Budget 2026-27: Strategic Reforms to Propel India's Export Growth and Trade Deal Advantage
In an era marked by geopolitical fragmentation and rising protectionism, India's budget for 2026-27 presents a forward-looking strategy that prioritizes competitiveness over caution. This framework is designed to help India maximize the benefits of new trade agreements, transforming global uncertainties into opportunities for export expansion, investment inflows, and sustainable long-term economic growth.
Manufacturing and Export-Led Growth
The budget emphasizes scaling up strategic and frontier manufacturing sectors, including biopharma, semiconductors, electronic components, rare earth magnets, chemicals, capital goods, and containers. This initiative aims to broaden India's export-manufacturing base while enhancing domestic value addition and reducing critical import dependencies. It reinforces the government's Make in India strategy, evolving it into a globally oriented manufacturing vision.
Additionally, the long-awaited India-US trade agreement is poised to be a transformative force for India's economic trajectory. This pact is expected to turbo-charge exports, deeply integrate India into global value chains, and unlock the full potential of the manufacturing sector. By restoring investor confidence and catalyzing large-scale investments from both nations, the agreement will redefine the India-US economic partnership and accelerate progress toward India's $1 trillion export ambition across goods and services.
Flexibility for SEZs and Services Strategy
Recognizing the challenges faced by Special Economic Zones (SEZs), the budget introduces a special one-time measure to allow eligible manufacturing units in SEZs to sell to domestic buyers at concessional duty rates. This flexibility helps SEZ units maintain capacity utilization, protect employment, and manage cash flows during periods of global demand volatility, ensuring the sustainability of export ecosystems amid external shocks.
Leveraging India's educated youth and robust IT foundation, the budget strengthens the services-led growth strategy. A proposed High-Powered Committee on Education-to-Employment-and-Enterprise will prioritize areas to optimize services growth, employment, and exports, with a target of making India a global leader in services, capturing a 10% global share by 2047. Supportive measures, such as tax holidays for foreign cloud service providers and safe harbour provisions for data centres, are expected to attract significant foreign direct investment in the coming years.
Green Initiatives and Sectoral Interventions
As the future of trade increasingly focuses on sustainability, the budget allocates ₹20,000 crore over five years for carbon capture, utilization, and storage technologies in sectors like power, steel, cement, refineries, and chemicals. This move complements India's recent free-trade agreement with the EU and enhances the competitiveness of sectors affected by the Carbon Border Adjustment Mechanism, positioning sustainability as a driver of long-term resilience.
Further sectoral interventions include the establishment of five Regional Medical Hubs in partnership with states and the private sector. These integrated healthcare complexes, combining medical, educational, and research facilities with Ayush centres and medical tourism infrastructure, aim to capture global demand for quality healthcare services and create new export opportunities.
Infrastructure and Global Competitiveness
The budget's focus on boosting growth through infrastructure and manufacturing is underscored by a capital expenditure of ₹12.2 trillion and initiatives like high-speed rail and semiconductor missions. Key measures include:
- Exemption of basic customs duty on capital goods for critical mineral processing to support domestic capacity creation.
- A ₹10,000 crore, five-year container manufacturing plan to reduce import dependence, ease supply-chain shortages, and boost efficiency for exporters and importers.
- Tax deductions for exploration to strengthen participation in global supply chains.
These efforts aim to build a strong future by reducing critical dependencies, enhancing domestic capacity, and expanding India's export base. By improving competitiveness and capturing new opportunities created by FTAs with the UK, EU, and US, the budget provides clarity and confidence to Indian industry, paving the way for a Viksit Bharat by 2047.
