The Union Budget 2026-27, presented from the newly inaugurated Kartavya Bhawan, reflects a bold and future-ready agenda with a distinct focus on youth empowerment, skill development, and technological advancement. The government’s “Yuva Shakti”-driven budget underscores its commitment to the poor, underprivileged, and disadvantaged, while balancing long-term economic growth with societal inclusivity.

This is the first budget prepared under the guiding principle of three Kartavya, which outline the government’s core priorities:

1. Accelerate and sustain economic growth.
2. Fulfil people’s aspirations and build their capacities.
3. Ensure inclusive development aligned with the vision of Sabka Sath, Sabka Vikas.

The Budget introduces the New Income Tax Act, 2025, which will come into effect from April 2026. Simplified income tax rules and forms will be notified shortly. Multiple proceedings have been rationalized to reduce penalties and prosecutions, and tax deductions available to certain primary cooperative societies are extended to cattle feed and cotton seed.

In a move aimed at strengthening India’s technology sector, a single category of IT services has been defined with a common safe harbour margin of 15.5%. The threshold for availing safe harbour for IT services has been raised from ₹300 crore to ₹2,000 crore. Foreign cloud service providers will enjoy a tax holiday until 2047, and exemption from Minimum Alternate Tax (MAT) will apply to non-residents paying tax on a presumptive basis.

To harmonize accounting standards, the Ministry will set up a joint committee to modify IndAS to eliminate separate accounting requirements based on ICDS from the 2027–28 tax year. Additionally, the Securities Transaction Tax (STT) on futures has been increased to 0.05% from the current 0.02%.

Strategic Customs and Industrial Measures

The Budget provides targeted support for critical sectors:

1. Basic customs duty exemption on capital goods for manufacturing lithium-ion cells and processing critical minerals.
2. Tariff rates on personal-use imports reduced from 20% to 10%.
3. Exemption of basic customs duty on 17 essential drugs and medicines.

The government also unveiled BioPharma Shakti, a ₹10,000 crore initiative to strengthen domestic production of biologics and biosimilars. Similarly, a ₹10,000 crore SME Growth Fund aims to cultivate MSMEs as future champions. Public capital expenditure is set to rise from ₹11.2 lakh crore in BE 2025–26 to ₹12.2 lakh crore in FY 2026–27.

Seven high-speed rail corridors between cities will serve as “growth connectors” promoting environmentally sustainable passenger systems. In education, the Indian Institute of Creative Technologies, Mumbai, will establish AVGC Content Creator Labs in 15,000 secondary schools and 500 colleges, fostering creative and technical skills among students.

To support girls in STEM, a girls’ hostel will be established in every district, and the government will upskill 10,000 tourist guides at 20 sites via a standardized 12-week hybrid training course, developed in collaboration with an IIM. The Khelo India Mission has been given a renewed focus to transform sports over the next decade.

The agriculture sector is set for a tech-led transformation with Bharat-Vistaar, a multilingual AI tool integrating AgriStack portals and ICAR agricultural packages. International travel facilitation has been eased with the overseas tour program package reduced from 5–20% to 2%. The customs warehousing framework will be transformed into a warehouse-operator-centric system with self-declarations, electronic tracking, and risk-based audits. Cargo clearance approvals from multiple government agencies will be consolidated through a single interconnected digital window by the end of the financial year.

Leadership Reactions

Industry leaders have welcomed the Budget, highlighting its focus on AI, digital infrastructure, and skills development.

Sunil Jose, President – Workday India, said,

“This year’s Budget places people, skills, and AI at the centre of India’s long-term growth agenda. By encouraging large-scale AI investments and inviting global organisations to build and innovate in India through tax incentives extending up to 2047, the government is reinforcing India’s ambition to become a global hub for talent and technology. The focus on education-to-employment pathways, continuous skilling, and AI-enabled workforce transformation reflects a clear understanding of how work is evolving. For organisations, sustained investments in skills, workforce agility, and human-centric technology will be critical to driving productivity and inclusive growth.”

Gagan Arora, Founder & President, Vertex Group; Chairman of the Foreign Investors Council; Trade Commissioner of the Indian African Trade Council, commented,

“This year’s Union Budget makes it clear: India is intent on gearing its services sector for an AI-powered future already reshaping IT, business process management, design, customer care, and digital delivery. Although specifics about the new committee are still to come, the message is clear: AI is being positioned as both a productivity booster and a pillar of employment strategy. For the tech industry, this marks a shift from traditional subsidies to prioritising talent pipelines, rigorous standards, and export-ready capabilities. The real test will be translating these policy ambitions into reality through updated curricula, industry-recognised certifications, and job-ready pathways.”

Sree Balaji, Co-Founder and Group CEO, iLink Digital, added,

“We welcome the Union Budget 2026’s strong focus on AI and digital infrastructure, which positions emerging technologies as central to industrial competitiveness. Initiatives such as the India AI Mission and the recognition of AI as a force multiplier for governance and enterprise operations create a positive outlook for AI-led modernisation across manufacturing and services. As adoption deepens, enterprises will increasingly prioritise scalable, secure, and data-driven technology solutions to enhance productivity and resilience. We look forward to being part of India’s AI-led growth journey.”

Naman Jain, Education Policy Expert and Vice Chairman, Silverline Prestige School, said,

“The government’s renewed emphasis on education with a strong push for skill-building, design labs, and digital innovation marks a real turning point for India’s educational and skilling landscape. We welcome this visionary approach. The announcement of AVGC Content Creator Labs in 15,000 secondary schools and 500 colleges signals a commitment to moving beyond rote learning and equipping students with real-world skills that match today’s industry needs. However, the real challenge lies in making sure these opportunities reach every student, not just those in a select few schools. The true measure of success will be how well we close the gap between what’s taught in classrooms and the expectations of the modern workplace. If implemented well, these commendable initiatives can transform India’s education system into a true engine of innovation, employability, and opportunity for all.”

A Future-Ready Budget

Union Budget 2026–27 signals India’s strategic pivot towards AI, skills development, and inclusive economic growth, while ensuring regulatory reforms, digital infrastructure, and investment incentives align with global best practices. By integrating AI into governance, education, and enterprise processes, the government aims to position India as a global hub for technology, talent, and innovation.

With the focus on public infrastructure, digital connectivity, high-speed rail corridors, and domestic manufacturing of critical technologies, India is charting a growth path that balances economic expansion with equitable opportunity. The emphasis on skill-building, STEM education, and AI-led workforce transformation indicates a forward-looking agenda aimed at making Indian youth central to the nation’s economic and technological trajectory.

As the country embraces AI and digital innovation, enterprises, educational institutions, and policymakers must work collaboratively to ensure that technological adoption translates into inclusive growth, employment opportunities, and sustainable competitiveness.

Union Budget 2026–27 reflects a vision that is ambitious yet pragmatic, placing people, technology, and innovation at the heart of India’s growth story.