The Union Budget 2026-27, presented by Finance Minister Nirmala Sitharaman on February 1, 2026, reinforces India’s trajectory toward a Viksit Bharat by 2047, with a strong emphasis on infrastructure-led growth, technological advancement, manufacturing scale-up, and sectoral reforms in emerging areas like AI, biopharma, and digital infrastructure. Titled a Yuva Shakti-driven Budget, it prioritizes transforming demographic potential into productive capacity while maintaining fiscal prudence, projecting a fiscal deficit of 4.3% of GDP and capital expenditure (capex) at a record ₹12.2 lakh crore—up from ₹11.2 lakh crore in the previous year.
This capex push, representing about 4.4% of GDP, underscores infrastructure’s role as a core growth engine, supporting jobs, manufacturing, and long-term resilience amid global uncertainties. Experts note that while higher allocations signal commitment, success hinges on execution, particularly in addressing persistent project overruns.
Anantha Keerthi, Senior Partner at Vector Consulting Group, highlighted this nuance:
“For the financial year 2026–27, the government has proposed increasing capital expenditure on infrastructure to ₹12.2 lakh crore, reinforcing the momentum built over recent years. This underscores infrastructure’s central role in India’s growth and development strategy. However, persistent challenges remain, as higher allocations alone do not automatically resolve cost and schedule overruns. The real test will be whether this increased outlay translates into stronger upfront project design and more robust Detailed Project Reports (DPRs). Most large infrastructure projects in India experience 55%–60% cost overruns and 30%–70% time overruns, largely stemming from weak early-stage planning, particularly inadequate DPRs. A portion of the budget must therefore be explicitly directed toward rigorous pre-construction planning. High-quality DPRs reduce delays, rework, and disputes, unlocking significant savings and enabling the country to build more infrastructure with the same resources. Strengthening investment in pre-construction activities can play a pivotal role in improving timelines, coordination, and long-term project performance.”
The Budget accelerates India’s digital and AI ambitions, allocating ₹1,000 crore under the IndiaAI Mission for FY 2026–27, alongside a high-powered committee to evaluate AI’s impact on jobs and skills. It aims to elevate India’s share in global services exports to around 10% by 2047, supported by tax incentives.
Sourabh Deorah, CEO and Co-Founder of AdvantageClub.ai,
welcomed the forward-looking approach: “This year’s budget felt like a clear shift towards building long-term foundations over short-term wins. The focus on capex, jobs, AI, IT, and manufacturing shows intent, not optics. Even with global uncertainty, India is probably the only large economy expecting ~7% growth. On AI, the intent is now turning into action. A high-powered committee is looking at how AI will impact jobs and skills, with a clear aim of helping India move towards a ~10% share of global services exports by 2047. This is backed by real investment, with about ₹1,000 crore earmarked under the IndiaAI Mission for FY 2026–27, along with earlier commitments like the ₹500 crore Centre of Excellence in AI for education. Add to this tax breaks for data centers, higher safe harbour limits for IT companies up to ₹2,000 crore in turnover, and a long-term focus on nuclear energy to power AI-scale needs. We are not just talking about the AI opportunity anymore. We are building for it.”
A standout measure for the data centre sector is a tax holiday till 2047 for foreign cloud providers utilizing Indian data centres to deliver global services, aimed at attracting hyperscale investments and positioning India as a preferred digital infrastructure hub.
Mr. Bimal Khandelwal, CEO of STT GDC India, described it as transformative:
“The Union Budget 2026 marks a decisive policy intervention that holistically addresses capital formation, demand creation, and long-term sustainability for India’s data centre sector. The proposed tax holiday till 2047 for foreign cloud providers using Indian data centres is expected to unlock increased foreign direct investment, position India as a preferred global digital infrastructure destination, and materially enhance its competitiveness in attracting hyperscale and AI-led workloads. This, in turn, will drive sustained demand for low latency, resilient digital infrastructure critical to enabling India’s Viksit Bharat 2047 digital economy agenda. We welcome the Government’s integrated approach, which aligns fiscal incentives with infrastructure readiness and sustainability priorities. At STT GDC India, we are well positioned to support this next phase of growth through scalable, AI-ready, and sustainable data centre infrastructure that underpins India’s digital future.”
In the life-sciences domain, the Budget introduces Biopharma Shakti with a ₹10,000-crore outlay over five years to bolster biologics, biosimilars, and overall biopharma manufacturing. It includes establishing a biopharma-focused network, three new NIPERs, upgrades to seven existing institutes, and a nationwide network of 1,000 accredited clinical trial sites, alongside CDSCO strengthening for faster approvals.
Mr. Rajiv Nath, Forum Coordinator of the Association of Indian Medical Device Industry (AiMeD), termed it a landmark:
“The Union Budget 2026 sends a strong and credible signal of India’s commitment to building a globally competitive life-sciences ecosystem. The announcement of Biopharma Shakti with a ₹10,000-crore outlay over five years is a landmark step towards positioning India as a global biopharma manufacturing hub, particularly in biologics and biosimilars, which are critical for improving longevity and quality of life at affordable costs. The proposed creation of a biopharma-focused network, establishment of three new NIPERs, upgradation of seven existing institutes, and a nationwide network of 1,000 accredited clinical trial sites will significantly strengthen India’s research, talent, and clinical validation capabilities. These measures address long-standing structural gaps across the innovation-to-manufacturing continuum. Equally important is the Budget’s emphasis on strengthening the Central Drugs Standard Control Organisation (CDSCO) through dedicated scientific review capacity, domain specialists, and time-bound approvals, which is essential for regulatory predictability, global alignment, and investor confidence. For India’s $50-billion pharmaceutical industry, which contributes nearly 2.5% to GDP, this Budget reinforces the shift from volume-led growth to value- and innovation-driven leadership. Complementing these initiatives with restoration of Weighted R&D Deduction up to 200% and expansion of PLI support to advanced modalities, APIs, biosimilars, and complex generics would further accelerate domestic manufacturing, reduce import dependence, and position India as a trusted global supplier of high-quality, affordable biopharmaceutical solutions. In the past such incentives were at times also shared by the biomedical devices and medical equipment. We look forward to continuity of reforms to make manufacturing competitive by the assurance given by Honourable FM on deregulation and reduction of regulatory compliance burden so that we can become globally competitive and take advantage of the recent FTAs with EU, EFTA & UK.”
Healthcare integration and medical tourism also gain momentum through proposals to upgrade allied health institutions, expand training, and bolster geriatric and allied infrastructure.
Ms. Sonam Garg Sharma, Founder and CEO of Medical Linkers, noted the strategic alignment:
“The 2026 Budget’s emphasis on integrated healthcare systems is a timely and strategic push that strengthens a direction India is already leading in. As a country, we are increasingly recognised for combining clinical excellence with value-driven care, and healthcare hubs that integrate advanced diagnostics, post-treatment rehabilitation, and AYUSH-led wellness therapies such as yoga and Ayurveda can take that advantage further by offering a truly end-to-end patient journey. This also adds meaningful momentum to India’s medical value tourism story, where outcomes, experience, and continuity of care matter as much as affordability. We welcome the proposals to upgrade allied health institutions, expand training capacity, and strengthen geriatric and allied healthcare infrastructure, which will deepen last-mile capability and create large-scale employment, especially across Tier 2 and Tier 3 cities.”
Overall, the Budget balances immediate fiscal consolidation with bold, long-term bets on technology, manufacturing, and human capital—positioning India to capitalize on its growth momentum while addressing structural challenges for sustainable, inclusive development. Industry responses indicate broad optimism, with calls for swift implementation to realize the vision.
Last Updated on Tuesday, February 3, 2026 7:04 pm by Startup Times
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