Finance Minister Nirmala Sitharaman’s Union Budget 2026-27, presented yesterday, reinforces a capex-led, reform-oriented growth path with capital expenditure sustained at ₹12.2 lakh crore and the fiscal deficit targeted at 4.3% of GDP. The budget prioritises local manufacturing, green mobility incentives, enhanced MSME risk capital, cooperative sector reforms, mental health capacity-building, and digital infrastructure acceleration—measures aimed at boosting middle-class consumption, job creation in Tier-II/III cities, and long-term economic resilience.
Key sectoral highlights include incentives for local EV component manufacturing, a ₹10,000 crore SME Growth Fund plus ₹2,000 crore micro-enterprise risk capital top-up, ‘Corporate Mitras’ compliance support, SHE-Marts for rural women entrepreneurs, a second NIMHANS in North India, and a tax holiday until 2047 for foreign cloud providers using Indian data centres.
Industry leaders have welcomed the budget as balanced, forward-looking, and execution-focused, with particular praise for its emphasis on sustainable mobility, MSME formalisation, and human capital development in healthcare and cooperatives.
Green Mobility & EV Ecosystem: Empowering Middle-Class Shift
The government’s continued push for local EV component manufacturing and measures to enhance middle-class purchasing power have been lauded as catalysts for sustainable mobility adoption.
Mr. Nemin Vora, Chief Executive Officer, Odysse Electric, said:
“We laud government’s focus on the local manufacturing ecosystem for assisting the mobility ecosystem and empowering the middle-class purchasing power. It’s encouraging to see the government’s effort in promoting green mobility by incentivizing local EV component manufacturing. With more disposable income in the hands of consumers—particularly the middle class—purchasing power is set to rise, which will naturally accelerate the shift toward sustainable mobility. With enhanced credit guarantee cover for MSMEs and startups, particularly in focus sectors crucial for Atmanirbhar Bharat, the budget lays a strong foundation for sustained growth and economic resilience.”
MSME & Consumer Finance: Risk Capital and Liquidity Boost
The budget’s MSME-centric interventions—₹10,000 crore SME Growth Fund, ₹2,000 crore micro-enterprise risk capital top-up, TReDS strengthening, GeM linkage, and ‘Corporate Mitras’—are expected to improve cash flows, job creation, and consumption of durables and two-wheelers in non-metro markets.
Vivek Singh, CEO, Home Credit India, highlighted the consumption and NBFC impact:
“Home Credit India welcomes Budget 2026’s measures to strengthen access to risk capital for small businesses. This year’s budget is expected to create new job opportunities by strengthening access to growth and risk capital for small businesses and micro-enterprises. The introduction of Rs 10,000 crore SME Growth Fund together with the Rs 2,000 crore micro-enterprise risk capital top-up, will create additional financial resources at the community level which will allow families and business owners to maintain their purchases of durable goods and transportation and residential requirements. The new regulations enable non-banking financial companies (NBFCs) which provide financing for two-wheeler purchases and consumer durable products and loan-against-property services to achieve more stable and responsible customer spending patterns. The public capital expenditure will increase from its current level to Rs 11 lakh crore in FY26 and the government plans to spend Rs 12.2 lakh crore in FY27 which will create job opportunities and sustain income levels for workers in tier-2 and tier-3 cities where people are starting to spend more money. With FY27 net borrowing at Rs 15.44 lakh crore, Budget 2026 supports NBFCs in financing SMEs, two-wheelers, consumer durables, and Loan Against Property (LAP) customers. The new infrastructure and better regional connections will create increased demand throughout these markets. In addition, modular skilling initiatives and MSME compliance support through Corporate Mitras will strengthen income continuity and borrower resilience. Together, these measures are expected to encourage sustained, need-based consumption rather than short-term spending cycles.”
Manoj Tulsian, CEO & Joint Managing Director, Greenply Industries Ltd., welcomed the manufacturing and housing linkage:
“The Union Budget 2026 presents a clear and growth-oriented vision for India’s economy, with a strong focus on manufacturing, infrastructure and job creation. The Government’s continued reform momentum, driven by over 350 reforms announced since Independence Day 2025, including GST simplification, labour reforms and reduced compliance will significantly ease operations for organized manufacturers, enabling faster expansion, better efficiency and improved formalization across sectors like wood panels and interior infrastructure. Rise in public capex and building focus on infrastructure are expected to drive housing and realty activity in tier II and tier III cities, where the demand for quality, branded interior solutions is increasing at a faster pace. This will in turn directly help the homebuyer due to better access to well-finished, durable and safe interiors as well as enhanced demand for plywood, MDF and related products. The emphasis on strengthening MSMEs and reviving traditional industrial clusters is particularly encouraging for the wood-based industry, which depends on a large network of carpenters, fabricators and small processing units. Improved access to finance, technology and compliance support will help upgrade skills, enhance productivity and create more stable livelihoods for skilled and semi-skilled workers across non-metro regions. At the same time, the Government’s commitment to fiscal discipline, reflected in a gradual reduction in fiscal deficit and debt levels, provides long-term economic stability. At Greenply Industries, this balanced approach between growth and financial discipline gives us the confidence to continue investing in capacity expansion, sustainable manufacturing practices and skill development, while contributing meaningfully to India’s housing growth and a more responsible interior infrastructure ecosystem.”
Cooperatives & Digital Infrastructure: Inclusive Capital Circulation
Reforms for cooperatives and the data centre tax holiday have been praised for deepening financial resilience and positioning India as a global digital hub.
Shri. Prabhat Chaturvedi, CEO, National Urban Cooperative Finance and Development Corporation Ltd. (NUCFDC), said:
“Union Budget 2026 signals continuity in India’s long-term development vision. The structural reforms reinforce India’s position as a dependable economic leader and show a strong commitment of Government towards improving global competitiveness. Cooperative-focused tax measures will strengthen federated cooperatives. Deductions for member-produced cattle feed and cotton seed, along with exemptions on inter-cooperative dividends, will deepen income linkages. It will improve capital circulation and boost balance sheet efficiency. The time-bound dividend exemption for national cooperative federations will help them mobilise and reinvest more capital into member institutions. The proposed high-level committee on Banking for Viksit Bharat is a timely macro-financial step. India is moving towards more credit- and investment-led growth, and the banking system must be future-ready. A structural review can improve capital deployment, strengthen risk monitoring, and address emerging balance sheet pressures. This will make credit expansion safer, more productive, and inclusive, while maintaining financial stability and customer confidence. MSME-focused measures provide a strong push to the sector. The 10,000 crore SME Growth Fund and risk-capital support will strengthen their long-term bankability. The proposed ‘Corporate Mitras’ network is a smart step. Affordable compliance support can speed up MSME formalisation, improve financial discipline, and raise enterprise quality. SHE-Marts for rural women-led enterprises support sustainable empowerment. These community-owned retail hubs can strengthen local supply chains, promote entrepreneurship, and build long-term social and financial resilience. The digital infrastructure push is a welcome move. A tax holiday until 2047 for foreign cloud players using Indian data centres, along with a 15% safe harbour for related entities, strategically anchors India as a global digital infrastructure hub. It will boost investment and create high-skilled jobs in the country. Also, it will tangentially help the financial ecosystem to accelerate digitisation with cost-effective tech infrastructure.”
Mental Health & Neurodevelopmental Care: Institutional Expansion
The announcement of a second NIMHANS in North India has been welcomed as a step toward mainstreaming mental health and neurodevelopmental care.
Mr. Jaishankar Natarajan, Chief Executive Officer and Director, India Autism Center, noted:
“The Union Budget 2026 marks a meaningful shift in how India is beginning to view mental health and neuroscience, particularly through the announcement of a second NIMHANS in North India. By expanding advanced neuroscience research, mental health education, and clinical services, the Budget acknowledges that mental health infrastructure must grow in depth, scale, and expertise to meet rising needs. Equally important is the recognition that care cannot remain confined to institutions or emergency settings alone. For individuals under spectrum, care does not end at emergency intervention it is lifelong, specialised, and deeply human, closely aligning with our mission at the India Autism Center. Through our Caregiver Outreach Programme to train 300 specialised caregivers for Samavesh, our purpose-built residential care facility, we are addressing an invisible crisis that has long remained under-acknowledged: the shortage of trained, autism-specific caregivers. The Budget’s emphasis on building both institutional capacity and a skilled caregiving workforce is an important step towards moving mental health and neurodevelopmental care from the margins to the mainstream, where continuity, empathy, and expertise are treated as essentials, not afterthoughts.”
The Union Budget 2026-27 delivers a coherent strategy: incentivising green and local manufacturing, easing liquidity and compliance for MSMEs and cooperatives, expanding mental health infrastructure, and laying digital foundations for long-term competitiveness. With fiscal anchors in place, stakeholders now await swift implementation to translate these announcements into inclusive consumption, job creation, and sustainable progress toward Viksit Bharat.
Last Updated on Thursday, February 5, 2026 10:13 am by Startup Times
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