cities, with an allocation of Rs 5,000 crore per city economic regions (CER). As these smaller cities evolve into dynamic economies, the demand for structural steel and allied steel products is likely to rise significantly.Industrial Modernisation to Spur Demand for SteelThe budget also focused on enhancing manufacturing and TBy linking regional development with industrial modernisation, the budget has laid a strong foundation for a long-term, transformative growthSTEEL