India raised public capital expenditure while keeping its fiscal consolidation plan intact in its Union Budget for 2026, signalling continued reliance on state-led investment to support growth amid global uncertainty.

Finance Minister Nirmala Sitharaman pegged capital expenditure at Rs 12.2 lakh crore (about $145–150 billion), around 3.1% of GDP. The fiscal deficit was set at 4.3% of GDP, keeping the government on its medium-term consolidation path.

Sitharaman said fiscal discipline, public investment and structural reforms had helped maintain economic stability, adding that the budget aimed to accelerate growth, build human capital and ensure inclusive development as part of the government’s long-term “Viksit Bharat” agenda.

Manufacturing was a central focus, with fresh policy support announced for sectors including biopharma, semiconductors, electronics, textiles, chemicals and capital goods. The government proposed developing India as a global bio-pharma manufacturing hub through a Rs 10,000 crore ($1.2 billion) Bio Pharma Shakti programme spread over five years, aimed at boosting domestic production of biologics and biosimilars.

Support for micro, small and medium enterprises (MSMEs) was expanded through measures to ease access to credit and equity financing, while labour-intensive export sectors such as seafood, leather and textiles received targeted relief, including higher duty drawback limits and extended export timelines to ease compliance pressures.

Infrastructure investment remains a key growth lever, with continued spending planned for freight corridors, inland waterways, high-speed rail and urban infrastructure, including Tier-II and Tier-III cities. Sitharaman announced seven proposed high-speed rail corridors, describing them as “growth connectors” between major economic centres.

The budget also outlined a Rs 20,000 crore ($2.4 billion) outlay over five years for carbon capture, utilisation and storage (CCUS) technologies as part of India’s industrial decarbonisation push. In addition, the government said dedicated rare earth mineral corridors would be developed in states including Odisha, Kerala, Andhra Pradesh and Tamil Nadu.

Tax proposals focused on simplifying compliance and easing prosecution provisions, while the budget also included targeted measures for farmers, women-led enterprises, persons with disabilities and the development of eastern and north-eastern states.