07 FEBRUARY 2026

07 February 2026 | BW BUSINESSWORLD | 51in infrastructure development and derisk their investment in the construction phase. The fund is expected to improve project timelines, reduce financing cost and project viability. However, the true impact will be dependent on the outlay and administration of the fund.The focus on capital expenditure, particularly in connectivity and manufacturing, lays a solid foundation for innovation, inclusive growth and long-term economic resilience. As a growth-oriented budget, the targeted schemes and sector-specific outlays all converge to not only stimulate demand, strengthen supply chain and enhance industrial competitiveness, but also to enhance the overall productivity, global competitiveness and uplift the general living standards of the nation. Such a holistic approach to growth creates a roadmap for sustainable and broadbased economic transformation.Impetus to the Steel SectorFor the steel industry, this budget is more than just numbers as it outlines a sustained demand growth. With significant capital expenditure earmarked for infrastructure and a clear focus on Tier-2 and Tier-3 cities as growth centres and strengthening of the manufacturing and logistic ecosystems not only bolsters India’s growth aspirations but also delivers tangible impetus to the steel sector as the key driver of economic growth. By linking regional development with industrial modernisation, the budget has laid a strong foundation for a long-term, transformative growth. As smaller cities evolve into dynamic economies, the demand for structural steel and allied steel products is likely to rise significantlyThe author is CMD, Kamdhenu Group 2026

52 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACT Column by Boman Rustom IraniGROWTH MOMENTUM & SOME MISSED OPPORTUNITIESHOUSINGBudget creates the right trajectory for the real estate sector; however, there is still much room for improvement in the area of providing affordable housingHE Finance Minister has delivered another growth-oriented budget that promises to continue India’s march toward its Viksit Bharat dream. Broadly, it is a measured budget that focuses on sustaining the growth momentum unleashed by big-ticket reforms announced in past budgets, sticks to the fiscal consolidation glideslope, and positions India as a stable business destination amid global uncertainties.More specifically from the real estate T

07 February 2026 | BW BUSINESSWORLD | 53sector’s perspective, it delivers a mix of both hits and misses. The PositivesOn the positive front, it promises to open a new growth frontier for the sector through the development of new City Economic Regions (CER). Each CER is set to receive Rs 5,000 crore over the next five years. Moreover, the focus of this initiative will be developing Tier-2 and Tier-3 cities, which will spark urban development beyond saturated metropolitan cities. In doing so, it will create new decentralised urban and industrial clusters. These, in turn, will drive job creation and spur demand for both residential and commercial real estate. One of the headline measures unveiled recently by the finance minister was the announcement of a tax holiday until 2047 applicable to foreign companies setting up data centers in India. Companies availing this tax holiday can provide cloud services to customers globally so long as they are provided through data centers based in India. What’s more, such companies will also have to serve Indian customers through a domestic reseller entity. This will incentivise global data centre giants to establish operations in India, further driving demand for commercial real estate space in the country.In addition to this tax holiday, the finance minister also proposed raising the safe harbour eligibility threshold for the IT services sector. The safe harbour eligibility threshold will now stand at Rs 2,000 crore up from Rs 300 crore. At the same time, a uniform margin of 15.5 percent will now apply to all categories of IT services.These changes will improve the ease of doing business and reduce compliance and tax burdens. As a result, they will act as another spur for global investment which will by extension translate to greater commercial real estate demand.The government’s continued focus on infrastructure development, meanwhile, will continue to unlock growth opportunities for the real estate sector. There will be an immense enhancement of connectivity through the improvement of highways, rail networks, urban transport systems and logistics infrastructure with a capital expenditure of Rs 12.2 lakh crore on infrastructure development. The launch of new high-speed rail corridors between key cities, ongoing build out of roadways infrastructure and the development of logistics clusters and industrial hubs will drive real estate demand in thus far untapped markets. The proposed Infrastructure Risk Guarantee Fund promises to mitigate the unpredictability typically inherent in large scale infrastructure projects, further bolstering a key growth driver for the real estate sector. Increased private sector involvement in infrastructure development will provide a multiplier effect for real estate development within the new economic corridors.Some MissesThese hits promise to deliver a robust fillip to real estate in India. But, at the same time, the budget contained some key misses, most notably on the affordable housing front.Rising costs of construction raw materials and land are disincentivising developers from increasing their presence in the affordable housing space. Both the definition and threshold for affordable housing do not reflect reality on the ground in most urban areas, which is inhibiting project feasibility. This is a sector that is crucial to not only the home ownership aspirations of millions of Indians but also plays a pivotal role in ease of living and quality of life. A lack of affordable housing will push up rents, shrink disposable incomes, affect consumption, force people to move increasingly out into city suburbs and outskirts, lengthen commute times and drive the growth of informal housing. It would have been a positive step for the government to provide policy support that would enable and incentivise developers to invest in affordable housing. The budget updates provide non-residents of India and residents who own assets overseas with more clear and easier rules for complying with tax regulations when they are attempting to invest in real estate in India, especially in the premium and mid-price segments. There are also several manufacturing and technology companies that will be developing, including pharmaceuticals and exportoriented industries. Many of these businesses support a significant number of jobs, and as a result, will lead to higher disposable incomes, thus supporting the growing demand for housing in urban India. Rising costs of construction raw materials and land are disincentivising developers from increasing their presence in the affordable housing space. Both the definition and threshold for affordable housing do not reflect reality on the ground in most urban areas2026 The author is Chairman and Managing Director, Rustomjee Group

BUDGET IMPACTblers of export-led growth in a rapidly changing global trade environment.Corridors & WaterwaysExperts say the focus on multimodal freight is critical for improving India’s export competitiveness. Inland waterways, in particular, are well-suited for commodities such as minerals, cement and agricultural produce, while also easing congestion on highways.Ajay Mokariya, Managing Director of Shree Maruti Integrated Logistics (SMILe), said enhanced regional connectivity—especially stronger east–west linkages—can significantly reduce supply-chain bottlenecks and enable faster delivery HE Union Budget 2026–27 marks a decisive shift in India’s infrastructure strategy, with logistics and transport moving firmly to the centre of the country’s growth and export ambitions. Finance Minister Nirmala Sitharaman has allocated Rs 5,98,520 crore to the transport sector, underlining the government’s intent to build faster, greener and more resilient supply chains that can support manufacturing-led growth and deepen India’s integration with global markets.The transport push is anchored in a set of high-impact initiatives, including new Dedicated Freight Corridors (DFCs) from Dankuni to Surat, the operationalisation of 20 National Waterways, and a Rs 10,000 crore container manufacturing scheme. Together, these measures seek to reduce logistics costs, improve cargo predictability and unlock scale efficiencies across road, rail, waterways and ports—long seen as a bottleneck in India’s competitiveness.Shashi Kiran Shetty, Founder and Chairman of Allcargo Group, described the budget as a forward-looking framework that balances near-term growth priorities with long-term structural reforms. The sustained focus on infrastructure, he said, reiterates the importance of logistics as a growth driver, with initiatives such as national waterways, coastal cargo schemes and new freight corridors set to lower logistics costs and boost cargo productivity.Ketan Kulkarni, Managing Director and CEO of Allcargo Logistics, added that the strengthening of multimodal infrastructure, last-mile connectivity and MSME support through the Rs 10,000 crore SME Growth Fund will be critical enaTBudget 2026–27 positions logistics as a core engine of India’s manufacturing and trade competitivenessBy Tarannum ManjulLOGISTICSGROWTH LIFELINES54 | BW BUSINESSWORLD | 07 February 2026

and export hubs is expected to improve availability, lower costs and enhance resilience against global supply disruptions.Kami Viswanathan, President, Middle East, Indian Subcontinent and Africa (MEISA) at FedEx, said the continued focus on infrastructure development and MSME growth sends a positive signal to businesses dependent on timedefinite, cross-border logistics. The emphasis on trade facilitation, digital logistics and multimodal infrastructure, she added, can improve predictability, reduce cycle times and further integrate Indian firms into global supply chains.Logistics as Growth EngineRavi Goel, CEO of RapidShyp, said the Rs 12.2 lakh crore capital expenditure announced for FY27 makes it clear that logistics is no longer a supporting function but a national growth engine.“For logistics players, this isn’t just a big number—it’s a commitment to faster freight movement, deeper multimodal integration and lower cost to serve,” Goel said. He highlighted reforms such as electronic sealing and trusted-importer clearances as game-changers that will drastically reduce dwell times and validate investments in AI-driven route optimisation and delivery predictability. Faster port and road upgrades, combined with improved supplier financing, are expected to help last-mile players scale more sustainably.The logistics measures are closely aligned with the Budget’s broader manufacturing agenda. Ganesh Iyer, CEO of Coldverse, said recognising trusted importers within the risk management system and enabling factory-to-port clearance will significantly reduce compliance friction and uncertainty in cargo movement.He also pointed to the proposed safe harbour for bonded warehousing at a competitive tax incidence as a decisive step for strengthening just-in-time logistics, particularly for electronics and advanced manufacturing. With MSMEs identified by industry leaders as critical to India’s manufacturing ambitions, Iyer said these reforms will enhance supply-chain efficiency and support the goal of raising manufacturing’s share of GDP towards 25 per cent. [email protected] proposed Dankuni–Surat Dedicated Freight Corridor is expected to strengthen east–west connectivity, linking mineral-rich and industrial hubs in the east with western ports and consumption centres2026cycles for manufacturing, agriculture and export-oriented sectors. By connecting regions such as Talcher and Angul with ports like Paradip and Dhamra, he noted, waterways can unlock smoother access to global markets while supporting greener logistics by lowering emissions and fuel consumption.Sustained investments in coastal shipping, inland waterways and dedicated rail corridors are expected to gradually rebalance India’s freight mix. Railways currently handle around 28 per cent of freight, with the government targeting a rise to 35–40 per cent through new corridors, terminals and last-mile connectivity.Container ManufacturingA standout announcement in the Budget is the Rs 10,000 crore container manufacturing scheme, aimed at reducing India’s dependence on imported containers and strengthening the domestic logistics ecosystem. Linking container production with manufacturing clusters KEY FIGURESnRs 12.2 lakh crore public capex, with logistics as a core focusn 20 national waterways to be operationalised over five yearsn Coastal cargo share to rise from 6% to 12% by 2047n Rs 10,000 crore container manufacturing scheme over five years07 February 2026 | BW BUSINESSWORLD | 55Photograph by Tryaging

56 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACT Column by D.K. SrivastavaEXPENDITURE RESTRUCTURING FOR VIKSIT BHARATGOVERNMENT FINANCES TThere is a need to emphasise fiscal consolidation in terms of achieving and sustaining a fiscal deficit level of 3 per cent of GDP as soon as possibleHE Union Budget 2026-27 in terms of its broad priorities, emphasising the advanced technology sectors such as AI and global capability centres, semiconductors and critical minerals, appears to be directionally relevant for the objective of Viksit Bharat. For achieving a sustained emphasis on these sectors, there is a need

07 February 2026 | BW BUSINESSWORLD | 57to provide for additional fiscal space. It is the gross tax revenue (GTR) to GDP ratio along with a sustainable level of fiscal deficit relative to GDP and suitable supplementation by non-tax revenues and non-debt capital receipts that will provide the needed fiscal resources.Financing of Government ExpenditureIn this context, the fall in the GoI’s GTR buoyancy to 0.8 in 2026-27 (BE) reflects some softening. In fact, there has been a fall in the GoI’s GTR to GDP ratio from 11.5 per cent in 2024-25 to 11.4 per cent in 2025-26 (RE) and further to 11.2 per cent in 2026-27 (BE). Alongside, GoI’s net tax revenue to GDP ratio has also fallen in these three years from 7.6 per cent to 7.5 per cent and 7.3 per cent. The contributions of non-tax revenues and non-debt capital receipts relative to GDP are relatively small, and their performance varies from year to year. Total expenditures are financed by non-debt receipts comprising GoI’s net tax revenues, non-tax revenues and non-debt capital receipts, along with fiscal deficit. Fiscal Consolidation StrategyThe fiscal deficit to GDP ratio in the medium term may be reduced from its current levels to a sustainable level of 3 per cent of GDP. GoI’s fiscal deficit had to be raised to an inordinately high level of 9.2 per cent in 2020-21. Since then, it has been brought down. However, the pace of fiscal consolidation has moderated over time. Considering the period from 2023-24, the annual reduction in successive years was 0.7 per cent points in 2024-25, 0.4 per cent points in 2025-26 (RE) and only 0.1 per cent point in 2026-27 (BE). Fiscal consolidation must be viewed through the sustainability of key parameters such as the fiscal deficit and government debt relative to GDP, or interest payments relative to revenue receipts. These frameworks are well established in literature. Under the GoI’s FRBMA 2018, the debt-to-GDP ratio was to be reduced to 40 per cent and the fiscal deficit to 3 per cent of GDP. However, in the 2025-26 budget, the GoI altered its targeting strategy to focus on an annual reduction in the debt-to-GDP ratio. The 2026-27 budget indicates that the debt-to-GDP ratio will reach around 50 per cent by 2030-31, remaining well above the FRBM 2018 target. Consequently, despite incremental annual reductions in both debt and fiscal deficit ratios, meeting the FRBM targets still appears several years away.GoI ExpenditureThe GoI’s expenditure relative to GDP comprises interest payments, primary revenue expenditure and capital expenditure. Any decline in the total expenditure-to-GDP ratio reflects changes in these components. Between 2025-26 (RE) and 2026-27 (BE), two ratios remain unchanged. Interest payments stay high but stable at 3.6 per cent of GDP, with interest payments accounting for nearly 40 per cent of revenue receipts in 2026-27 (BE). Capital expenditure is also steady at 3.1 per cent of GDP. The decline in the overall expenditure-toGDP ratio is driven solely by a reduction in primary revenue expenditure. Consequently, total expenditure has fallen from 14.8 per cent of GDP in 2023-24 to 14.1 per cent in 2024-25, 13.9 per cent in 2025-26 (RE) and 13.6 per cent in 2026-27 (BE). While part of this reduction reflects a desirable restructuring—mainly due to lower subsidies—allocations for defence and other critical sectors, relative to GDP, have declined. In the context of capital expenditure, capital outlay to GDP ratio has fallen from 2.48 per cent in 2025-26 (RE) to 2.40 per cent in 2026-27 (BE). It is in loans and advances to states that some increase from 0.58 per cent of GDP in 2025-26 (RE) to 0.71 per cent in 2026-27 (BE) was accommodated.Fiscal Strategy for Viksit BharatA falling tax-GDP ratio leading to a falling trajectory for expenditure to GDP ratio may not help in serving the objective of achieving a Viksit status. There is also a need to substantially increase the allocations in sectors like education and health. A useful beginning has been made in these respects in the 2026-27 Budget. Alongside an increase in tax-GDP ratio, there is a need to emphasise fiscal consolidation in terms of achieving and sustaining a fiscal deficit level of 3 per cent of GDP as soon as possible. (Muralikrishna Bharadwaj, Senior Manager, Tax and Economic Policy Group, EY India also contributed to the article) A falling tax-GDP ratio leading to a falling trajectory for expenditure to GDP ratio may not help in serving the objective of achieving a Viksit status. There is also a need to substantially increase the allocations in sectors like education and health. A useful beginning has been made in the 2026-27 budgetThe author is Chief Policy Advisor, EY India 2026

58 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACT Column by Sunil Badala & Nirmal NagdaTAXATIONIThe proposed changes impact a key repatriation strategy typically used by overseas shareholders from their wholly owned subsidiaries / joint ventures in IndiaTAXATION OF BUYBACK – A MERRY GO AROUNDN GOOD old days, we were all told by our parents and teachers that continuous learning is the most important element for success. With the advent of technological developments, this belief underwent a change--unlearn and relearn (reskill). Over the years, the Union budget has become a muchawaited event which throws light on the thinking of the government. The Union Budget 2026-27 presented by Finance Minister Nirmala Sitaraman presents one such opportunity to unlearn and relearn. Like every year, the Finance Minister proposed various tax changes. While some of them are for providing clarity, others provide tax incentives. However, there is one change which appears to be in the nature of course correction i.e., taxation of buyback of shares. The Original Buyback Tax LogicHistorically, and more specifically pre-2013, buyback of shares was treated as a transfer and gains thereon were taxed as capital gains. However, in 2013, this classical style of taxation was modified significantly through introduction of a Buyback Distribution Tax. This tax was akin to the Dividend Distribution Tax, whereby the Indian companies undertaking buyback Sunil Badala, Partner and Head of Tax, KPMG in Indiawere subjected to pay buyback tax on the distributed income / reserves. This levy had many shortcomings. Tax was levied on the company, irrespective of gains in the hands of shareholders, and foreign shareholders were not able to get credit for the taxes paid by the Indian companies in their home country, etc. Having said that, this also resulted in tax savings, more specifically for the Indian promoters. This was evident as more and more Indian companies adopted buyback as a means to distribute profits to their shareholders rather than declaring dividends. There was a clear tax arbitrage that was available and utilised.

07 February 2026 | BW BUSINESSWORLD | 59Taxation of Buyback as Dividend This arbitrage was noticed by the tax regulators and that gave birth to a unique method of taxing buyback. In 2024, the Buyback Distribution Tax was abolished and replaced with taxation of buyback as dividend. In effect, buyback proceeds were entirely taxed as dividends and at the slab rate applicable to the recipient shareholder. At the same time, the legislators acknowledged the fact that the shares bought back got extinguished and hence provided that the cost of shares shall be allowed as a loss by deeming the sale consideration of buyback as nil for computation of capital gains. In a way this meant that gross buyback proceeds were taxed as dividends, while cost of share was allowed as capital loss to be carried forward. This amendment certainly reduced the attractiveness of buyback since the domestic shareholders were taxed as per the slab rate and many of them at the highest rate of 30 per cent (plus applicable surcharge and cess). From a non-resident shareholders’ perspective, while this scheme meant availability of credit for taxes paid in India on dividend in their home country, it also posed some difficulty in determining the character of income, whether as dividend or capital gains under the tax treaties. In some cases, for instance for unitholders of InvIT or REIT, buyback proceeds were exempt if the underlying SPVs were in the old tax regime, while they were able to claim capital loss. Back to Capital GainsThe Finance Minister through Budget 2026 proposes to go back to the classical form of taxing buyback i.e., as capital gains. The stated objective behind this proposal is to rationalise the taxation. However, the proposal also entails differentiation in the rate applicable to promoters and non-promoters. While non-promoters are proposed to be taxed at the rates prescribed for taxing capital gains on shares, for promoters an additional tax rate is proposed to be levied.Definition of “promoter” for this purpose borrows meaning from SEBI (Buyback of Securities) Regulations, or Companies Act 2013 or is a person who holds directly or indirectly, more than 10 per cent shareholding in the company. The proposal certainly appears to be a welcome change from the perspective of non-promoter shareholders, since in their case the rate of taxation reduces from the applicable slab rate (which could be as high as 30 per cent) to 20/12.5 per cent for listed short-term and long-term shares. Even from a resident promoter’s perspective the change is not damaging, since at best the tax rate remains unchanged for them. Bad News for Some, Good News for SomeThe proposal can be bad news for non-resident promoters since they will now be taxed at 22/30 per cent as compared to possible lower tax rate for dividends as per the tax treaties. Further, taxation will now be on a net basis, unlike the current gross dividend and capital loss treatment. Also, for the shareholders from jurisdictions such as Mauritius, Singapore, the proposal could also mean a possible exemption for shares acquired pre-April 2017, subject to treaty eligibility. Having said the same, the 10 per cent threshold for deciding the promoter tag does appear to be very small in the current day context. Various private investors, including the private equity investors, do invest more than the prescribed limit, but may not necessarily be in control of company to enforce buyback. More 2026Nirmal Nagda, Partner Tax, KPMG in IndiaPhotograph by Hppd

60 | BW BUSINESSWORLD | 07 February 2026Nature New tax rate Earlier tax rate on deemed dividendNon-promoter Promoter is a domestic companyPromoter is not a domestic companyShort-term capital gain on listed shares20% 22% 30% Slab rates / applicable ratesShort-term capital gain on unlisted sharesSlab rates / applicable ratesSlab rates / applicable ratesSlab rates / applicable ratesSlab rates / applicable ratesLong-term capital gain on listed / unlisted shares12.5% 22% 30% Slab rates / applicable ratesEFFECTIVE BUYBACK TAX RATESfundamentally, as a shareholder, whether promoter or otherwise, one has right to reserves of the company based on the proportion of its holding. However, taxability would defer, based on the shareholding, which can be hard to digest. Too Many Changes for ComfortFurther, explaining the ever-changing tax treatment for buyback undertaken in different periods to shareholders, including retail and overseas shareholders, is going to be a tall ask. Somewhere, policy stability is an important aspect which the legislators should keep in mind. The proposed changes impact a key repatriation strategy typically used by overseas shareholders from their wholly owned subsidiaries / joint ventures in India. This amendment is likely to force people to go back to the drawing board and reevaluate their repatriation and return thesis and make appropriate choices. There are also nuances in terms of how to interpret the definition of promoter in case of a family trust, mutual funds, investment trusts, etc, considering that the section uses words “directly” or “indirectly.” Also, the section has not restricted its use of buyback in a strict sense. Assuming that in majority of cases buyback could be between two related parties, whether transfer pricing regulations would be applicable in such a situation is also not very clear. On balance, the proposed amendment seems to be a course correction, certainly for the non-promoters. Various attempts made in the past to fix the tax treatment of buyback were fraught with some or the other challenges. While it has been a full merry go around, hopefully we have found a resting place for taxation of buyback of shares, while one would like to have some modifications / clarifications to the proposal on the lines discussed above. BUDGET IMPACTThe Finance Minister through Budget 2026 proposes to go back to the classical form of taxing buyback i.e., as capital gains. The stated objective behind this proposal is to rationalise the taxationColumn by Sunil Badala & Nirmal Nagda

Store : The Oberoi ,Zakir Hussain Marg, New Delhi - 110003FLAGSHIP STOREEmail: [email protected] : +91-76693-55996 / www.thomasgoode.inGET IN TOUCHAn Understandingof the TableFrom intimate dinners to formal gatherings, the table is where ceremony unfolds.Thomas Goode’s crystalware is shaped by centuries of observing how hosting is understood. Hand-cut with precision, proportion, and restraint.

62 | BW BUSINESSWORLD | 07 February 2026BUDGET SPECIALUNION BUDGET 2026–27 comes at a time when the global economy is facing uncertainty. Growth is slowing in many countries, supply chains are being reworked, and governments are under pressure to manage their finances effectively. In this context, the Budget makes a clear choice. Instead of short-term stimulus or populist spending, it focuses on long-term growth built on strong public finances, investment in infrastructure, skilling people, and betterfunctioning cities.The government’s commitment to the fiscal glidepath at 4.3 per cent , even while increasing capital expenditure to Rs 12.2 lakh crore is laudable . Public investment as a growth lever continues with capital expenditure increased to Rs 12.2 lakh crore up from Rs 11.2 lakh crore in FY 2026. The continued push on building roads, railways, sanitation and water systems has a strong multiplier effect for the economy and new investments in the development of inland waterways also highlight a focus on a green and sustainabilityoriented infrastructure programme. Spending on transport corridors, logistics, industrial clusters and cities helps lower logistics costs for businesses, improve productivity and create jobs. This is especially important at a time when global companies are looking to diversify supply chains and invest in countries that offer scale, stability and clear policies. India’s push into areas such as semiconductors, electronics, biopharma, capital goods, strategic minerals and rare earths reflects an effort to reduce dependence on imports to secure our supply chains in critical areas and increase exports in higher-value sectors.I am delighted to see the focus on cities and urban infrastructure, especially water, sanitation and wastewater management. By including water supply, sanitation, drainage and wastewater as part of overall urban infrastructure planning and financing, the Budget recognises that these services are essential for economic growth. Clean water and proper sanitation improve public health, support a productive workforce, and make cities more attractive places to live and invest.Funding for the Department of Water Resources, River Development and Ganga Rejuvenation rose by 17 per cent in FY 2025–26, from Rs 21,640.88 crore to Rs 25,276.83 crore. Spending on river cleaning and basin-level planning increased, with a 13 per cent rise for the National Ganga Plan and a 70 per cent increase in the River Basin Management scheme, expanding attention to rivers beyond the Ganga. The Water Resources Management Scheme also saw a 57 per cent increase, strengthening groundwater management, BUILDING GROWTH THROUGH INFRASTRUCTURE, SKILLS AND STRONG CITIESColumn by Naina Lal Kidwai Overall, Budget 2026 -27 sends a clear message. India’s growth strategy is built on responsible public spending, strong infrastructure and jobs and skilling of our people

07 February 2026 | BW BUSINESSWORLD | 63hydrology, water data systems and long-term planning. Most notably, the Jal Jeevan Mission budget increased by nearly 200 per cent. Since 2019, about 15 crore rural households – nearly 80 per cent of the rural population – have received tap water connections, and the mission has been extended to achieve full coverage by 2028.As access improves, the next challenge will be ensuring reliable services, sustainable groundwater use and proper wastewater treatment, especially in fast-growing towns and cities. Problems such as untreated sewage, flooding and water contamination have real economic and health costs that cities can no longer ignore.The Budget’s proposal to develop City Economic Regions supports this broader view of urban growth. Planning cities together with nearby towns and surrounding areas allows infrastructure, housing, transport and jobs to be developed more efficiently. This regional approach can help cities grow in a more balanced and coordinated way.Financing urban development is another area where the Budget moves in the right direction. Encouraging municipal bonds, including for Tier-2 and Tier-3 cities, can help cities raise funds for water, sanitation, wastewater treatment and climate-resilient infrastructure. Stronger city finances reduce dependence on government grants and improve accountability. Job creation and skills are the other major focus of the Budget. The emphasis on training and capacity-building, especially in the healthcare sector, recognises that infrastructure alone is not enough. Skilled doctors, nurses, paramedics and allied health workers are needed as health services expand. The mention of medical tourism is also important. As India attracts more patients from abroad, it will create jobs not only in healthcare, but also in hospitality and support services.Tourism more broadly is seen as a source of employment and local growth. For many European countries this is a major source of growth.Plans to develop 12 archaeological sites as cultural centres, along with Buddhist circuits in the North East and trekking trails in hill regions, can bring income and jobs to smaller towns and rural areas. These initiatives support local businesses, craftspeople and service providers.Disinvestments at Rs 80,000 crore will contribute to much needed funds for all the programmes mentioned above . The Budget has included asset monetisation in this number and has indicated it will look at REITs to take over some of the PSE assets with a view to asset monetisation . The setting up of a High Level Committee on banking to review the adequacy of our banking sector in light of our aspirations of a Viksit Bharat and a focus on developing our bond markets will go a long way in financing the India growth story. Overall, Budget 2026 -27 sends a clear message. India’s growth strategy is built on responsible public spending, strong infrastructure and jobs and skilling of our people. The challenge now is effective implementation – turning spending into real improvements, skills into jobs, and plans into healthier, more productive communities. By including water supply, sanitation, drainage and wastewater as part of overall urban infrastructure planning and financing, the Budget recognises that these services are essential for economic growth. Clean water and proper sanitation improve public health, support a productive workforce, and make cities more attractive places to live and invest 2026-27 The author is founder and Chairperson, India Sanitation Coalition, past President, FICCI and former Country Head, HSBC India

64 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACTBudget 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 scaleTECHNOLOGYA LONG PLAYHE Union Budget 2026-27 has drawn strong support from industry leaders across semiconductors, electronics manufacturing, information technology, cloud infrastructure and artificial intelligence (AI). The government is seen as having moved decisively from policy signalling to execution while offering long-term clarity to investors. Industry bodies and corporate leaders said the budget builds on earlier initiatives such as the India Semiconductor Mission (ISM), Production-linked Incentives and the IndiaAI Mission, while placing greater emphasis on scale, value-chain depth and regulatory certainty.Ashok Chandak, President, India Electronics and Semiconductor Association (IESA), said the sector had crossed a credibility threshold. “The budget builds on trust from 2025 to execution and scale up in 2026-27,” he said, adding that India had “clearly moved from aspiration to credibility and is now recognised as a serious, investible destination for electronics and semiconductors.”He said the budget sustained policy momentum at a critical stage when approved projects were moving into execution.A key industry focus is the announcement of TISM 2.0, which Chandak described as a big evolution in India’s semiconductor strategy. “The Finance Minister’s statement on ISM 2.0 is a very important signal for India’s semiconductor ambitions,” he said, noting that it marked a shift from a fab-centric approach to a full value-chain strategy covering “equipment, materials, Indian IP, and supply-chain resilience (chemicals, gases, materials, etc).“For India, this means the ambition is no longer limited to manufacturing chips, but to own capabilities across design, tools, materials, and upstream inputs,” Chandak said, while adding that “the quantum of funds for ISM 2.0 [is] to be clarified.”Under the budget, increased spending allocation for the semiconductor sector is “close to Rs 8,000 crore,” Chandak said, including Rs 2,000 crore for fabs, Rs 5,000 ASHOK CHANDAK, President, India Electronics and Semiconductor Association (IESA) “The Finance Minister’s statement on ISM 2.0 is a very important signal for India’s semiconductor ambitions. It marks a clear evolution from a fab-centric approach to a full valuechain strategy”By Rohit Chintapali

07 February 2026 | BW BUSINESSWORLD | 65The government announced the clubbing of IT-enabled services, KPO and contract R&D under a single category of information technology services, with a uniform safe harbour margin of 15.5 per cent, an expanded eligibility threshold from Rs 300 crore to Rs 2,000 crore, automated approvals and five-year continuity.“The Union Budget 2026-27 provides much-needed structural clarity for India’s AI and cloud infrastructure ecosystem,” said Sharad Sanghi, Co-founder and CEO, Neysa. He said the changes “significantly improve tax certainty for technology companies operating at scale”. Sanghi also spotlighted the proposal to offer a tax holiday until 2047 for foreign companies providing global cloud services using data centres based in India, along with a 15 per cent safe harbour on cost for related entities delivering data centre services. “These measures directly strengthen India’s attractiveness as a hub for cloud and AI infrastructure and support the shift towards domestically hosted compute,” he said.2026crore for OSATs, and Rs 900 crore for SCL modernisation. The Electronic Component Manufacturing Scheme (ECMS) has received an allocation of Rs 1,500 crore, with the scheme enhanced to Rs 40,000 crore overall.Chandak said the electronics sector would benefit from a “unique 2 per cent profit margin support for electronic manufacturers,” along with components warehousing and logistics hubs, customs simplification and focused support for MSMEs and capital goods. While welcoming the measures, he cautioned that challenges remain. “Going forward it important to address ambition vs. execution, private sector readiness, bridging talent gap, international tie up’s,” he said.IT, Cloud And Data CentresIn information technology and digital services, industry leaders said tax reforms in the budget would significantly reduce compliance friction and improve certainty for large technology companies.Photograph by DC Studio

66 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACTservices sector as a primary driver of India’s economic growth, leveraging AI as the force multiplier,” Iyer said.She said the proposal to provide “long term tax exemption for data centre services provided from India to foreign customers will help in establishing India as a data centre hub”. Rajesh Varrier, President - Global Operations and CMD, Cognizant India, said the changes would allow companies to redirect attention away from regulatory processes.“The recognition of IT services as a unified category, along with enhanced safe harbour thresholds, brings much-needed certainty and predictability to the industry—allowing companies to shift their focus from compliance to innovation, client outcomes, and long-term value creation,” Varrier said.The budget’s focus on emerging technologies also drew support from research and policy experts. Amit Sheth, Founding Director of IAIRO, said, “The Union Budget reinforces India’s commitment to leveraging emerging technologies, particularly AI, as a driver of inclusive and productivity-led growth.” He cited continued focus on the IndiaAI Mission, the National Quantum Mission and the announcement of a dedicated committee to assess AI’s impact on jobs and skills.In agriculture, the launch of Bharat Vistaar was welcomed by agri-tech researchers. Pushpendra P. Singh, Dean CAPS and Project Director of ANNAM.AI at IIT Ropar, said the initiative aligned with the Prime Minister’s vision of technology-led farm transformation. “The launch of Bharat Vistaar is a significant step towards empowering farmers with AI-driven, real-time, climate-smart support,” Singh said.From the startup ecosystem, investors said the budget’s focus on hardware and systems was a strategic choice. Natasha Malpani, Founder at Boundless Ventures, said the government was investing “where compounding actually happens: hardware, manufacturing, and system capacity.”“What’s encouraging is the clarity of intent: AI being treated as infrastructure,” Malpani said, adding that targeted support such as tax relief on R&D, credits for compute and data infrastructure, and public procurement pathways would help AI startups scale within India’s largest systems. [email protected], executives said regulatory clarity would be critical to unlocking the next wave of investments.“Policy clarity regarding data localisation, cross-border data flows, and power and right-of-way reforms will be crucial to accelerating investments in next-generation digital infrastructure,” said Sudhir Kunder, Chief Business Officer, DE-CIX India.He added that a public-private partnership approach to expanding interconnection in Tier-2 and Tier-3 cities could accelerate digital inclusion. “With the (data centre) industry growing at 25 per cent CAGR and projected to reach 32 per cent CAGR by FY26, neutral interconnection platforms will play a crucial role in accelerating this growth,” Kunder said.Large IT services firms had similar views. Aparna Iyer, CFO at Wipro, said the budget clearly positioned IT services and artificial intelligence as central to India’s economic strategy.“The budget clearly articulates the government’s vision to promote the Indian IT APARNA IYER, CFO, Wipro“The budget clearly articulates the government’s vision to promote the Indian IT services sector as a primary driver of India’s economic growth”SHARAD SANGHI, Cofounder & CEO, Neysa “The Union Budget 2026-27 provides muchneeded structural clarity for India’s AI and cloud infrastructure ecosystem”

Jury MembersDr Annurag BatraChairman & Editor-in-ChiefBW Businessworld andFounder, exchange4mediaDr Pawan SinghDirectorIIM TrichySwaroop SampatRawalActress Educator ChairpersonCommittee for Inclusive Educationfor CBSE (Former)Mukesh SharmaFounding ChairmanPrometheus SchoolRupa ChakrabortyDirectorSuncity SchoolProf D P GoyalDirector and DeanLM Thapar School of ManagementPriya Saraf | [email protected] | 9732247222 | 9832386269Biren Singho | [email protected] | 8700166424 For QueriesEVENT PARTNERS#BWEducation40under40awards2026In association with5th EditionCelebratingChangemakersin Education!Honoring Excellence, Innovation & Impact in EducationNominate NowTaj MG Road Bangalore MARCH 2, 2026Scan to Nominate

68 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACTBuilding AI LeadershipImportantly, the budget also acknowledges that AI leadership is not achieved through technology alone. It is achieved through people. The proposed high-powered Standing Committee on ‘Education to Employment and Enterprise’ reflects a mature understanding of how emerging technologies will reshape work. The government is choosing to study AI’s impact on jobs proactively and translate those insights into curriculum reform, reskilling programmes and new pathways to employment and entrepreneurship.This approach aligns with the Economic Survey’s emphasis on managing the labour-market transition through augmentation and new roles, rather than viewing AI purely through the lens of displacement. For a country like India, anticipating change is far more responsible than responding to it belatedly.That focus on skilling and workforce readiness is visible across sectors. From allied health professionals and caregivers to AVGC creators, tourism workers and digital service providers, the budget repeatedly links new employment opportunities with technology exposure and digital tools. In AI terms, this is particularly important. It broadens the talent pool to a much wider base of AI-literate workers who can adopt, supervise and co-create AI systems in everyday work environments.I have always believed that innovation does not scale on capital or regulation alone, but on their alignment. For startups and MSMEs, especially in deep-tech and AI-first sectors, this year’s Budget reflects that same maturing policy mindset. By strengthening access to patient capital while simultaneously reducing regulatory ambiguity, it creates the conditions for sustainable innovation. The outcome is a more predictable operating environment, one that allows Indian AI companies to focus less on navigating friction and more on building globally competitive solutions from India. AI for Inclusive GrowthEqually important is how Budget 2026 frames AI as a tool for inclusive growth, not just efficiency gains. Technology’s Column by C.P. GurnaniROADMAP FOR INCLUSIVE AI-LED GROWTHHE Union Budget 2026–27 sends a clear signal about how the country intends to compete in the 21st century. The journey to Viksit Bharat will be technology-led but firmly rooted in self-reliance and inclusion. AI is no longer positioned as a futuristic experiment or a sectoral add-on; it is treated as a core national capability, one that will shape growth, employment, governance and India’s place in the global economy. In that sense, this budget is less about allocations and more about intent: India wants to own its AI future, not rent it.Self-reliance in Digital DomainThe budget reflects an evolution of Atmanirbhar Bharat as India prepares for an AI-first future. Over the past decade, India has focused on strengthening domestic manufacturing, improving energy security and reducing dependence on critical imports. Budget 2026 extends this logic decisively into the digital domain. The emphasis on semiconductors, cloud infrastructure, data centres and AI platforms recognises a fundamental truth: leadership in the digital economy is built bottom-up on strong and resilient foundations.The expansion of the India AI Mission provides a coordinated national framework to accelerate AI research, deployment and ethical governance across sectors. When viewed alongside initiatives such as the India Semiconductor Mission 2.0, expanded support for processing critical minerals and capital goods, and measures to attract global cloud providers to operate India-based data centres, the direction is clear. India is investing not just in consuming AI, but in building the compute, data and infrastructure layers that will increasingly power AI systems trained and served from Indian soil.TTECHNOLOGY

07 February 2026 | BW BUSINESSWORLD | 69true impact lies in how broadly its benefits are distributed, across geography, gender, age, and ability. Initiatives like Bharat Vistar, a multilingual AI platform designed to provide farmers with locallanguage, data-driven agricultural guidance, demonstrate how AI can directly improve productivity and decision-making at the grassroots. This reflects a larger and deliberate shift in thinking. Both the Economic Survey and the budget point away from dependence on a small number of foreign, black-box frontier models, and towards application-specific, domaincentric AI. For India, this approach is more sustainable and more strategic, given constraints on compute, power and capital and better aligned with the needs of public services, MSMEs, Indian languages and local supply chains.Taken together, Budget 2026–27 does not treat AI as a buzzword or a standalone policy objective. It weaves AI into manufacturing, services, agriculture, startups and human capital in a way that strengthens Atmanirbhar Bharat for a digital age. The real test will lie in execution, how effectively policies translate into platforms, skills into capabilities, and innovation into impact. If done right, India has the opportunity to shape an AI future that is not only technologically advanced, but deeply human in its outcomes. India is investing not just in consuming AI, but in building the compute, data and infrastructure layers that will increasingly power AI systems trained and served from Indian soilThe author isCo-founder and Vice Chairman, AIONOS 2026

70 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACTgression. The initial focus was on establishing India as a hub for electronics assembly, largely driven by the Production Linked Incentive (PLI) schemes. This was followed by efforts to create a domestic ecosystem for key components through initiatives such as the Electronics Component Manufacturing Scheme (ECMS).The next phase involved deepening capabilities in semiconductors through the India Semiconductor Mission (ISM), first with ISM 1.0 and now with ISM 2.0. Most recently, policy attention has shifted further upstream, encouraging the domestic manufacture of piece parts, materials, and inputs that support electronics component production. This phased approach has helped reduce vulnerabilities, strengthen supply chains, and improve overall value capture within the country.Budget 2026 introduces a set of direct policy measures aimed at broadening and deepening the electronics manufacturing base. The outlay for the Electronics Component Manufacturing Scheme has been increased from Rs 22,919 crore to Rs 40,000 crore, providing a strong incentive for domestic production of printed circuit boards, display panels, camera modules, and other critical components. This is expected to have a multiplier effect by catalysing downstream investments across the value chain.An allocation of Rs 40,000 crore for the PLI scheme in FY 2026–27 further reinforces the government’s commitment to electronics manufacturing. In parallel, Rs 8,000 crore has been earmarked for India Semiconductor Mission 2.0, with a focus on advanced semiconductors, materials, equipment design, and research and development.The announcement of two high-technology tool rooms is another important step. Tools, moulds, and dies play a critical role in determining manufacturing quality, yet often receive limited attention. Strengthening domestic capabilities in this area will help reduce dependence on imports, particularly from China, and improve consistency and quality across manufacturing operations.Additional initiatives include a Rs 10,000 crore scheme to encourage domestic manufacturing of containers and the establishment of three dedicated chemical parks. These measColumn by J.S. GujralVER the last seven to ten years, the Government of India has pursued a series of policy initiatives aimed at positioning the country as a global hub for electronics manufacturing. Beginning with the Modified Special Incentive Package Scheme (MSIPS), followed by SPECS, the Production Linked Incentive (PLI) schemes for key sectors, and later the India Semiconductor Mission (ISM) and the Electronics Component Manufacturing Scheme (ECMS), this sustained policy focus has delivered tangible outcomes.The value of electronics manufacturing in India has grown nearly six-fold, increasing from about $21 billion in 2014–15 to over $125 billion in 2024–25. Mobile manufacturing has been a clear standout, recording almost a thirty-fold increase in production value, rising from approximately $200 million in FY15 to around $65 billion in FY25. Exports have also accelerated sharply, with iPhone exports from India reaching $24 billion in 2025, nearly double the $13 billion exported by Apple from India in calendar year 2024.Building on the success of the PLI schemes and related initiatives, the sector has attracted significant capital investments of around Rs 2 lakh crore up to September 2025. These programmes have also contributed to the creation of over 1.33 million direct and indirect jobs in the electronics sector. With a strong foundation now in place, policy focus is increasingly shifting toward developing a domestic ecosystem for component manufacturing and establishing a robust semiconductor supply chain within the country.Electronics ManufacturingGovernment policy has followed a clear and structured proOTECHNOLOGYSTRENGTHENING INDIA’S ELECTRONICS VALUE CHAIN

07 February 2026 | BW BUSINESSWORLD | 71ures aim to reduce import dependence in specialty chemicals, substrates, and other materials that are essential for electronics component manufacturing.Empowering BusinessesAlongside direct policy initiatives, Budget 2026 introduces several tax and duty measures designed to improve predictability, liquidity, and operational efficiency for manufacturers. The proposed tax holiday until 2047 for foreign companies offering global cloud services from India-based data centres strengthens India’s digital infrastructure push, while also creating new opportunities for EMS companies across data centers and supporting technology ecosystems.The Budget also provides for provisional refunds under the inverted duty structure and introduces a one-time concessional duty window to facilitate sales by eligible SEZ units into the domestic tariff area. These measures allow manufacturers to utilise capacity more effectively while reducing working capital stress.Further steps include deferred duty payment windows for trusted manufacturers, rationalisation of customs duty rates, and the extension of basic customs duty exemptions on capital goods used in the manufacture of lithium-ion cells to include battery energy storage systems. The Budget also addresses a long-standing industry requirement by allowing non-residents to store components in bonded warehouses, along with a presumptive profit margin of 2 per cent on the imported invoice value. This measure is expected to significantly shorten working capital cycles and reduce upfront investment requirements across the electronics manufacturing supply chain.The Road AheadTaken together, the announcements in Budget 2026 reflect a clear and deliberate effort to strengthen India’s electronics manufacturing ecosystem. The focus now extends to depth, resilience, and long-term competitiveness.The policy direction is well defined and the foundation has been laid through sustained reform and targeted investment. What follows now is the work of execution. As the ecosystem matures, the onus will be on industry participants to build capability, invest in quality, and integrate more deeply into global value chains. If approached with discipline and collaboration, this phase can position India as a trusted hub for electronics manufacturing in the years ahead. The outlay for the Electronics Component Manufacturing Scheme has been increased from Rs 22,919 crore to Rs 40,000 crore, providing a strong incentive for domestic production of printed circuit boards, display panels, camera modules, and other critical componentsThe author isMD, Syrma SGS 2026

72 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACToften more valuable than fiscal incentives. It allows enterprises to plan long-term expansion, migrate higher-value global roles, and deepen strategic ownership from India with confidence that tax frameworks will remain stable.Building A GCC EcosystemThe Budget also reinforces India’s digital infrastructure ambitions through long-term policy support for data centres and cloud ecosystems. This alignment strengthens India’s position as a full-stack GCC destination—where talent, platforms, and data infrastructure coexist within a single ecosystem.For GCCs, proximity to hyperscale infrastructure improves latency, enhances security, and supports compliance with evolving data governance requirements. These factors increasingly influence location decisions for advanced digital and R&D mandates, particularly when compared with emerging hubs in Eastern Europe and SE Asia.The Budget’s emphasis on education-to-employment linkages and skills development underscores the central role of services in India’s long-term economic vision. As artificial intelligence reshapes job roles and value chains, policy focus is shifting toward building high-end, future-ready capabilities rather than volume-driven employment alone. By aligning talent development, digital infrastructure, and tax certainty, Budget 2026 lays the groundwork for India to remain ahead of the technology curve as global service delivery models evolve.The Bottom LineTaken together, these measures reflect a transition from a cost-plus mindset to a value-integrated strategy. India is no longer competing solely on efficiency, but it is offering predictability, scale, and long-term readiness. For enterprises evaluating where to anchor their global capabilities, India is emerging not just as the most cost-effective option, but as one of the most stable and scalable global operations hubs in the world. Column by Monica PirgalThe author is CEO, Bhartiya ConvergeINSTITUTIONALISING THE INDIAN GCC ADVANTAGEFOR decades, India’s Global Capability Centre (GCC) value proposition was anchored in cost efficiency and talent availability. Union Budget 2026-27 upgrades this proposition from cost to certainty, from fragmented expansion to scalable strategy, and from execution support to global mandate ownership.In fact, this budget seeks to position India as one of the world’s most predictable and scalable destinations for global operations.A key outcome of the budget is the simplification of tax administration across technology-led services. By expanding and clarifying the treatment of IT and IT-enabled services, and R&D-led operations within the tax framework, the government has reduced long-standing ambiguity for multinational enterprises.For modern GCCs, now operating as multi-functional hubs spanning engineering, analytics, and innovation, this convergence provides greater clarity and consistency. It enables enterprises to consolidate global mandates in India with increased confidence.Historically, as GCCs scaled in India, their operational complexity and tax exposure often increased in parallel. The decision to raise the safe harbour threshold from Rs 300 crore to Rs 2,000 crore represents a decisive shift in policy thinking. By signalling that scale will no longer automatically trigger heightened scrutiny, the budget replaces uncertainty with predictability. For global boards and CFOs, this stability is TECHNOLOGYIndia is no longer competing solely on efficiency, but it is offering predictability, scale, and longterm readiness

In a world of quick fixes,imagine healing as ancient asthe Himalayas and as profoundas your breath.Welcome to a wellness philosophy that predates modern medicineand still outlasts it. Rooted in the wisdom of Charaka Samhita andempowered by diagnostic precision, Kairali – The AyurvedicHealing Village invites seekers of balance to live Ayurveda, not justtry it.Hidden Gem:Guests access secret trails throughour 65-acre organic farm—lush withhealing herbs, spices, and thevibrancy of monsoon life.Chef's Table:Sattvic, seasonal vegetarian meals—ash gourd stew, cumin-spiced redrice, turmeric-infused teas—allpersonalized for your dosha.Lifestyle Workshops:Continue the healing journey withexpert-guided classes on Ayurvedicself-care, immunity routines, andresilient living.“I arrived burnt out and bloated. After14 days of Panchakarma, I felt mymind, skin, and gut reborn. I lost 5 kg,slept like a baby, and went homecraving ghee!”-Aparna M., Media Executive, MumbaiLegacy:Since 1908, four generations of Ayurvedic healers. Trusted in 30+countries. One of India’s most internationally recognizedAyurvedic institutions.Authenticity:More than a retreat: every villa is designed with Vastu Shastraprinciples, every meal is tailored to your dosha, and every therapyis personalized for your unique mind-body balance.Science Meets Shastra:Ancient pulse diagnosis (Nadi Pariksha), guided by classicalAyurvedic texts, is practiced at Kairali with medical expertise forpersonalized healing.Panchakarma: A Cellular ResetTotal mind-body detox—medicallysupervised for lastingtransformation.Customizable Program: The StarTherapySelect therapies for your uniquehealth needs, including multipleconcerns and co-morbidities,guided by expert Ayurvedicphysicians.Yoga SynergyDaily movement, breath, andstillness—integrating Kerala’straditional wisdom.The Kairali DifferenceLOCAL FLAVOR & INSIDER TIPSA Transformational StorySignature ExperiencesDiscover Kairali’s Healing Power-Limited Slots Remain!Connect with us byscanning the code :Reserve your journey :www.ktahv.comCall Now : +91-9555156156WhatsApp: +919289838797

74 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACT Column By Ravi NawalTECHNOLOGYTWHY DATA CENTRES AREN’T TECHHE UNION Budget 2026-27 made a remarkable announcement: tax holidays extending until 2047 for foreign companies providing cloud services through Indian data centres. This 23-year incentive window, coupled with exemptions from Minimum Alternate Tax and a favourable 15 per cent safe harbour margin for related entities, represents one of the most generous policy packages in recent memory. The sheer scale of these incentives prompts a fundamental question: what exactly is the government subsidising?The official narrative frames data centres as cutting-edge technology infrastructure—gleaming facilities filled with servers, artificial intelligence, and the digital backbone of tomorrow’s economy. But the structure of these incentives tells a different story. When we examine what data centres actually are and how they behave economically, a counterintuitive reality emerges: data centres are fundamentally commodities masquerading as technologies.Understanding the DistinctionTechnologies, think solar panels, smartphones, or electric vehicles- exhibit a characteristic pattern: as cumulative production increases, costs decline predictably and often dramatically. Solar panel costs have dropped over 90 per cent in the past decade. Technologies can be manufactured modularly, scaled globally, and shipped wherever demand exists. Their value proposition improves continuously through innovation.Commodities operate under entirely different rules. Oil, copper, wheat, or iron ore are bound by physical constraints. They must be extracted or grown in specific locations where natural conditions permit. As the easiest deposits get exhausted, producers face rising costs. Commodity prices fluctuate based on supply-demand dynamics and resource availability rather than following predictable downward trajectories.Why Data Centres Are CommoditiesData centres, despite their high-tech veneer, exhibit nearly every characteristic of commodities rather than technologies.Location dependency: A data centre cannot be built just anywhere. Data centres require convergence of multiple critical resources: abundant electrical power at

07 February 2026 | BW BUSINESSWORLD | 75stable rates, robust network connectivity with low latency, adequate cooling infrastructure, water availability, and appropriately zoned land. These aren’t preferences, they’re fundamental requirements. Just as gold mines exist where gold is found, data centres can only exist where this constellation of resources comes together. This explains why global hubs cluster in specific regions: Northern Virginia, Singapore, Ireland, and increasingly, India.Depletion dynamics: As more data centres concentrate in favourable locations, they face classic commodity depletion dynamics. The first data centre secures the best sites — nearest to power substations, with optimal fibre routes, on the most suitable land. Each subsequent facility faces incrementally worse conditions. Singapore halted new data centre development in 2019 due to power grid constraints. Ireland now faces pressures with grid operators warning that data centres could consume 30 per cent of national electricity by 2030. These aren’t technology scaling challenges, they’re resource depletion problems identical to those facing mining operations.Flat cost curves: While servers and switches inside data centres follow technology learning curves and become cheaper, the facility itself does not. Construction costs for data centre buildings remain stubbornly high. Land acquisition, concrete and steel structures, HVAC systems, backup generators, and security infrastructure don’t decline with cumulative production. A data centre built in 2025 costs roughly the same per megawatt of capacity as one built in 2015, sometimes more. This flat cost curve is characteristic of commodities, not technologies.The container-content confusion: Proponents might argue that compute density is exploding; today’s AI chips deliver exponentially more power per rack. But this confuses the container with its contents. India’s tax holiday applies to the facility operator managing power, cooling, and physical infrastructure, not to NVIDIA designing chips. The facility operator doesn’t benefit from Moore’s Law; it suffers from it. As compute density increases, cooling requirements intensify dramatically. Modern AI chips generate vastly more heat, demanding more sophisticated and expensive cooling systems. The facility becomes more expensive to operate precisely because the technology inside improves -- the opposite of a learning curve.Commoditised outputs: The services data centres provide -- computing power, storage capacity, network bandwidthhave themselves become commoditised. Cloud computing resources from different providers are largely interchangeable. Customers choose based on price, latency, and compliance, not fundamental technological differentiation. This standardisation is the hallmark of commodity markets.The 23-year tell: Most tellingly, data centres require the investment horizons associated with commodity infrastructure. If data centres were genuine technologies poised for exponential improvement, such extended incentives would be unnecessary. The market would naturally drive deployment as economics improved. Technologies don’t need multi-decade subsidies; they need early-stage support until learning curves kick in. But commodity infrastructureports, pipelines, power plants -- requires exactly this kind of long-term policy commitment. The 2047 horizon aligns perfectly with how governments approach strategic commodity infrastructure.Significance of this Reframing Understanding data centres as commodities reframes the budget announcement entirely. India isn’t betting on transformative technology that will become exponentially cheaper. Instead, the government is pursuing strategic commodity development, securing control over critical infrastructure that provides geopolitical leverage and economic sovereignty.The policy’s sophistication becomes apparent when viewed as part of India’s broader digital strategy. While the Digital Personal Data Protection Act itself doesn’t mandate blanket data localisation, sector-specific regulations from the RBI (for payment data), SEBI (for financial data), and other regulators have created de facto localisation requirements. The tax holiday complements these frameworks by reducing cost barriers for companies forced to maintain Indian infrastructure.Data centres may be filled with advanced equipment, but at their core, they’re resource infrastructure -- bound by geography, constrained by physical inputs, and valued for strategic positioning rather than exponential improvement potential. They are the digital equivalent of mineral deposits: valuable, location-specific, and requiring long-term commitment to develop. India’s policy treats them accordingly, even if the official narrative suggests otherwise. (Read full column on www.businessworld.in)Technologies don’t need multi-decade subsidies; they need early-stage support until learning curves kick in. But commodity infrastructure- ports, pipelines, power plants — requires exactly this kind of long-term policy commitment2026 The author is Board Member, Responsible AI Foundation; CEO, Data Peace AI Technologies, and technology evangelist

76 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACTleveraged tax incentives to become a major data centre hub in Europe. With demand for cloud services, artificial intelligence workloads, and data localisation rising rapidly, the tax holiday significantly improves project viability for hyperscalers and domestic players alike. Over time, this could catalyse an ecosystem of allied industries, from power equipment and cooling technologies to fibre optics and data security, anchoring high-value investment and skilled employment within India.The budget also signals a clear intent to double down on selected strategic and capital-intensive industries. Duty relief and policy support for civil aviation aircraft manufacturing, nuclear power plants, energy storage systems, and electronics manufacturing indicate a willingness to support longgestation sectors where scale, technology, and patient capital are critical. In nuclear power in particular, the budget’s focus on future-ready energy infrastructure aligns with India’s longterm goals of clean baseload capacity and energy security. Similarly, targeted support for energy storage and electronics reinforces India’s ambition to move up the value chain in clean energy and advanced manufacturing.The attention to future-oriented industries forms another important aspect of the Budget. Policy emphasis on rare earths and critical minerals, biologics, semiconductors, and other technology-intensive sectors reflects that industrial competitiveness will increasingly depend on secure access to materials, technology depth, and resilient supply chains. For domestic industry, this focus provides policy certainty and encourages long-term investment in capabilities that are both commercially and strategically significant.The budget also advances measures aimed at increasing women’s participation in the workforce. Support for womenled enterprises, skill development initiatives, and institutional platforms such as SHE-marts seeks to reduce entry barriers and improve access to economic opportunities.Ecommerce exports receive a boost through the budget’s focus on small-package-based trade. Simplifying processes Column by Jaijit BhattacharyaALIGNING FOR MANUFACTURING COMPETITIVENESSHE Union Budget 2026-27 reinforces the government’s investment-led approach to economic growth, anchored in fiscal discipline and medium-term stability. The budget adheres to a credible fiscal deficit reduction trajectory and preserves the policy preference for capital expenditure over revenue spending. For domestic industry, the budget provides clarity through infrastructure investment, selective duty interventions, and focused support for sectors aligned with long-term economic priorities. At the same time, certain structural issues, particularly inverted duty structures and input cost disparities, remain relevant considerations for enhancing manufacturing competitiveness.At the macro level, the budget emphasises limiting fiscal pressures that can constrain private investment. By containing expenditure and directing public borrowing towards asset creation, the budget improves the availability of capital for the private sector. Over time, this can contribute to a more stable interest rate environment, benefiting domestic manufacturers. Add to this continued public investment in transport and logistics infrastructure, which lowers logistics costs and improves supply-chain efficiency for industry.Tax Holiday IncentivesOne of the most consequential announcements for emerging sectors is the extension of tax holiday incentives for data centres. This measure has the potential to reshape India’s position in the global digital infrastructure landscape, much as Ireland TBudget reinforces confidence in India’s growth trajectory and supports the domestic industry through infrastructure investment, fiscal discipline, and targeted policiesMANUFACTURING

07 February 2026 | BW BUSINESSWORLD | 77and providing targeted support for crossborder ecommerce can significantly benefit MSMEs and first-time exporters.The DownsidesAlongside these measures, certain structural features reflected in the budget merit closer attention. In sectors such as textiles, the continued imposition of customs duty on Dissolving Grade Wood Pulp (DGWP) undermines the competitiveness of domestic viscose staple fibre manufacturing. Removing customs duty on DGWP would make the value chain tax-neutral and align domestic manufacturing with import competition.Similarly, differences in feedstock costs continue to influence competitiveness in several downstream industries. Natural gas in India remains nearly seven times more expensive than in competing economies, a disparity that directly impacts industries such as isopropyl alcohol, a key feedstock for pharmaceuticals, and ammonium nitrate, which is critical for coal mining and, by extension, energy security. In addition, the cost of nitric acid in India is roughly 38 per cent higher than in comparable international markets. This cost differential affects downstream chemicals such as para-nitro-chloro-benzene, an important input for paracetamol. Targeted measures such as input cost rationalisation or compensatory policy mechanisms could address these disparities and strengthen domestic competitiveness without weakening efficiency incentives.However, to fully unlock the potential of domestic manufacturing, incremental steps to rationalise tariff structures and address persistent input cost disparities would further enhance the effectiveness of these measures. One of the key announcements for emerging sectors is the extension of tax holiday incentives for data centres. This measure has the potential to reshape India’s position in the global digital infrastructure landscape2026 The author is President, Centre for Digital Economy Policy

78 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACT By Abhishek SharmaNION BUDGET 2026-27 takes a decisive step to give more teeth to micro, small and medium enterprises (MSMEs). Moving beyond incremental support witnessed in the years past, the Union government now attempts to structurally strengthen small industries that form the core of the country’s manufacturing base, employment engine and export ambitions.The emphasis on MSMEs as a key policy pillar for boosting domestic manufacturing was evident in Prime Minister Narendra Modi’s remark, when he said, “The support that UPhotograph by URFMSMEs EMPOWERED TO TRULY BE THE BACKBONE OF THE INDIAN ECONOMYUnion Budget 2026-27 places micro, small and medium enterprises (MSMEs) at the core of India’s growth strategy, signalling a shift from incremental relief to small industries to a structural reform that aims to enhance their access to credit, step up their output and ensure overall growth and employment opportunitiesMSMEs and our small and cottage industries have received in this budget will give them new strength to become local to global.” The Budget seeks to address long-standing constraints like access to capital, scale and productivity of the MSMEs through a Rs 10,000 crore SME Growth Fund, sustained public capital expenditure of Rs 12.2 lakh crore, expanded use of digital payment platforms such as the Trade Receivables Discounting System (TReDS), and a renewed focus on reviving legacy industrial clusters. The most binding constraint remains a structural credit gap of around Rs 30 lakh crore, or roughly 24 per cent of estimated demand, a shortfall that disproportionately affects micro enterprises, women-owned firms and service-sector MSME

07 February 2026 | BW BUSINESSWORLD | 792026-27compliance requirements and uneven integration into global value chains.The disruptions caused by the Covid-19 pandemic exposed these vulnerabilities starkly, with thousands of micro and small enterprises being forced to shut down as cash flows dried up. While successive government measures since have sought to stabilise the sector, translating policy intent into onground outcomes has remained challenging, given the sheer scale, diversity and informality of India’s MSME universe.The Rs 10,000 Crore Growth FundThe proposed Rs 10,000 crore SME Growth Fund will prove one of the most significant targeted interventions for small businesses in recent years. Union Finance Minister Nirmala Sitharaman has said the fund would be set up to “create future champions”. The Growth Fund is designed to provide equity support to high-potential small and medium enterprises, allowing them to scale operations, invest in technology and improve productivity without the immediate repayment pressures associated with traditional debt. Industry representatives see the equity-focused approach as a departure from earlier policy tools that largely relied on credit guarantees and liquidity support. Praveen Khandelwal, Member of Parliament from Chandni Chowk and Secretary General of the Confederation of All India Traders (CAIT), says the initiative shows a clear intent to integrate MSMEs into India’s long-term growth trajectory.“For the first time, the MSME sector has been kept at the centre of the budget and the Rs 10,000 crore SME Growth Fund clearly reflects the government’s intent to integrate MSMEs into India’s long-term growth and export ambitions,” he says. Khandelwal is of the opinion that “By resting support on three critical pillars, equity infusion, enhanced liquidity and professional handholding, the initiative provides a comprehensive framework for scaling MSMEs.”Equity support, he says, allows firms to expand production and explore export markets at a time when global demand remains uneven and financing costs are elevated. “This marks a decisive shift from supporting MSMEs merely with liquidity to empowering them with long-term capabilities,” he says.businesses. Even as overall MSME credit growth rose 11.27 per cent year-on-year by mid-2025, borrowing costs ranging between eight per cent and 18 per cent and persistent collateral requirements continued to exclude millions of enterprises from affordable finance.Industry representatives say the combined thrust of the Budget could reshape MSMEs, which now contribute towards roughly a third of the gross domestic product (GDP), around 45 per cent of manufacturing output and close to 40 per cent of exports. Despite repeated policy pushes over the past decade, the sector continues to grapple with high financing costs, delayed payments, fragmented PRAVEEN KHANDELWAL, Member of Parliament from Chandni Chowk and Secretary General of the Confederation of All India Traders (CAIT) “By resting support on three critical pillars, equity infusion, enhanced liquidity and professional handholding, the initiative (SME Growth Fund) provides a comprehensive framework for scaling MSMEs,”KEY POINTERSn Rs 10,000 crore SME Growth Fund to create scale-ready champion firmsn Rs 2,000 crore top-up to Self-Reliant India Fund for micro enterprisesn TReDS platform to be mandated for CPSE purchases from MSMEsn Credit guarantee support for invoice discounting via CGTMSE

80 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACT Reviving Industrial ClustersThe Union budget also proposes a scheme to rejuvenate 200 legacy industry clusters across the country. Many of these clusters, once hubs of regional manufacturing, have struggled with outdated technology, prolonged credit stress and declining competitiveness. The government expects the revival to generate employment, restore manufacturing activity and support decentralised industrialisation in regions that have lost momentum over the years. For industry bodies, the focus on clusters signals a return to place-based industrial policy after years of fragmented support.Nirmal K. Minda, President, Assocham, describes the budget as a framework that meaningfully advances domestic manufacturing, MSME growth and ease of doing business while maintaining a pro-growth outlook. He says the industry body had submitted suggestions structured around five pillars, namely Make in India, ease of doing business, MSME growth, digitisation and sustainability, most of which is now reflected in the Budget.“Another one was cluster-based plugand-play manufacturing they have given. That was also very commendable. Again, the mega textile park and other industrial parks will also give a very important boost to our MSME sector,” says Minda. The Rs 5,000 crore outlay focused on MSMEs in Tier-2 and Tier-3 cities, he points out, could spur job creation beyond major urban centres and deepen regional industrialisation.The MSME-focused measures accompany a broader public capital expenditure push, with the government maintaining a capex target of Rs 12.2 lakh crore. Bankers say the manufacturing-led investment cycle is likely to have a direct multiplier effect on smaller enterprises embedded in supply chains. Shyam Mani, Head of SME at CSB Bank, says the capex thrust would benefit MSMEs, particularly those linked to manufacturing. “The Union Budget continues to focus on strengthening the MSME sector. Rs 12.2 lakh crore of capex target will have a positive impact on MSMEs in manufacturing,” he says. Mani points to the emphasis on electronics and semiconductors as especially significant for supplier ecosystems. He says the SME Growth Fund would help improve resilience and global competitiveness, while the Rs 2,000 crore top-up to the Self-Reliant India Fund would keep risk capital flowing NIRMAL KUMAR MINDA, President, Assocham “Another one was cluster-based plug-and-play manufacturing they have given. That was also very commendable. Again, the mega textile park and other industrial parks will also give a very important boost to our MSME sector,”to micro enterprises. Measures to revive 200 legacy industrial clusters and increase MSME procurement through TReDS were also “very proactive”, says Mani.TReDS & Payment DisciplineA central pillar of the Budget’s MSME strategy is the expansion of digital platforms to improve liquidity and payment discipline. The Trade Receivables Discounting System allows MSMEs to finance trade receivables from corporates, government departments and public sector undertakings through multiple financiers.Over Rs 7 lakh crore has already been facilitated through TReDS, and the Budget announces a series of measures to enhance its effectiveness. These include mandatory use of TReDS by central public sector enterprises (CPSEs) for procurement from MSMEs, credit guarantee support for invoice discounting through the Credit Guarantee Fund Trust for Micro and Small Enterprises, linking the Government eMarketplace (GeM) with TReDS to enable faster financing of government receivables, and permitting securitisation of TReDS receivables to create a secondary market. The measures are expected to unlock faster, cheaper and more reliable access to working capital, particularly for sectors such as textiles, where delayed payments have been a persistent issue.Ramachandran Venkataraman, Director and Chief Operating Officer of V-Guard Industries, says the Budget has addressed both capability gaps and working capital challenges in the MSME sector. “Most importantly, the focus on the MSME sector is very, very strong and it is addressing both the capability issues, but also making sure that the MSME sector is well supported with stronger capability on TReDS, the integration of TReDS with various aspects, so that working capital challenges can be addressed,” he says.To support the smallest enterprises, the budget provides a Rs 2,000 crore top-up to the Self-Reliant India Fund. The fund is aimed at micro enterprises that remain capital-starved despite existing credit guarantee schemes, offering equity-like support to stabilise and expand operations. Khandelwal says the top-up would help scalable MSMEs grow without adding balance-sheet stress. He also welcomes the enhanced allocations across multiple MSME-focused schemes, including Rs 9,000 crore for the Emergency Credit Line Guarantee

07 February 2026 | BW BUSINESSWORLD | 812026-27cated to ‘Three Kartavyas’ which include accelerate and sustain economic growth, fulfil the aspirations of people making them strong partners in India’s path to prosperity, and ensure inclusive access to growth opportunities,” he says.Juneja says the focus on creating champion MSMEs, rejuvenating legacy industrial sectors and scaling up manufacturing in strategic areas would increase the contribution of manufacturing to GDP over time. The Rs 10,000 crore allocation for the SME Growth Fund and the Rs 2,000 crore top-up to the Self-Reliant India Fund were critical to meeting the expanding financial needs of MSMEs, he goes on to say.Mamta Binani, President of MSME Development Forum West Bengal, describes the Growth Fund as a “monumental stride” at a pivotal moment of the economy. She says the initiative would help MSMEs innovate, modernise and scale while improving resilience against global trade disruptions. “At a time when MSMEs face liquidity challenges, delayed payments and intense competitive pressures, this fund will act as a catalyst for enhanced competitiveness, improved access to global markets, and deeper integration into value chains,” she says.While the Budget signals a clear policy intent to elevate MSMEs from survival mode to scale mode, execution remains the critical test. By shifting the focus from short-term relief to long-term capability building, the Budget positions MSMEs not merely as beneficiaries of growth, but as drivers of India’s industrial future. Whether the ambition to create globally competitive champion MSMEs is realised will deScheme, Rs 1,900 crore for the Fund of Funds for MSMEs, Rs 1,500 crore for the Raising and Accelerating MSME Performance programme, Rs 3,861 crore for PM Vishwakarma and Rs 4,000 crore for the Atmanirbhar Fund. “These reforms will give a greater boost to the trade finance chain for supporting MSMEs,” he says.Compliance & Capacity BuildingBeyond capital and liquidity, the Budget introduces institutional reforms aimed at simplifying compliance and building managerial capacity within the MSME ecosystem. The Corporate Mitras scheme is expected to play a key role, with professional institutions designing short-term modular courses to develop accredited para-professionals across Tier- 2 and Tier -3 towns. “These trained para professionals will provide MSMEs with affordable, accessible and reliable compliance support, significantly reducing cost and complexity for small businesses,” says Khandelwal. Industry representatives say such measures could address a long-standing gap in the MSME sector, where limited access to professional advice often constrains formalisation and scale. Trade bodies broadly welcome the Union Budget’s focus on MSMEs, describing it as timely amid global uncertainty and shifting trade dynamics. Rajeev Juneja, President of PHDCCI, says the Budget’s emphasis on manufacturing, infrastructure and MSMEs aligned to sustain long-term economic growth.“We appreciate that the Union Budget 2026-27 is dediRAJEEV JUNEJA, President, PHDCCI, “We appreciate that the Union Budget 2026-27 is dedicated to ‘Three Kartavyas’ which include accelerate and sustain economic growth, fulfil the aspirations of people making them strong partners in India’s path to prosperity, and ensure inclusive access to growth opportunities,”MAMTA BINANI, President, MSME Development Forum West Bengal “At a time when MSMEs face liquidity challenges, delayed payments and intense competitive pressures, this fund (the MSME Growth Fund) will act as a catalyst for enhanced competitiveness, improved access to global markets, and deeper integration into value chains,”

82 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACTserious attempt at building full-stack industrial capability. This is not about incremental assembly, it is about IP, equipment and depth. As Anil Joshi, Managing Partner, Unicorn India Ventures, says, “Indian Semicon is at a very nascent stage and needs a lot of hand-holding and policy support. ISM 2.0 will certainly help in mushrooming genuine Semicon use cases and will make India self-reliant.” Biopharma and climate tech also find space, with Rs 10,000 crore for RESENTED by Finance Minister Nirmala Sitharaman, the budget is a study in restraint. It hits several firsts but avoids easy applause lines. The word ‘startups’ appeared just twice in the speech. Was this a deliberate signalling choice? Or a belief that India’s startup ecosystem, now a decade old, no longer needs constant policy validation to survive? Missing leversAt first glance, the gaps stand out. There were no explicit announcements on ESOP tax easing, no fresh largeticket allocations for venture capital and no clear roadmap for unlocking rupee institutional capital at scale. For founders and investors these gaps are hard to ignore. However, Budget 2026 was not about short-term relief. It was about laying the foundational bedrock for India’s march towards becoming a developed nation by 2047. Rajat Tandon, President, IVCA (Indian Venture and Alternate Capital Association), notes, “We congratulate the Finance Minister on presenting a forward-looking and futuristic budget, which reinforces India’s position as a safe haven for long-term investments.”Capacity buildingThe strongest signals for startups emerge from the manufacturing and deeptech push. Semiconductor Mission 2.0, Rs 40,000 crore for electronic components, rare earth corridors across four states and high-tech tool rooms point to a Startups get fewer shoutouts, but bigger signals as the Union Budget 2026-27 focused on manufacturing depth, capital pathways and long-term capacity for India@2047By Resham Suhail STARTUPSWHY STRUCTURE MATTERS MORE THAN STIMULUSNTASHA,Co-founder and Managing Partner, VG Capital, says, “This budget is setting the cornerstone for the vision which India has towards being a Viksit Bharat by 2047”P

07 February 2026 | BW BUSINESSWORLD | 83pecially encouraging.” While domestic risk capital remains an unresolved challenge, Budget 2026 nudges liquidity through higher foreign investment limits and easier global capital access for tech companies. It is not a silver bullet, but it expands exit pathways. The mention of ‘Orange Economy’ was the major attraction. Government backing for the Indian Institute of Creative Technologies (IICT) and AVGC (animation, visual effects, gaming and comics) content labs across 15,000 secondary schools and 500 colleges, is remarkable. Rajan Navani, Chairman, JetSynthesys, calls it ‘a significant and timely step’ in expanding India’s creative talent pool. He adds, “In my role as a member of the Board of Directors of IICT, I truly welcome this intervention.”Ronnie Screwvala, Co-founder, upGrad and Investor, states, “For us to be a developed country in 2047, winning in sports big time (and not just cricket) and being a softpower is essential and the clarion call in this budget is loud and clear.” Defence capital expenditure rises to Rs 2.19 lakh crore, nearly 22 per cent higher than the previous year. On defence, Ankit Mehta, Co-founder and CEO, ideaForge Technology, asserts that the increased DefEx (Defence Expenditure) signals a strong commitment to modernisation and long-term capability building.” The agriculture sector and farmers received much to celebrate, such as Bharat Vistaar, coconut-centric businesses and more. As Anand Chandra, Co-founder and Executive Director, Arya.ag, says, “The budget lays strong groundwork, execution will depend on how these initiatives reach real farms in real time.” Long horizonThe government appears to be stressing that the next phase of growth will be driven by execution, governance and alignment with national priorities, not policy crutches only. Ntasha, Co-founder and Managing Partner, VG Capital, says, “This budget is setting the cornerstone for the vision which India has towards being a Viksit Bharat by 2047.” Kunal Bahl, Co-founder, AceVector and Titan Capital, sums it up, “Budget 2026 is pragmatic and enabling, with a sharp focus on employment, enterprise, education, emerging tech, and exports. Bharat continues to build strongly.” For startups, this year is less about chasing incentives and more about building foundational strength, strong balance sheets, real revenues and credible governance. In that sense, it may actually signal confidence, not neglect. [email protected] Shakti and Rs 20,000 crore for carbon capture, opening new lanes for science-led startups. What this budget makes clear is that the government is betting on capacity building over consumption. Manufacturing, deeptech, infrastructure and skills take precedence over startup-only incentives. Capital pathwaysEmployment and enterprise support come through the Rs 10,000 crore SME Growth Fund and a Rs 2,000 crore boost to the Selfreliant India (SRI) Fund, aimed at helping tech-enabled MSMEs and scaleups bridge the growth gap. On talent and inclusion, the emphasis is more pronounced. The SHE programme’s focus on women entrepreneurs drew strong support from the ecosystem. As Padmaja Ruparel, Co-founder, IAN Group, says, “It addresses systemic access to opportunity and funding is esKEY FIGURESn Rs 2,000 crore top-up to Self-Reliant India Fund to support early-stage enterprisesn TReDS-linked financing and credit guarantees to improve startup-MSME liquidityRONNIE SCREWVALA,Co-founder, upGrad and Investor,“For us to be a developed country in 2047, winning in sports big time (and not just cricket ) and being a softpower is essential\"

84 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACT Column by Archana JahagirdarVIKSIT BHARATAThe first budget prepared at Kartavya Bhawan sustains the momentum of structural reforms for the startup sector as a core driver of Viksit Bharat KEEPING THE REFORM EXPRESS FUELLEDS a venture capitalist watching India’s startup ecosystem mature over the past decade, the Union Budget 2026-27 feels less like a moment of announcement and more like a statement of continuity. Presented amid global economic volatility and fractured supply chains, the budget underscores a mature policy insight: innovation-led growth is not cyclical, but structural. The focus has clearly shifted—from merely accelerating startup creation to building enduring institutions that enable enterprises to survive shocks, compete globally, and compound value over time.An assured approachSince the PM’s Independence Day

07 February 2026 | BW BUSINESSWORLD | 85address in 2025, the government has rolled out over 350 reforms. Measures such as GST simplification and the rationalisation of mandatory Quality Control Orders are already extending startup runways. High-level committees have been constituted to drive these reforms, while the Centre is working in parallel with state governments to accelerate deregulation and materially lower compliance burdens across jurisdictions. The clearly articulated sectoral priorities in the budget now provide strong policy tailwinds. AI, semiconductors, and digital public infrastructure stand out as high-conviction opportunity areas which signal where entrepreneurial energy, capital, and long-term national interest are set to converge.Policy tailwindsAccess to markets remains a defining pillar of the startup growth story. Public procurement has emerged as one of the state’s most effective levers of startup policy. Through the Government e-Marketplace, more than 35,700 startups have already fulfilled close to five lakh orders, translating into business worth over Rs 51,200 crore. Budget 2026 builds meaningfully on this momentum. The decision to fully remove the existing Rs 10 lakh per-consignment value cap on courier exports is a decisive step toward enabling startups and small businesses to participate seamlessly in global e-commerce. Equally important is the proposed improvement in the handling of rejected and returned consignments, with technology-driven identification and processing. These measures shift the conversation from enabling access to markets to designing systems that help Indian startups scale beyond borders. Scaling through marketsMore than half of India’s startups now originate from Tier II and Tier III cities. It is a decisive shift that marks the decentralisation of entrepreneurship. Capital has been steadily moving into emerging hubs such as Jaipur, Vadodara, Haridwar, and Kota, alongside a growing wave of rural-first and impact-led ventures. Entrepreneurship is no longer defined by metropolitan boundaries but evolving into a district-level economic pathway, bringing to life the long-articulated vision of har jile mein ek startup. Budget 2026’s renewed focus on Tier II and Tier III cities, particularly through investments in modern infrastructure and essential urban amenities, has the potential to significantly accelerate this transition. By recognising cities as engines of agglomeration-driven growth, the budget proposes mapping City Economic Regions (CERs) around their distinct growth drivers. A proposed allocation of Rs 5,000 crore per CER over five years, implemented through a competitive challenge mode with reform-cumresults based financing mechanism, will certainly be a strong booster for startups.Fuelling the pipelineThe budget’s proposal to create “Champion SMEs” and extend deeper support to micro enterprises will have meaningful spillover benefits for India’s startup ecosystem. Although framed under the MSME umbrella, these measures strengthen the very pipeline from which high-growth startups emerge and scale. By recognising MSMEs as a critical engine of innovation and employment, the budget lays out a structured approach to help them evolve into ‘Champions’. At the heart of this effort is equity support through a proposed Rs 10,000 crore SME Growth Fund and the proposed Rs 2,000 crore top-up to the Self-Reliant India Fund, designed to back select enterprises. This expands the pool of growth capital available beyond traditional VC channels, particularly for startups transitioning from early revenue to expansion stages.Aspiration to ambitionOver the past decade, India’s startup ecosystem has transformed dramatically. DPIIT-recognised startups have grown from 500 to over 2,00,000 and unicorns have grown from four to 125. Rising patent filings, stronger global innovation rankings, rapid AI adoption, surging deep-tech funding, and supportive national and state policies together signal a decisive shift toward innovation-led growth. Against this backdrop, Budget 2026 appears less about signalling ambition and more about institutionalising it. In an increasingly volatile global environment, risk cannot be eliminated. It can at best be shared and absorbed. The real strength of an ecosystem is revealed in the framework that sustains founders through uncertainty. And in its design and direction, this budget upholds that framework. The budget’s proposal to create “Champion SMEs” and extend deeper support to micro enterprises will have meaningful spillover benefits for India’s startup ecosystem The author is Founder and Managing Partner, Rukam Capital 2026

86 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACT Column by Srini SriniwasanVIKSIT BHARATTThe centrepiece of this budget’s “Viksit Bharat” agenda is the continued momentum in capital expenditure, now hovering around the Rs 12 trillion markSTABILITY MEETS AMBITIONHE Union Budget 2026-27, presented against a backdrop of global geopolitical shifts and the looming “AI-first” era, is a masterclass in fiscal discipline and strategic long-term planning. Finance Minister Nirmala Sitharaman has once again resisted the siren song of populist giveaways in favour of robust capacity building. By pegging the fiscal deficit at 4.3 per cent of GDP and reinforcing the transition toward the debt-to-GDP ratio as the primary fiscal anchor, the government has sent a clear message of stability to global markets.

07 February 2026 | BW BUSINESSWORLD | 87Three specific areas stand out for their potential to reshape the Indian economy: the institutionalisation of infrastructure guarantees, the overhaul of corporate capital returns, and the aggressive incentivisation of the digital backbone. However, the budget is not without its missed opportunities, particularly regarding the deepening of our bond markets. The centrepiece of this budget’s “Viksit Bharat” agenda is the continued momentum in capital expenditure, now hovering around the Rs 12 trillion mark. However, the most nuanced and appreciated measure is the proposal for an Infrastructure Guarantee Corporation. For years, the “infra-gap” in India has not just been a lack of funds, but a lack of risk-mitigation tools. Private developers and investors often shy away from large-scale projects due to development risks typical of long gestation projects in India. By creating a dedicated guarantee mechanism, the government is essentially “de-risking” development risk in the sector. This institutional support will attract a wider pool of institutional capital, including pension and insurance funds. It is a vital step towards moving infrastructure from a government-funded model to a truly public-private partnership (PPP) ecosystem. Complementing this is the strategic Buy-Back Tax Proposal. The shifting of the tax burden on share buy-backs from the company to the shareholder (to be treated similarly to dividends) is a significant move toward tax neutrality. By taxing buy-backs in the hands of the recipients, the government has levelled the playing field, ensuring that capital allocation is driven by business logic rather than tax avoidance. Data centres and cloud servicesThe most forward-looking aspect of the budget is the specific tax proposal for data centres and cloud services. In the 2025-26 Economic Survey, data centres were described as “geostrategic leverage,” akin to critical minerals. Recognising the “infrastructure status” the budget has provided targeted tax incentives for their development. This is a critical enabler for the Digital India mission for several reasons: * Data sovereignty: By incentivising domestic data centres, India reduces its reliance on international servers, ensuring that 20 per cent of the world’s data—generated right here—is stored and processed within our borders. * AI readiness: Large-scale AI models require massive compute power. Tax breaks for cloud services will lower the cost of “compute” for Indian startups, allowing them to compete in the global AI race without the prohibitive “GPU tax” often seen in cross-border deployments. * Infrastructure depth: It transforms “Digital India” from a front-end interface (like UPI) into a back-end powerhouse. This is the “Digital Infra 2.0” that the country needs to sustain its growth toward a $7 trillion economy. The budget’s approach to the financial sector is a study in contrasts. On the positive side, the proposal for marketmaking in corporate bonds is a welcome intervention. The Indian bond market has long suffered from “liquidity amnesia”—where bonds are issued but never traded. By providing incentives for market makers, the government is kindling animal spirits in this market. However, the budget has failed to provide relief on the high taxation of interest income. The tax differential between capital gains and interest income creates a massive structural disincentive for investors to invest in bond markets. By ignoring the tax reform on interest income, the government has left the “demand side” of the bond market weak, even while strengthening the“supply side” through market-making measures. Overall, the Union Budget 2026-27 is a “continuity budget” that refuses to blink in the face of global uncertainty. The focus on infrastructure guarantees and digital infra shows a government that understands the nuts and bolts of a modern economy. The shift in buy-back taxation demonstrates a commitment to transparency and fairness. Yet, as we look toward the 2030 target of a $7 trillion GDP, the government must eventually address the elephant in the room: the uneven tax treatment of different asset classes. To truly “Trump-proof ” or “crisis-proof ” the Indian economy, we need a retail public that is as comfortable buying corporate bonds as they are buying stocks or gold. The foundations have been laid; now, the incentives must follow. To truly “Trumpproof” or “crisisproof” the Indian economy, we need a retail public that is as comfortable buying corporate bonds as they are buying stocks or gold. The foundations have been laid; now, the incentives must follow2026 The author is Vice Chairman, IVCA and Managing Director, Kotak Alternate Asset Managers

88 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACTBy embracing large-scale structural reforms, the government has sent a clear signal: tourism is no longer just a peripheral sector but a central engine of India’s journey toward becoming a Viksit BharatTRAVEL & TOURISMA VISIONARY ROADMAPColumn by Rikant Pittie

07 February 2026 | BW BUSINESSWORLD | 892026lence and ancient Indian wellness traditions like Yoga and Ayurveda.Infrastructure and the “Purvodaya” SpiritThe government’s commitment to the “Purvodaya” states—the Eastern region—is evident in the plan to create five new tourism destinations and develop Buddhist circuits across states like Arunachal Pradesh and Sikkim. This focus on spiritual and cultural heritage, supported by improved connectivity and pilgrim amenities, will distribute the economic benefits of tourism more evenly across the country.The Path ForwardWhile we celebrate these measures, the industry remains hopeful for the eventual granting of “Infrastructure Status” to the hospitality sector, which would further accelerate private investment. However, the budget’s emphasis on skilling 1.5 lakh caregivers and enhancing aviation components through customs duty exemptions shows a holistic understanding of the tourism ecosystem. Initiatives promoting heritage and medical tourism, the National Institute of Hospitality, guided upskilling with IIM, trekking experiences, and sustainable travel demonstrate a strong focus on experience-driven tourism, which is projected to grow at 12-15 per cent over the next three to five years.The reduction of TCS on overseas tour packages to a flat 2 per cent is a significant step that eases the financial burden on travellers and is expected to boost outbound bookings by 10-12 per cent. Enhanced connectivity through seven high-speed rail corridors, new air routes, expanded inland waterways, and incentives for seaplane operations will improve access to remote and scenic destinations, attracting over 200 million domestic travellers annually and generating two to three million direct and indirect jobs across tourism, hospitality, and allied sectors. At the same time, a strong focus on medical tourism positions India as a global healthcare hub, while sustainable and adventure tourism initiatives further strengthen local economies and inclusive growth.These forward-looking budget initiatives, supported by AI-driven solutions and technology-enabled operations, are set to build a travel ecosystem that creates jobs, fuels regional growth, and enhances India’s global competitiveness. T HE Union Budget 2026-27, presented by Finance Minister Nirmala Sitharaman, marks a watershed moment for India’s travel and tourism landscape. By moving beyond incremental changes and embracing large-scale structural reforms, the government has sent a clear signal: tourism is no longer just a peripheral sector but a central engine of India’s journey toward becoming a Viksit Bharat. High-speed Rail and SeaplanesOne of the most ambitious announcements is the development of seven new high-speed rail corridors, including Mumbai-Pune, DelhiVaranasi, and Hyderabad-Bengaluru. These “growth connectors” will redefine domestic travel, making Tier II and Tier III cities more accessible. Also, the introduction of the Seaplane Viability Gap Funding (VGF) scheme and incentives for indigenising seaplane manufacturing will unlock the tourism potential of India’s vast coastlines and remote water bodies, providing last-mile connectivity to previously unreachable gems.Rationalising TCSA significant victory for the Indian traveller is the rationalisation of the Tax Collected at Source (TCS). The proposed reduction of the TCS rate to a flat 2 per cent for specific goods—and the broader effort to simplify the tax landscape—is a major step toward making international tour packages more competitive. For years, the industry has advocated for a more streamlined tax structure to prevent the outflow of bookings to foreign platforms. This move not only eases the upfront financial burden on travellers but also ensures a level-playing field for Indian Online Travel Agencies (OTAs).India as a Global Wellness Hub The budget’s focus on “Medical Value Tourism” is a strategic masterstroke. The proposal to support states in establishing five regional medical hubs in partnership with the private sector will position India as an integrated healthcare destination. By combining modern medical facilities with AYUSH centres and rehabilitation infrastructure, these hubs will attract a global audience seeking both clinical excelThe reduction of TCS on overseas tour packages to a flat 2 per cent is a significant step that eases the financial burden on travellers and is expected to boost outbound bookings by 10-12 per centThe author is Co-founder & CEO, EaseMyTrip

90 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACTled learning by aligning education with emerging technologies such as AI,” says Tapash Kumar Ganguli, Director General, NICMAR, adding that it creates opportunities to deepen industry–academia collaboration in infrastructure and construction.Echoing his sentiments, Anil Nagar, Co-founder and Group CEO, Adda Education, says that the focus on Tier2 and Tier-3 cities could make regional talent job-ready and globally competitive. Abhishek Arora, CEO, TimesPro, notes that the framework could translate intent into action by linking curriculum and credentials to real industry demand, while Dhruv Marwadi, Trustee, Marwadi University, describes the move as critical for emerging fields such as artificial intelligence (AI).University Townships: The proposal to develop five university townships near industrial and logistics corridors was widely seen as a structural reform with long-term impact.“These clusters can strengthen industry linkages and promote interdisciplinary research,” says Sanjay Singh, Dean (Programmes) and Professor, IIM Lucknow. Pro Vice Chancellor, FLAME University, M. A. Venkataramanan, emphasises that the initiative builds ecosystems where learning, research and enterprise reinforce one another, while Tarun Anand, Founder and Chancellor, Universal AI University, highlights their potential to become global research and employment hubs.HE PROPOSALS for education in the Union Budget 2026-27 point to a decisive shift in strategy and intent. Union finance minister Nirmala Sitharaman shifts education from the “social sector” and positions it as a key driver of employability in India’s development strategy. Should intent translate into action India’s education system will at last prove a fulcrum for employability, innovation and global competitiveness. The finance minister has announced the setting up of a high-powered Education to Employment and Enterprise Standing Committee, five university townships near industrial corridors, large-scale creator and AI labs, expanded research infrastructure and targeted interventions to increase women’s access to higher education. Industry leaders and academic heads broadly welcomed the Budget’s outcomeoriented approach, particularly its emphasis on aligning curricula with emerging technologies, strengthening industry–academia collaboration and building regionally balanced talent ecosystems.Linking Classrooms to Careers: Responding to the budgetary proposals leaders in the education sector underline the significance of the proposed Education to Employment and Enterprise Standing Committee in tightening the connection between learning outcomes and labour market needs. “The Budget marks a clear move towards outcomeTFrom skilling and research to industrylinked campuses, the Union Budget places education at the centre of India’s growth and services-led ambitionsBy UpasanaEDUCATIONEDUCATION AS A NATIONAL CAPABILITY BUILDERPhotograph by Indiapicture

07 February 2026 | BW BUSINESSWORLD | 91demand for skilled professionals. Vallish Herur, Executive Chairman, Prayoga Institute of Education Research, welcomes the strengthening of research institutions, while calling for deeper support for experiential and laboratorybased learning.Access, Inclusion and Women in Education: The proposal for a girls’ hostel in every district was repeatedly flagged as a critical intervention to improve participation, especially in STEM.“This addresses safety and access barriers that limit women’s academic progression,” says Niru Agarwal, Managing Trustee, Greenwood High International School. Shweta Sastri, Managing Director, Canadian International School, adds that combined with AI-enabled learning and medical education expansion, the move would strengthen futureready schooling.Global Education and Mobility: Measures such as the reduction in tax collected at source (TCS) on overseas education is being welcomed by international education stakeholders. “The lower TCS will ease the financial burden on students and families,” says Piyush Kumar, Regional Director, South Asia, Canada and LATAM, IDP Education, describing the move as more student-friendly and pragmatic.Tourism, Skills and Cultural Alignment: Beyond formal education, the Budget’s focus on tourism skilling and heritage development is being perceived as proposals that will widen employment-linked learning pathways. Minu Mehta, Dean and Professor, ASMSOC, NMIMS, stresses that the training of tourist guides and promotion of handlooms reflects a thoughtful integration of culture with economic strategy. Bharath Supra, Associate Professor, NMIMS Navi Mumbai, highlights the Budget’s trust-based regulatory approach as essential for sustainable job creation and enterprise growth.Union Budget 2026- 2027 outlines a clear intent to reposition education as a national capability builder – one that feeds directly into jobs, enterprises and innovation. By combining structural reforms such as university townships and standing committees with targeted investments in STEM, creative industries and inclusion, the Budget sets the stage for an education ecosystem that is more responsive, interdisciplinary and employmentfocused. The challenge ahead will lie in execution, but the direction signals a strong alignment between India’s classrooms and its long-term economic ambitions. 2026-27Creative Economy: The expansion of AVGC content creator laboratories across 15,000 schools and 500 colleges and the proposal for a new National Institute of Design in eastern India, has been hugely welcomed by creative education leaders. “The push towards the creative and design economy opens doors to future-ready careers,” says Sanjay Gupta, Vice Chancellor, World University of Design.Somak Raychaudhury, Vice Chancellor and Professor of Physics, Ashoka University, says that the investments in creator labs and research infrastructure would strengthen India’s innovation backbone, while Lokanath Mishra, Professor, JK Lakshmipat University, points out that these measures link creativity directly with employability.STEM & Semiconductors : The Union Budget’s focus on advanced manufacturing, semiconductors and biopharma will without doubt, prove the destination of students engaged in high-end STEM education and research. “The Budget moves India from semiconductor consumer to architect,” says Sanket Goel, Chair Professor and Head, CREST, BITS Pilani, citing ISM 2.0 and support for fullstack Indian IP.From a public health perspective, says PR Sodani, President, IIHMR University, investments in biopharma and clinical trial infrastructure would accelerate healthcare innovation while expanding KEY POINTERSn Rs 1,39,289 crore allocation for educationn Five university townships to be set up near industrial and logistics corridorsn Girls’ hostels in STEM institutions in every districtn Training of 1.5 lakh multi-skilled caregivers

92 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACTNDIA’S healthcare sector enters a decisive phase as the Union Budget 2026–27 crosses a historic threshold, allocating more than Rs1.05 lakh crore to the Ministry of Health & Family Welfare for the first time. The nearly 10 per cent increase over last year signals a clear policy intent: move beyond incremental reform and build a resilient, future-ready healthcare system anchored in infrastructure, innovation and workforce expansion. The expanded allocation strengthens flagship programmes such as the National Health Mission, Ayushman Bharat PM-JAY and the Ayushman Bharat Health Infrastructure Mission, with a sharper focus on IBy Arya RakshitaHEALTHCAREFrom biopharma innovation to medical education reform, the government signals a system-wide healthcare shift with long-term global ambitionsINDIA’S HEALTHCARE RESET GAINS DEPTH AS SPENDING, SCIENCE AND SKILLS MOVE IN TANDEMPhotograph by Lightpoet

07 February 2026 | BW BUSINESSWORLD | 93empting basic customs duty on 17 life-saving cancer drugs and extending duty-free access for medicines used in rare diseases. With advanced oncology treatments often costing upwards of Rs20 lakh per patient, experts say the move can substantially lower out-of-pocket expenditure. “This is a direct intervention that patients will feel immediately. For therapies dependent on imports, duty exemptions can meaningfully reduce treatment costs,” Dr Thakwani notes.Mental Health Steps Into the MainstreamMental health receives structural recognition through proposals to strengthen existing institutions and establish NIMHANS-like centres, alongside district-level integration. Dr Jothi Neeraja, Founder and Chairperson of Maarga Mind Care and People Tree Hospital, calls the move long overdue. “India’s mental health burden has grown silently, driven by chronic disease, urban stress and post-pandemic trauma. Expanding NIMHANS and decentralising care creates trained manpower, improves early diagnosis and reduces the stigma of seeking help,” she says. The budget rightly brings mental health onto the national agenda, acknowledging the rising burden of anxiety, depression, and burnout. India faces a deep treatment gap, with 70–90 per cent of people needing mental healthcare not receiving it. While strengthening mental health institutions and centres of excellence is a positive step, access remains the real challenge. Addressing workforce shortages, integrating mental health into primary care, and ensuring affordability are essential to turning policy intent into real outcomes.Digital Health: Data as the New BackboneThe continued push for the Ayushman Bharat Digital Mission (ABDM), ABHA IDs and telemedicine platforms such as e-Sanjeevani is seen as one of the most impactful long-term reforms. Dr Singh describes healthcare data as India’s untapped stra2026district hospitals, secondary care facilities and public health capacity, areas long acknowledged as pressure points in India’s healthcare delivery model Dr Sanjeev Singh, Medical Director at Amrita Hospitals, views the increase as foundational rather than cosmetic. “This lays down a very strong base for healthcare delivery,” he says. “Public healthcare spending moves from about 1.9 per cent of GDP closer to 2.5 per cent. When you add private spending, India reaches nearly 5 per cent of GDP, which is remarkably efficient when compared to Scandinavian countries at 7-8 per cent or the US at 16-17 per cent.”Primary and Secondary Care While India’s tertiary care hospitals and medical colleges remain globally competitive, experts note that district hospitals and secondary care have long been the weakest link. Dr Singh points out that increased allocations to the National Health Mission and Ayushman Bharat Health Infrastructure Mission directly address this gap. “The real issue in India is not tertiary care, it is secondary and districtlevel infrastructure,” he explains.“Strengthening district hospitals through project-based implementation is critical, especially because many states earlier struggled with delayed reimbursements under Ayushman Bharat due to inadequate allocations.” Biopharma Shakti and the Oncology ShiftThe Rs 10, 000 crore Biopharma Shakti initiative stands out as one of the most transformative announcements, positioning India as a future hub for biologics, biosimilars and advanced therapies. Dr Anil Thakwani, Head of Radiation Oncology at Sharda Care Healthcity, links the move directly to oncology outcomes. “Modern oncology is no longer about conventional chemotherapy alone—it is driven by biologics, immunotherapies and targeted drugs,” he says. He stresses that the initiative’s focus on 1,000 accredited clinical trial sites and regulatory upgrades could shorten approval timelines for cancer therapies while reducing import dependence. “Biopharma Shakti builds an ecosystem that spans research, clinical trials, regulation and manufacturing, which is essential for faster access and affordability,” Dr Thakwani adds.Cancer Care ReliefAlongside long-term innovation, the government delivers immediate patient-centric relief by exKEY FIGURESn Rs 10,000 crore Biopharma Shakti programme over five yearsn 3 new NIPER institutes and upgrade of 7 existing onesn Network of 1,000+ accredited clinical trial sites plannedn Rs 1,04,599 crore total health-related expenditure“Public healthcare spending moves from about 1.9 per cent of GDP closer to 2.5 per cent. When you add private spending, India reaches nearly 5 per cent of GDP which is remarkably efficient when compared to Scandinavian countries at 7-8 per cent or the US at 16-17 per cent” DR SANJEEV SINGH,Medical Director, Amrita Hospitals

94 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACTtegic asset. “Data is a goldmine,” he says. “Until now, we rely on US or UK datasets to shape policy. A digital system allows patient histories to travel across cities, prevents repeated investigations and improves governance.” Medical Education and Workforce Beyond infrastructure, experts agree that human capital remains the cornerstone. The addition of 10,000 medical seats, training of 1.5 lakh caregivers and expansion of allied health disciplines signal a workforce-first approach.“Infrastructure does not work without people,” Dr Singh reiterates. “We need incentives for doctors and specialists to serve in rural and semi-urban areas, where nearly 68 per cent of the population still lives.”Medical Tourism and Global PositioningWhile affordability measures such as duty exemptions on cancer drugs address immediate patient concerns, experts stress that India’s long-term opportunity lies in building systems that attract global patients seeking both advanced care and continuity of treatment. Dr Thakwani says the focus on medical tourism hubs signals a structural shift rather than a cosmetic one. “It is equally about building integrated systems—clinical infrastructure, trained manpower, diagnostics, rehabilitation and followup care that make innovation accessible, affordable and equitable.”He adds, “Medical tourism cannot succeed on price advantage alone. It requires depth of clinical expertise, reliable systems, strong digital records, and the ability to deliver consistent outcomes. The emphasis on training allied health professionals, expanding clinical trial capacity, and strengthening secondary and district-level care directly supports this ecosystem.” According to Dr Thakwani, India’s advantage lies in the convergence of cost efficiency, clinical capability and scale, an edge that few global markets can replicate. “When oncology care is supported by predictable approvals, local manufacturing of biologics, digital health records and a trained workforce, India becomes not just a treatment destination, but a trusted healthcare partner for the world,” he says.A System-First Healthcare BlueprintThe budget outlines a system-first healthcare strategy where spending, innovation, mental health, digital intelligence and affordability advance together. India’s healthcare allocation marks a shift—from fragmented interventions to systemlevel thinking. The benefits are clear: stronger infrastructure, biopharma momentum, digital scale and workforce growth. Yet, experts caution that federal coordination, rural deployment and execution speed will determine realworld impact. As Dr Thakwani puts it, “The future of Indian healthcare is not just about new medicines, but about building systems that work for everyone.” Dr Prathap C Reddy, Founder & Chairman, Apollo Hospitals, says, “The budget sends a reassuring message that India’s growth will be anchored in healthier citizens and stronger health systems. The focus on biopharma innovation, clinical trial networks, workforce development and mental health reflects a holistic approach to building a resilient healthcare ecosystem.” While execution will determine outcomes, the direction is clear: India’s healthcare future is being shaped not just by new medicines, but by stronger institutions and smarter systems that serve patients more equitably. [email protected]“India’s mental health burden has grown silently, driven by chronic disease, urban stress and post-pandemic trauma. Expanding NIMHANS and decentralising care creates trained manpower, improves early diagnosis and reduces the stigma of seeking help\" DR JOTHI NEERAJA,Founder and Chairperson, Maarga Mind Care and People Tree Hospital “Modern oncology is no longer about conventional chemotherapy alone—it is driven by biologics, immunotherapies and targeted drugs. Biopharma Shakti builds an ecosystem that spans research, clinical trials, regulation and manufacturing, which is essential for faster access and affordability\" DR ANIL THAKWANI,Head of Radiation Oncology, Sharda Care Healthcity

96 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACTidentifying skill gaps and co-creating industry programmes, to placing talent in high-growth domestic and global roles. This strategy positions India to secure a greater portion of the global talent market, where skilled individuals earn higher wages and contribute to economic growth through knowledge exchange.Education, Jobs and a Formal WorkforceThe continuity of reforms over the last several years, be it GST 2.0, labour codes, and now a budget centred on education, training, employment and livelihoods points to a clear structural objective-- moving millions from the informal to the formal economy. India has roughly 63 million MSMEs, but fewer than 10,000 large enterprises, and this fragmentation has historically limited productivity, wages and social security coverage.By strengthening schemes such as the Pradhan Mantri Viksit Bharat Rojgar Yojana and significantly increasing allocations for labour and employment including a sharp rise in Pradhan Mantri Skill Yojana funding, the government is creating stronger incentives for formal job creation and sustainable livelihoods. As more workers move into formal roles with stable incomes and benefits, India shifts from a low-income economy to one driven by spending and investment, fuelling growth through higher consumer purchases.This budget stands out for the clarity with which it links capital investment to employment creation. A Rs12.2 lakh crore capex outlay, bolstered by increased defence spending, will maintain demand for skilled workers across infrastructure, manufacturing, and services. The push on data centres and cloud infrastructure is equally crucial. A tax exemption until 2047 for data centres focused on exports, along with incentives for international cloud companies to operate in India from local facilities, will boost investments in sovereign and hyperscale infrastructure. In addition Column by Lohit BhatiaFUTURE-FOCUSED REFORMSOR the first time in several years, we have a Union Budget that prioritises the improvement of long-term capabilities in education, skill enhancement, and job creation, rather than implementing new blanket subsidies. This signifies a significant shift in viewpoint- the government is moving away from merely expanding benefits to empowering individuals to boost their own income.The creation of a permanent “education to employment” standing committee in the services sector acknowledges that India’s growth engine is increasingly talent and services-led, not merely asset-led. Additionally, the significant boost in funding for the Ministry of Skill Development and Entrepreneurship, with revised estimates increasing from around 2,700 crores to nearly 9,800 crores under the Pradhan Mantri Viksit Bharat programme, emphasises that skills and livelihoods are now central to the narrative of development, rather than being secondary initiatives.The budget’s skilling focus is refreshingly specific, prioritising training in healthcare, allied health, geriatric and aged care, wellness professions, and two million additional technology professionals under advanced digital initiatives. These goals directly address global shortages in nurses, care workers, cybersecurity specialists, data engineers, and analytics experts, linking skills to both domestic needs and international mobility. By aligning training with overseas demand, it boosts earning potential creating a continuous progression from FA clear 1–2 per cent TDS category for manpower and staffing services removes long-standing ambiguity, improves cash flows and recognises staffing as a mainstream contracting modelJOBS

07 February 2026 | BW BUSINESSWORLD | 97to technology, this serves as a significant catalyst for job creation generating employment opportunities in construction and operations while increasing demand for highly skilled positions in cloud, cybersecurity, data, and AI.If skills are one pillar of this budget, tax predictability is the other. By holding the fiscal deficit at 4.4 per cent this year and 4.3 per cent next year despite softer tax receipts, the government signals strong fiscal discipline supportive of lower inflation and, over time, lower interest rates. This creates headroom for fresh capex and job creation.Equally important are targeted tax reforms. A clear 1–2 per cent TDS category for manpower and staffing services removes long-standing ambiguity, improves cash flows and recognises staffing as a mainstream contracting model. In parallel, reducing the pre-deposit in tax disputes from 20 per cent to 10 per cent of the core tax frees up capital and manageThe continuity of reforms over the last several years, be it GST 2.0, labour codes, and now a budget centred on education, training, employment and livelihoods points to a clear structural objective—moving millions from the informal to the formal economyThe author isCEO, Quess Corp 2026ment focus for growth rather than litigation.An Opportunity and a ResponsibilityUnion Budget 2026 is a jobs-first blueprint trusting Indians to learn, adapt and excel with the right platforms replacing subsidy dependence with skill investment and tomorrow’s sectors.For employers, it’s an opportunity to leverage skilling, formalisation and tax clarity for growth in AI, data centers, healthcare and tourism. Our responsibility is to co-invest in upskilling, apprenticeships and quality careers for India’s youth. If government, industry and training partners align around this shared agenda, India can move meaningfully towards the ambition of raising its share of global services from roughly 4.3 percent today to 10 percent by 2047 and do so on the back of a skilled, confident and aspirational work force.

98 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACTand critical mineral processing, reflect a conscious attempt to reduce import dependence and anchor supply chains domestically. These measures complement India’s broader ambition to emerge as a global clean energy manufacturing hub rather than remain a pure deployment market. Support for carbon capture, utilisation, and storage (CCUS) further signals openness to transitional technologies that can decarbonise hard-to-abate segments of industry. Another clear positive is the continued emphasis on grid and evacuation infrastructure. Investments in dedicated freight corridors, national waterways, coastal shipping, and transmission-linked infrastructure will be the backbone on which renewable energy projects depend. While not explicitly labelled as power-sector reforms, these investments address one of the most persistent and crucial bottlenecks in India’s energy transition, the mismatch between generation capacity and evacuation readiness. Improved logistics and transmission reduce curtailment risks and enhance project bankability.The Fine Print Some limitations of this energy push in the Union Budget, are, however, evident. Most notably, wind energy remains largely absent as a distinct policy priority. While solar, storage, and nuclear energy receive explicit fiscal and regulatory NION FINANCE MINISTER Nirmala Sitharaman’s ninth Budget comes across as one that could accelerate India’s journey towards a zero carbon economy. Even so, the largesse granted to the energy sector requires some reading between the lines. Union Budget 2026–27 does place some energy policies at the centre of India’s long-term growth and security strategy. It’s strongest contribution though, is its focus on energy security and supply resilience. Long-term duty exemptions for nuclear power projects till 2035, along with expanded coverage across capacities, signal a clear intent to treat nuclear as a credible baseload option rather than a marginal supplement. This policy continuity is critical for attracting patient capital into a sector characterised by long gestation periods and high upfront costs. For an economy targeting sustained growth of around seven per cent, a reliable source of baseload power will remain indispensable. The Budget also strengthens the clean energy manufacturing ecosystem, particularly around storage and critical inputs. Exemptions for capital goods used in lithium-ion cell manufacturing, battery energy storage systems, solar glass, UThe Union Budget gives a fillip to India’s ambition to emerge as a global clean energy manufacturing hub, but ignores the wind energy sector. It succeeds in reinforcing India’s energy security and manufacturing ambitions, but falls short of delivering a fully balanced and marketready energy transition frameworkBy Urvi ShrivastavENERGYSTRONG ON SECURITY, UNEVEN ON TRANSITIONPhotograph by Man64

07 February 2026 | BW BUSINESSWORLD | 99long-term contracting flexibility and inadequate price signals. Instruments such as capacity markets, ancillary services, and time-of-day pricing (TOD) need stronger policy backing if renewables, storage, and flexible generation are to coexist efficiently. Their absence suggests that regulatory reform is lagging behind physical expansion. From a climate perspective, the Budget adopts a pragmatic rather than aggressive transition stance. While clean energy receives support, fossil fuel phase-down pathways are not clearly articulated. This reflects realism rather than denial, acknowledging India’s development needs and energy demand growth. However, clearer medium-term transition signals would help investors price risk and allocate capital more efficiently across technologies. Another missed opportunity lies in demand-side and decentralised energy solutions. Rooftop solar, distributed storage, and energy efficiency programmes receive limited fresh momentum despite their potential to reduce grid stress and empower consumers. Greater focus here could have delivered faster, more inclusive transition outcomes, especially for urban households and MSMEs.The Uncomfortable Truth At the heart of India’s energy transition lies an inconvenient reality that the Budget does not confront – the fact that without fixing the power distribution ecosystem, no amount of generation capacity or clean energy manufacturing will deliver reliable or affordable electricity. The DISCOMs remain financially strained, politically constrained, and structurally misaligned, delaying payments, suppressing tariffs, and undermining investor confidence. As a result, private capital continues to price in regulatory risk, while public sector entities quietly absorb balance-sheet stress. Till power markets are deepened, contracts are strictly honoured, and distribution reforms move beyond bland announcements, India’s energy ambitions will remain vulnerable to execution gaps. Overall, the energy narrative in Budget 2026–27 is one of continuity and caution. The government has chosen to strengthen what already works, namely large-scale infrastructure, centralised generation and manufacturing capacity, while postponing deeper structural reforms and sector-specific course corrections. For long-term investors, this provides comfort on policy stability and scale. For the energy transition, however, the challenge will lie in execution, coordination, and reform beyond the Budget documents. In sum, the Budget succeeds in reinforcing India’s energy security and manufacturing ambitions, but falls short of delivering a fully balanced and market-ready energy transition framework. 2026-27support, wind units seem to have been treated as a mature sector expected to survive without targeted intervention. This is a risky assumption. India’s wind power sector has struggled with tariff pressure, land availability issues, grid access constraints, and declining annual capacity additions. The absence of incentives for repowering old wind sites, offshore wind development, or wind-specific manufacturing, risks slowing diversification within the renewable mix. Similarly, while energy generation and infrastructure receive attention, the distribution sector reform remains under-addressed. The financial stress of power distribution companies (DISCOMs) continues to be one of the biggest structural risks in India’s power ecosystem. Without stronger enforcement of payment discipline, costreflective tariffs, and deeper market reforms, private capital will remain cautious. The Budget does not meaningfully tackle these issues, choosing instead to focus on supply-side expansion. This raises concerns about whether new capacity additions will translate into financially sustainable power delivery. The Budget also leans heavily on capital expenditure and exemptions, but does little to strengthen market-based mechanisms. Power markets remain shallow, with limited KEY POINTERSn Rs 1,09,029 crore allocation to energy sectorn Rs 20,000 crore CCUS programme for industrial decarbonisationn Restructuring of PFC and REC to improve powersector financing efficiency

100 | BW BUSINESSWORLD | 07 February 2026BUDGET IMPACTlosses; it is about creating a digitally intelligent grid capable of integrating renewables, storage, and distributed energy resources at scale.Clean Energy, Carbon ManagementIndia’s energy transition strategy is clearly broadening beyond generation to include carbon management and system resilience across industrial value chains. The proposed Rs 20,000 crore outlay for Carbon Capture, Utilisation, and Storage over five years reflects a pragmatic approach to decarbonising hard-to-abate sectors while sustaining industrial growth.At the same time, continued support for Small Modular Reactors under the Nuclear Energy Mission underscores the role of nuclear energy as a reliable, low-carbon baseload solution for a stable power mix. The ambition to develop indigenously designed SMRs strengthens energy security and positions India at the forefront of next-generation nuclear technologies.Trade Policy: Enabler of Domestic ManufacturingThe budget’s calibrated approach to customs duty exemptions is clearly aligned with building globally competitive domestic supply chains without distorting market signals. Exemptions on capital goods for lithium-ion cell manufacturing, battery energy storage systems, and EVs will accelerate investments in advanced storage technologies, an essential enabler for renewable integration and grid stability.Equally important is the strong focus on critical minerals. Full duty exemptions on key inputs such as cobalt, lithium-ion battery scrap, and other essential materials address long-term supply vulnerabilities and pricing volatility risks. The introduction of duty concessions for equipment used in rare earth processing, supported by the creation of dedicated Rare Earth Corridors, is a strategic step towards reducing import dependence in technologies such as EV motors, wind turbines, and power electronics.Column by N. VenuENABLING NEXT GEN OF POWER INFRASTRUCTUREHE Union Budget 2026–27 is a pragmatic blueprint towards India becoming a resilient, technology-driven, and sustainable economic powerhouse. It balances fiscal discipline with long-term strategic ambition. At its core, the budget recognises that the energy transition, industrial competitiveness, and technological self-reliance are deeply interconnected and must advance together. For the electrical equipment and power sector, this budget signals continuity of intent with sharper execution levers modernising power infrastructure, strengthening domestic manufacturing, and positioning India as a global hub for advanced energy and digital technologies amid shifting global supply chains.A significant structural reform is the proposed restructuring of key power sector financing institutions to enhance efficiency, governance, and long-term capital deployment through better institutional alignment. As India’s electricity demand grows driven by electrification, renewables, data centres, and industrial expansion, access to patient, futureready capital will be critical. This reform acknowledges that power sector financing must evolve in step with the country’s long-term development goals.On the distribution side, the proposed increase in allocation for the Revamped Distribution Sector Scheme to Rs 18,000 crore in FY27 reinforces the focus on strengthening the last mile and improving utility balance sheets. The accelerating rollout of smart meters is not merely about reducing TIndia’s transition is no longer about catching up—it is about shaping the future. This budget takes a confident step in that direction with strategic clarityENERGY