Budget 2026
- Feb 1
- 2 min read
Nirmala Sitharaman presented Budget 2026 earlier today. The announcements are both innovative and all- encompassing, marking a conscious shift beyond the traditional focus on manufacturing, financial markets, and capital-intensive sectors.
The Budget demonstrates a refreshing breadth in policy thinking. Initiatives to promote tourism, archaeology, astronomy, handloom and handicrafts, Ayurveda, and the Indian wellness sector signal a clear intent to unlock India's vast but underutilised cultural and knowledge-based potential. At the same time, structural reforms such as Biopharma Shakti, aimed at developing India into a global biopharmaceutical manufacturing hub, is a step forward for consolidating India's manufacturing capabilities as well as putting the lime light on India's public health infrastructure.
The emphasis on mineral-rich states such as Odisha, Kerala, Andhra Pradesh, and Tamil Nadu, through the proposed establishment of dedicated Rare Earth Corridors is a welcome move. The continued focus on infrastructure development in Tier II and Tier III cities, coupled with a slew of measures to enhance credit access for MSMEs, provides a much-needed foundation for balanced and inclusive growth.
Equally notable are the forward-looking initiatives in the creative and digital economy, including the proposal to set up AVGC (Animation, Visual Effects, Gaming and Comics) Content Creator Labs in schools and colleges. Collectively, these measures offer a more tangible and diversified pathway towards the vision of Viksit Bharat.
From a legal and regulatory perspective, the Budget also signals an impending overhaul of the FEMA (Non-Debt Instruments) Rules, 2019, with the objective of making the foreign investment framework more user-friendly and contemporary.
Currently, NRIs and OCIs are permitted to acquire equity instruments of listed Indian companies on stock exchanges up to 5% of the total paid-up capital, with the aggregate holding of all NRIs/OCIs capped at 10%. The Budget proposes to enhance the individual limit from 5% to 10% and the aggregate limit from 10% to 24%.
More significantly, it appears that this investment route—hitherto restricted to NRIs and OCIs—is proposed to be extended to any individual who is a person resident outside India. This move is clearly aimed at broad-basing foreign investment, simplifying access for individual nonresident investors, and further improving the ease of investing in India.
Budget 2026 reflects a calibrated blend of ambition and pragmatism—expanding India's growth narrative beyond conventional sectors while steadily refining the legal and regulatory architecture to attract global capital.
Finally, below are the key takeaways from an Indian direct tax perspective. For a more detailed reading you can refer to the annex.
