Budget 2026 expectations Highlights: ‘Key expectation from AI ecosystem is shift from policy signalling to execution'

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Rajesh Damani, the founder and Managing Director at Jamshri Realty Limited said that the real estate industry expects the upcoming Union Budget to be a watershed moment for Tier 2 and Tier 3 cities.

“These emerging hubs are now the centers of demand for high-quality residential and mixed-use spaces,” he said.

The sector anticipates a budget that prioritises 'Infrastructure-led Urbanization.' He further outlined how this goal can be achieved:

— The government should increase capital expenditure on regional connectivity, such as ring roads and metro extensions, as they will unlock new growth corridors.

— Another crucial expectation is the revision of the 'Affordable Housing' price cap. Raising this limit to 75 lakh or 80 lakh would reflect the current land and construction costs in growing cities, while also allowing more families in Tier 2 markets to access credit-linked subsidies and tax benefits.

Meanwhile, for developers, granting the real estate sector 'Infrastructure Status' and streamlining single-window clearances will reduce project timelines significantly, he said.

“By incentivizing digital infrastructure and green building practices, the government can help us create self-sustained urban ecosystems. These measures will ensure that the growth of India’s real estate sector remains inclusive and balanced across all geographies,” he added.

“As we approach the Union Budget 2026, I believe it is time to acknowledge that the current tax exemption limits have lost their punch against inflation,” said B. Shravanth Shanker, Managing Partner at B. Shanker Advocates.

He further noted that for savings instruments to remain attractive, the government must move beyond the stagnant Section 80C and offer realistic adjustments that reflect the cost of living in 2026.

Here's what else the industry seeks:

— The government should revise the limits on interest income, which serves as a lifeline for conservative savers and retirees. The current Section 80TTA deduction of ₹10,000 is outdated, hence it should be raised to ₹25,000 for individuals below 60.

— For senior citizens who are battling medical inflation, the Section 80TTB limit must be hiked from ₹50,000 to at least ₹75,000 or ₹1 lakh. This would provide immediate liquidity to those who rely on fixed deposits for survival.

Hari Raheja, Advocate, D.M. Harish & Co. has laid down a list of specific tax incentives that the upcoming Union Budget should introduce or enhance to make long-term savings instruments.

The proposed tax incentives include:

— Long term capital gains should be exempted up to five lakhs.

— Fixed deposits for a period of three years or more should be treated as long term for the purpose of taxation and not taxed at normal rates of tax.

— Dividends should again be treated as exempted to boost investments in stock market.

— Gold Scheme should be introduced similar to the nature which was there in the past being to hand over gold in any form to the government with no tax liability, which should be returned after five years without any penalty or prosecution or applicability of any other law.

— Reinvestment in new house property which is restricted to Rs. 10 crores should be enhanced to Rs. 25 crores.

— Number of days allowed to a non resident person to stay in India should be increased from 180 days to 240 days.

“India’s office market is entering a decisive phase where growth is no longer defined by square footage alone," said Koheli J Puri, the founder and MD of StudioXP.

Based on his own account, Puri said that she has been witnessing a clear shift towards flexible formats, greener buildings, technology-led workplaces, and expansion beyond metros.

“Global Capability Centres are diversifying their locations, companies are prioritising sustainability, and employees expect smarter, more agile work environments,” she added.

In view of the trend, she said that Budget 2026 presents an opportunity to turn this momentum into long-term capacity building through policy clarity, ESG incentives, digital infrastructure, and easier approvals.

"If aligned well, it can help India move from rapid office expansion to a future-ready workspace ecosystem that supports jobs, productivity, and sustainable urban growth.”

Rajul Bohra, Partner, JSA Advocates & Solicitors, said that the semiconductor industry is expecting the upcoming Budget to come out with incentives that focus on chip production, rather than just assembly, as well as strong domestic supply chain.

“There should also be incentive schemes for local components, chip design and manufacturing for sustainable growth. It is also pertinent that the incentives which have been committed are released faster as large fab and OSAT projects are under financial pressure,” she said.

Se further mentioned that parallel reforms under related laws are also required to boost the momentum and for the nation to achieve its aim of becoming top chip manufacturing hub by 2032 and attract major financial investment in this sector.

Shivam Budhiraja, an automotive content creator and co-founder of Team Car Delight said that the previous year’s move to simplify tax slabs by removing exemptions was a step in the right direction, but the industry now needs such measures to be applied to green mobility.

According to him, the real game-changer in the upcoming Budget would be reducing GST on Hybrid Cars as they are often taxed as high as luxury petrol cars despite saving significant fuel.

“We expect a merit-based tax regime that rewards technologies like Plug-in Hybrids (PHEVs) - cars that use both petrol and EV charging. Lowering this tax will make fuel-efficient, sustainable mobility truly accessible for the Indian middle class,” he said.

“India’s strong GDP growth and rising disposable incomes are reshaping consumer behaviour, with people increasingly investing in health, wellness, and quality-of-life products," said Saptarshi Basu, Marketing Head-Emma at The Sleep Company India.

The expert further noted that in the upcoming Union Budget, the industry expects the government to continue prioritising economic growth while strengthening support for entrepreneurship, innovation, and the startup ecosystem.

“The mattress industry is undergoing a significant transformation. We are witnessing a rapid shift from traditional products to premium, technology-driven sleep solutions, supported by greater health awareness and the expansion of e-commerce,” they said.

SR Patnaik, head of taxation at Cyril Amarchand Mangaldas, said taxpayers are expecting the upcoming Budget to introduce higher deductions, especially under section 80C, which covers certain specified investments, to promote higher savings in the targeted instruments and sectors for the middle-class taxpayers.

He further outlined that this can be done by increasing the deduction limit of ₹1.5 lakhs under section 80C of the Income-tax Act, 1961 for long-term saving instruments, which includes:

— Life insurance premium payments

— Contributions to provident and public provident funds

— Investments in fixed deposits of specific institutions

— Medical insurance premiums

“The taxpayers are also expecting that an enhanced section 80C deduction is also extended to the new tax regime,” he added.

Vibhuti Patel, Managing Trustee at Anusandhan Trust, noted that, despite efforts to promote gender responsive budgeting since 2005-06, its coverage and impact remains limited due to weak implementation.

According to her, only 38 out of 62 Union ministries have active Gender Budget Cells, and although 75% of Centrally Sponsored Schemes include gender components, only half are reflected in the Gender Budget Statement (GBS).

“Thus gap between promise and performance needs to be filled by putting in place accountability and monitoring outcome,” she said.

She further noted that Gender Responsive Budgeting must prioritise the needs of the most marginalised and vulnerable women and gender diverse persons across different segments.

Here are a few other expectations:

— Compulsory digitalization criteria must be removed for anti poverty programmes, PDS, employment guarantee scheme and other social protection/social security schemes related to livelihoods and health emergencies.

— A shift in GRB from reporting on outlay to outcome so that gender commitments translate into ground level gender impacts. Gender disaggregated data on all vital sectors are important for resource allocation in terms of funds, functions and functionaries. Strict actions must be taken against the concerned department for non-utilisation of funds.

— Complete clarity on criteria of inclusion and exclusion for all schemes and programmes must be provided. The state must ensure public transparency on allocations and results.

— All ministries and departments should establish robust MIS systems to collect beneficiary data, ensuring that this information is shared with the public and must be taken into consideration in the Gender Budget Statement.

— Establishment of Gender Budget Cells that remain fully functional across all departments of national, sub-National governments and urban and rural PRIs. There must be mandatory reporting on compliance and outcomes on the Gender Budget Statement.

“The upcoming Budget comes at a critical moment for India’s energy landscape. With the green transition gaining momentum, the industry expects policy measures that not only accelerate adoption but also strengthen the domestic ecosystem for clean energy technologies," said Anand S. Kabra, Chairman and Managing Director at Kabra Extrusiontechnik Limited and GEON.

The key demands of the energy sector include:

— Government's support for energy storage, electric mobility, and advanced electronics, which according to Kabra, will be essential to ensure that India is not just a consumer of future technologies but a global contributor to them.

— Introducing a policy framework that would encourage innovation, improve ease of doing business, and enable sustainable manufacturing at scale.

"If these factors are aligned well, the Budget can act as a catalyst for long-term growth, positioning India as a leader in sustainable and technology-driven industries,” he said.

“The year 2025 has been quite turbulent for India for various reasons including war, tariffs, weaker currency which has impacted the overall business scenario and job markets," Mahesh Krishnamoorthy, the Managing Director of Core Integra.

In view of the current geopolitical situation and its unpredictability, the executive believes that the upcoming budget may be conservative to maintain stable economic growth rate in 2026.

“The Budget must provide incentives for manufacturing and MSME especially to support trade uncertainties, enhance financing options and attract investments. From direct tax perspective, expect it to remain largely same. At best, the standard deduction value could be revisited, and old tax regime may continue to be retained,” he said.

He further noted that the impact due to new labour codes and its impact on employers may have a dent on the tax revenues, however it remains unsure whether the budget 2026 would factor this into consideration.

"Startups could continue to get extension of some existing benefits though new schemes seem unlikely. Overall, it is expected that Budget 2026 would remain a neutral one focusing on stability and protective against uncertainties,” he said.

Ishank Joshi, the MD and CEO of Mobavenue AI Tech Ltd said that artificial Intelligence has transitioned from being a future promise to a present-day growth engine for India.

At the same time, the adtech ecosystem is emerging as a critical enabler of digital-first businesses, he noted.

“As we look toward the Union Budget 2026-27, stronger policy support for AI innovation, indigenous model development, and scalable digital infrastructure will be essential to building long-term national capability,” he added.

“A sustained push on AI funding and adoption can enable truly ‘Made in India, For the World’ AI solutions by strengthening India’s digital backbone, enhancing its global relevance, and accelerating the country’s journey toward becoming a technology leader while driving inclusive economic growth,” he said.

Abhishek Aggrawal, CEO of Birla Fertility & IVF, said India’s healthcare system has made significant strides in prevention, diagnostics, and treatment, but fertility care now needs to be formally integrated into this framework as a core component of comprehensive family health planning.

He believes that Budget 2026 presents an opportunity to enable earlier and more efficient fertility care through practical measures, which includes integrating fertility screening into preventive health programmes, extending insurance coverage to diagnostics and early-stage interventions.

These measures would allow people to seek care sooner, when treatment is more effective, and costs are better controlled, he said.

“Access must be matched with quality. National standards for fertility laboratories, structured training for embryologists, and consistent clinical protocols are essential to delivering safe and reliable outcomes across the country,” he added.

“These are targeted investments with long-term returns. Strong fertility care infrastructure supports family formation, demographic stability, and a more resilient healthcare system, making it a logical inclusion in India’s health and economic planning,” he said.

Prateek Maheshwari, co-founder at PhysicsWallah said that the company's expectation for the upcoming budget is to make education affordable and accountable.

“I want to see a reduction in the GST on educational services. The current 18% rate is a burden. Lowering this is essential to make quality learning accessible to every family,” he said.

Additionally, the executive seeks a shift to outcome-based budget allocation. He believes that such a move would be transformational for India as it moves the focus from spending to impact.

"We shouldn't just fund infrastructure but results, such as improved learning outcomes and increased employability. When we link budget to performance, we ensure that every rupee spent directly empowers our youth and builds a skilled nation," he said.

Madhura Samant, Managing Partner at Elarra Law Offices, said that for the real estate sector, this Budget presents an opportunity to ease transaction-level bottlenecks that continue to impact deal timelines and costs.

“Rationalisation of indirect taxes on construction inputs, improved access to long term institutional capital, and meaningful progress on digitisation and integration of land records can significantly reduce execution risk,” she added.

She also stressed that policy support for rental housing and infrastructure led development will further strengthen demand. "What the sector needs most is certainty and transparency to enable smoother deal making and sustained growth," she said.

"In 2026 budget, we hope to see continued policy support for the premium housing segment across India. This becomes especially important for Tier 2 cities, where a lifestyle transformation is underway. Active home buyers are demanding larger living spaces, upscale amenities, and gated community environments that match metro standards," said Parvinder Singh, CEO, Trident Realty.

“If the government provides incentive-linked funding and greater investment in urban infrastructure, it will further strengthen these emerging markets and enhance buyer confidence. In Tier 2 cities, luxury housing is not only about premium living; it also helps create jobs, attract talent, and build future-ready urban ecosystems,” he added.

"India’s capital markets have deepened, but long-term wealth creation still depends on policy stability and investor trust. In this Budget, we are looking for measures that strengthen transparent participation—financial literacy, consistent taxation signals, and continued support for formal investing habits rather than speculative churn. It’s also important that regulatory frameworks keep evolving to improve accountability and disclosure so retail investors can make informed decisions and the industry can build credibility," said Prasenjit Paul, Equity Research Analyst at Paul Asset & Fund Manager at 129 Wealth Fund.

“As a SEBI-registered research and fund management ecosystem, we believe the Budget should encourage disciplined investing through clarity in tax treatment, stronger investor education, and supportive policies that deepen market participation responsibly. India’s growth story will be strongest when households shift from idle savings to productive investment, and that requires trust-led reforms. A Budget that balances growth with governance—encouraging long-term capital formation while reinforcing transparency—will strengthen investor confidence and support sustainable wealth creation,” he added.

“Looking at the continuous outflow from FIIs where one of the key factors is the relatively adverse capital gains tax structure in India (source based taxation). This is putting pressure on USDINR leading to viscious cycle of acceleration in outflow and weaker USDINR. To attract FPIs, there is hope that Union Budget may provide some relief to FPIs for bringing long term capital in country. The collection from STT has been very robust this fiscal and with weaker market sentiments, anyways tax pool for LTCG will reduce substantially, if this volatile trend continues,” said Sunny Agrawal, Head of Fundamental Research at SBI Securities.

"Hence, we believe that the ensuing Union Budget is likely to focus more on ensuring measures to attract long term foreign capital and can take measures to provide them relief on capital gains tax front," he added.

“As India’s fintech ecosystem continues to evolve, the Union Budget presents an opportunity to further strengthen financial inclusion through regulatory stability and sustained investment in digital public infrastructure. For regulated digital lending and P2P platforms, policy encouragement for responsible AI adoption can enable greater automation, stronger risk and fraud assessment, and more robust compliance frameworks," said Bhavin Patel, Co-Founder & CEO, Vartis Platforms & LenDenClub.

“Continued collaboration between regulators and the fintech industry, along with predictable tax policies and streamlined compliance, will be important to support innovation-led growth and reinforce India’s position as a global hub for next-generation financial technology. Improving access to lower-cost funds for NBFCs will be critical to democratising credit and expanding formal lending to underserved consumers across Bharat, while a supportive policy environment for P2P lending can help broaden access to credit opportunities,” he further said.

“Aligned with these expectations, measures that enhance disposable income for the middle class can further boost consumption and sustain economic momentum,” Patel added.

"For start-ups operating in the audio-visual category, growth is closely linked to infrastructure creation. More PSUs, tech parts, and smart cities directly translate into demand for electronic media solution providers," said Alok K. Chaubey, founder of Keytech Enterprises.

“FM Nirmala Sitharaman should prioritise public infrastructure, digital workplaces, and smart urban projects to create real opportunities for India tech solution providers,” he added.

“Budget 2026 should recognise that education outcomes are inseparable from household economics and employment realities. When teachers face tax pressures and young graduates struggle to repay education loans after layoffs, it signals deeper stress points,” said Dr. Ashok Kumar Mittal, Member of Parliament, Rajya Sabha Founder-Chancellor, Lovely Professional University.

“The upcoming Budget must ease middle-class tax burdens, strengthen education-linked employment pathways, and ensure that skilling and higher education translate into stable livelihoods,” he added.

“We are seeing growing investor interest in senior-friendly healthcare and assisted living infrastructure, reflecting the recognition of India’s demographic shift and changing family structures. However, capital alone cannot build a holistic, integrated care ecosystem that is both scalable and sustainable. This momentum would be best supported if the Budget backed it with comprehensive policy provisions, particularly around insurance coverage for long- and short-term assisted living, and at-home care. This represents a critical affordability gap for seniors and their families, for a service that is increasingly becoming a wellbeing necessity," said Ishaan Khanna, CEO, Antara Assisted Care Services.

"The second big unlock would come from announcements supporting large-scale training of non-medical care professionals in geriatrics, the establishment of standardised norms for assisted care, and formal recognition of caregiving as a skilled profession. As demand for senior care rises, India has a timely opportunity to move from informal, fragmented solutions to a regulated, high-quality care ecosystem that delivers dignity, safety, and continuity of care for seniors,” he added.

"In manufacturing sector, where continuous machinery upgrades and technology adoption are essential, higher depreciation allowances can accelerate modernization, improve productivity, and strengthen quality standards, helping Indian manufacturers compete globally," said Darshan Shah, Managing Director, Harkesh Rubber LLP.

“Additionally, consistent policy support for MSMEs, easier access to finance, and incentives linked to manufacturing efficiency will be crucial in strengthening India’s industrial base and enabling sustainable long-term growth,” he added.

“The hospitality and food services sector is at a critical inflection point. Revisiting the GST notification on commercial leases under the Reverse Charge Mechanism would provide much-needed relief to operators already managing tight cash flows. Reintroducing support mechanisms like SEIS can also strengthen restaurants that contribute to foreign exchange earnings," said Pranav Rungta, Cofounder and Director of Nksha Restaurant and Vice President of NRAI Mumbai.

"What the industry truly needs is targeted subsidies, easier access to debt for SMEs and formal recognition through industry status, considering its significant role in employment generation. A dedicated food services ministry, along with structured employee welfare initiatives, would go a long way in building a more resilient and sustainable ecosystem," he added.

“India’s EV sector is seeing strong growth in both vehicle adoption and charging infrastructure. However, reaching long-term maturity will require clear and stable policies over multiple years. Manufacturing DC fast chargers is capital-intensive and needs long-term planning. This Union Budget we expect clarity on the future of the PM E-Drive scheme after 2026,” said Benny Parihar, Managing Director and Founder, EVERTA.

“At present, incentives are largely focused on EV manufacturers and charging operators, while charger manufacturing companies receive limited support. To truly promote indigenization, the industry needs PLI or volume-linked incentive schemes for manufacturers of DC chargers, power modules, and high-voltage components. In addition, priority sector lending, lower interest rates, and rationalised duties on non-localisable inputs would help strengthen domestic manufacturing,” he added.

“India has clearly articulated its ambition in artificial intelligence over the last few Budgets through initiatives such as the IndiaAI Mission and investments in digital public infrastructure. As we approach Union Budget 2026–27, the key expectation from the AI ecosystem is a shift from policy signalling to execution," said Ashutosh Upadhyay, Founder & Chief AI Architect, Cognio Labs.

"Access to affordable compute has become foundational for AI startups, with GPUs and high-performance infrastructure now as critical as capital. Alongside this, predictable data-governance and DPDP compliance pathways, coupled with simplified government procurement for AI solutions, can significantly accelerate adoption. From a macroeconomic perspective, AI investment is no longer discretionary—it is central to productivity, competitiveness, and long-term growth,” he added.

“For education startups, Union Budget 2026 is about moving from experimentation to impact. AI has the potential to personalize learning, support teachers, and improve outcomes—but only if backed by strong digital infrastructure and clear policy direction," said Palack Jain, Co-Founder, Vidya Labs.

"Investments in AI-powered assessments, teacher enablement, and interoperable education platforms can help edtech founders build solutions that work at scale. With the right focus on governance and execution, this Budget can ensure AI strengthens learning outcomes and prepares India’s workforce for the future," she added.

Good morning and welcome to Livemint's extensive coverage of Union Budget 2026. Days ahead of Finance Minister Nirmala Sitharaman's Budget speech on 1 February (Sunday), we bring you the latest news and updates ahead of India's eagerly awaited finance event.