Newspaper Summary 020226

 Based on the sources provided, the article titled "Critics’ Choice Rather Than Crowd-pleaser" provides a critical summary of Nirmala Sitharaman’s ninth and "least exciting" budget.

The text of the article is as follows:

Unremarkable. That sums up Nirmala Sitharaman’s ninth and least exciting budget. She said the “reform express” of Prime Minister Narendra Modi was well on its way, but avoided introducing any major new reforms, such as reducing the huge subsidy for urea fertilisers. Her budget emphasis was on continuity, revelling in GDP growth of 8% in the first half of FY26. Why rock the boat when it is moving so smoothly in the face of global headwinds?

The broader analysis associated with this "critics' choice" perspective includes the following insights:

• Market Impact: The Nifty sank, largely due to a stiff increase in securities transaction tax (STT) for futures and options. The government aims to slow the explosive growth of derivative trading by amateur retail investors, 93% of whom lose money to market experts.
• Fiscal Consolidation: The sources describe fiscal consolidation as continuing "at a crawl". The fiscal deficit is projected to dip only slightly from 4.4% of GDP to 4.3% next year, while the Centre’s debt-GDP ratio is expected to move from 56.1% to 55.6%. At this pace, the article suggests it will take decades to reach the 40% debt-to-GDP ratio targeted by the NK Singh committee.
• Budget Quality: Despite the slow pace of deficit reduction, the article notes that the quality of the fiscal deficit is improving, as it will finance a welcome rise in government capex from ₹11 lakh crore this year to ₹12.2 lakh crore next year.
• Political Cycle: The article observes that in India’s political cycle, the first and last budgets of a five-year term usually emphasize freebies, implying this middle budget opted for realistic consolidation instead.

Based on the sources, the article titled "It’s a TKO for Dalal Street Speculators" details the market reaction to a sharp hike in the securities transaction tax (STT) aimed at curbing derivatives speculation.

The following is a reproduction of the key reporting from the article:

It’s a TKO for Dalal Street Speculators

TRADERS USE OPTION TO SELL: Sharp hike in securities transaction tax pulls Nifty and Sensex down by 2%; brokerages feel the heat.

Sunday’s budget circled back to July 2004, a period when the then-finance minister P Chidambaram introduced the Securities Transaction Tax (STT) for the first time, causing equities to crater. Sunday was no different; with India currently the global leader in derivatives, a higher STT on futures and options caused the Nifty and the Sensex to lose 2% each.

Curbing Speculation Finance Minister Nirmala Sitharaman stated the proposal seeks to curb F&O speculation. The impact will be felt across the board, affecting retail traders, institutions, high-frequency traders, algorithmic traders, and brokers.

The specific tax increases are as follows:

• Futures: Raised to 0.05% from 0.02%.
• Options Premium: Raised to 0.15% from 0.10%.
• Options Exercised: Raised to 0.15% from 0.125%.

Brokers noted that the futures outgo would rise by 150%. For example, the STT on one lot of Nifty Futures at 25,000 levels will increase from ₹325 to ₹812 starting April 1. Analysts warn that this sharp increase serves as a headwind by materially raising hedging and trading costs, which is likely to impact market liquidity and increase impact costs.

Brokers Battered Brokers were the top losers following the announcement, with the Nifty’s Capital Markets index tumbling 5.8%. Individual hits included:

• Angel One: Fell 8.6%.
• Groww (Billionbrains Garage Ventures): Dropped between 5% and 8%.
• BSE, Nuvama Wealth, and CDSL: Also dropped between 5% and 8%.

While retail participation is not expected to be significantly impacted because most operated with small lot sizes, the move is a setback for foreign funds already struggling with underperformance in Indian stocks. Higher transaction costs may cause FIIs to view India less favorably compared to other global markets.

Based on the sources provided, the article titled "Buybacks to be Taxed as Capital Gains; Retail Investors Benefit" reports on a significant shift in how share buybacks are treated for tax purposes.

The following is a reproduction of the reporting and analysis from the sources:

Buybacks to be Taxed as Capital Gains; Retail Investors Benefit

Move corrects a distortion, say experts; foreign promoters to pay more.

The Union Budget has proposed a major reset in the taxation of share buybacks, shifting them from being treated as ‘deemed dividends’ back to capital gains. Tax experts stated that this change corrects a distortion in equity taxation and restores buybacks as a more efficient capital-return mechanism. Under the proposed framework, the cost of acquisition will now be adjusted within the capital gains computation, removing the split-character treatment that had created distortions under previous law.

Impact on Retail and Promoters The new structure significantly benefits minority and retail shareholders while altering the economics for promoters:

• Individual/Retail Shareholders: Buyback proceeds will be taxed at 12.5%, which is significantly lower than the current slab-based rate of up to 30%.
• Indian Promoters: Will continue to be taxed at 22%.
• Foreign Promoters: Will face a higher levy of 30% (subject to tax treaty rates).

A Shift in Strategy Independent directors and analysts suggest that buybacks will now be used primarily to address capital-structure inefficiencies rather than for tax arbitrage. Shailesh Haribhakti noted that promoters must recognize that buybacks are no longer a tax-efficient substitute for dividends.

Ketan Dalal, managing director of Katalyst Advisors, observed that the framework places promoters in a significantly higher tax bracket, with gains taxed at rates closer to normal income rather than preferential capital gains. This creates a strong disincentive for buybacks in companies with high promoter shareholding. Raamdeo Agrawal added that because promoters take the buyback decisions and now face higher taxes, there is a chance that profits will be retained in the company to the potential detriment of minority shareholders.

Correcting Past Distortions This move reverses a system implemented in October 2024 where buyback proceeds were treated as dividends and taxed at regular rates, while the cost of acquisition was recognized separately as a capital loss. Less than 18 months later, the old system has been restored with added complexity regarding the distinction between promoters and non-promoter shareholders. Last year, 14 companies bought back shares worth ₹19,711 crore, significantly lower than the record ₹55,273 crore seen in 2017.

Based on the sources, the article titled "Foreigners Get a Direct Pass to Indian Equity" reports on a new budget proposal designed to attract foreign retail investment directly into the Indian stock market.

The following is a reproduction of the reporting and analysis from the sources:

Foreigners Get a Direct Pass to Indian Equity

India will open a new door to foreign retail money at a time when overseas fund managers are pulling out from local stocks.

The budget has proposed allowing individuals residing outside India—beyond Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs)—to buy listed stocks directly. Under the proposal, Persons Resident Outside India (PROIs) can invest in listed companies through portfolio investment schemes (PIS).

New Investment Limits The proposal introduces significant changes to investment caps:

• Individual Cap: Doubled to 10% for each individual PROI.
• Aggregate Limit: Raised to 24% for all PROIs, up from the previous 10%.

Anyone who does not qualify as an Indian resident under foreign exchange rules will be treated as a PROI. Currently, these individuals typically bet on Indian markets through pooled investment vehicles managed by foreign institutions, Category-III Alternative Investment Funds (AIFs), or limited NRI channels.

Strategic Advantages By creating this "third pathway" beyond foreign direct and portfolio investments, the government aims to attract global wealth that wants India exposure without the FPI compliance hassle, while simultaneously building resilience against FPI outflows. Experts noted that the 10% individual cap is strategic, as it keeps PROIs below the control threshold and will not complicate FDI characterization, takeover regulations, or trigger open offers.

Pankaj Bhuta, founder of PR Bhuta & Co., stated that a direct route allows investors to choose their own stocks instead of relying on institutions, benefiting from a streamlined KYC process and full, unrestricted repatriation of funds.

Roadblocks and Implementation Despite the policy shift, the immediate impact on inflows may be limited as overseas investors currently remain in a risk-off mode regarding India. Analysts suggest the biggest hurdles will be onerous KYC checks and client onboarding, including the requirement for documentation that is strictly compliant with the Foreign Exchange Management Act (FEMA).

Based on the sources, the article titled "Tech, GCCs Set Sail with Safe Harbour Shield" details the government's efforts to boost investment in Global Capability Centres (GCCs) and R&D through tax reforms.

The following is a reproduction of the reporting and analysis found in the sources:

Tech, GCCs Set Sail with Safe Harbour Shield

Changes to the safe harbour regime are expected to trigger a wave of investments by new global capability centres (GCCs) or the research and development arms of multinationals, providing much-needed tax and policy certainty.

Major Policy Shift Finance Minister Nirmala Sitharaman announced key proposals to improve the ease of doing business for new GCCs and established technology giants like Microsoft and Google, who operate their largest centers outside the U.S. in India. The moves are designed to reduce transfer pricing disputes and lower the compliance burden for these entities.

The specific reforms include:

• Threshold Increase: The safe harbour threshold for IT services providers was raised significantly to a turnover of ₹2,000 crore, up from the previous ₹300 crore.
• Unified Margin: A common safe harbour margin was announced at 15.5%.
• Simplified Classification: Several categories of services were bunched under a common "IT" head to reduce ambiguity.
• Data Centre Provision: A safe harbour margin of 15% was proposed for data centres providing services to related foreign companies.

Boosting Global Confidence Industry leaders welcomed the move, noting that long-term tax certainty is vital as AI workloads expand rapidly. Ashish Aggarwal, vice-president of policy at Nasscom, stated that the move would reduce dispute costs and free up administrative capacity to focus on higher-risk cases, making India a more attractive base for global delivery.

India currently hosts approximately 1,800 GCCs, with major players like Mercedes-Benz, BMW, Walmart, Ikea, JP Morgan, and Bank of America operating massive captive centres in the country. Industry data shows that one new GCC opened every week last year, and experts expect this pace to accelerate following these reforms.

Future Horizons The budget also proposes a 20-year tax holiday for foreign data centre investments, effective until 2047, for provision of global cloud services. Additionally, the government plans to establish an Education-to-Employment Enterprises standing committee to strengthen the IT talent pipeline, aiming for India to capture 10% of the global services market share by 2047.

Based on the sources provided, the article titled "Cart Blanche for Global Ecomm Shopping" details significant relief for Indian consumers who purchase goods directly from international websites.

The following is a reproduction of the reporting and analysis from the sources:

Cart Blanche for Global Ecomm Shopping

DUTY DOWN: Customs levy on personal imports halved to 10%; high-end electronic goods, apparel, sneakers may see lower landed costs.

Lower Costs for Overseas Goods Indian consumers shopping directly from global ecommerce platforms are set to receive relief at a time when the rupee is falling, as the budget proposes to halve the customs duty on personal imports to 10%. Effective April 1, this cut applies to all dutiable goods imported for personal use, with the exception of cars, alcoholic beverages, tobacco products, printed books, and items requiring an import license. Industry executives suggest this move will drop the landed cost of items ranging from electronics to fashion, which are often imported privately because they are either unavailable in India or launched here much later.,

Dominant Categories and Platforms Personal imports into India are currently dominated by categories such as electronic gadgets, kitchen appliances, gaming accessories, cameras, sneakers, apparel, and beauty products. Most of these purchases are routed through overseas versions of platforms like Amazon, eBay, Alibaba Group’s AliExpress, Temu, and Desertcart, as well as webstores of global brands primarily from the US, UK, and China.

Expert Analysis and Consumer Caution Industry experts offer a nuanced view of the impact:

• Targeted Benefit: Former Arvind Fashions managing director J Suresh noted the duty cut would primarily help a narrow segment of consumers seeking specific designs or early launches, such as a just-launched Armani jacket, as most mainstream global brands are already locally available.
• Niche Markets: Deba Ghoshal, an electronics industry veteran, highlighted that people often import high-end appliances and gaming consoles because many brands do not sell these specific products within the Indian market.
• Opaque Fees: Consumers remain cautious, as many global platforms collect upfront import fees of 30-40% to cover customs assessment uncertainties, which may prevent the duty reduction from translating into substantial savings for the end user.
• Offsetting Surcharges: The relief will be partially offset by a new social welfare surcharge of 10% of the total customs duty payable.

Revised Baggage Rules In addition to ecommerce changes, the budget includes a plan to overhaul baggage rules for international travelers. Indians returning from overseas travel (excluding neighboring countries like Nepal, Bhutan, and Myanmar) will see their duty-free allowance increased from ₹50,000 to ₹75,000. However, the allowance for liquor remains capped at 2 liters per passenger.

Based on the sources, the article titled "A Slow-cooked Recipe for Wholesome Consumption" describes the government's strategic choice to prioritize long-term economic stability over immediate fiscal stimulus.

The following is a reproduction of the reporting and analysis found in the sources:

A Slow-cooked Recipe for Wholesome Consumption

STABILITY OVER STIMULUS: Govt seeks to achieve demand stimulation from long-lasting growth in disposable personal incomes over short-term relief measures.

Earning Capacity Over Spending Impulse The budget places its primary faith in India’s earning capacity rather than its immediate spending impulse. It is not a budget aimed at artificially stimulating consumption through short-term fiscal relief; instead, it reflects a conscious policy choice to protect purchasing power through macroeconomic stability. The underlying philosophy is that discretionary spending will rise more effectively as a result of growth that is earned, durable, and sustainable.

Organic Growth Through Investment Rather than engineering an immediate upswing, the government’s approach allows consumption to strengthen organically as investment-led growth feeds into employment and incomes, albeit with a lag. Public capital expenditure (capex), particularly in infrastructure and manufacturing, serves as the backbone of this strategy. These investments are intended to support demand over time through:

• Job creation across various skill levels.
• The development of stronger vendor ecosystems.
• Improved national productivity.

Targeted Sectoral Signals The strategy is reinforced by a focus on moving up the manufacturing value chain. Key signals include:

• Future-Aligned Manufacturing: Deepening electronics component manufacturing and expanding the India Semiconductor Mission to build a full-stack ecosystem.
• Strategic Resilience: The development of rare earth corridors and the chemical ecosystem to drive value addition and supply-chain resilience.
• Productivity Multipliers: Emphasis on shared manufacturing and testing facilities within industrial clusters to help smaller firms compete globally.

Stability for the Middle Class and Rural Markets While the budget continues to emphasize the middle class and agriculture to support income stability, it limits direct consumption incentives that often have strong multiplier effects in areas like furniture and home improvement. The government remains steadfast in its focus on strengthening India’s growth trajectory by supporting investment-led consumption rather than chasing near-term outcomes.

Based on the sources, the article titled "Banking on Change, Cool Money, New Hopes" discusses the formation of a high-level committee tasked with overhauling India's banking sector to align with the "Viksit Bharat" 2047 vision.

The following is a reproduction of the reporting and analysis from the sources:

Banking on Change, Cool Money, New Hopes

BIGGER & BETTER: High-level committee being formed to review PSB mergers, easing of foreign flows and also voting rights at pvt banks.

Building Balance Sheet Arsenal A high-level committee on banking is expected to examine bank ownership structures with the goal of building fewer but bigger lenders. These institutions are intended to have the "balance sheet arsenal" necessary to power India's entry into the league of developed nations and support long-gestation infrastructure projects.

Key Reform Areas The panel's review is expected to be comprehensive, focusing on several long-standing issues:

• Public Sector Consolidation: The committee will likely examine the consolidation of smaller government banks.
• Voting Rights in Private Banks: A major task will be reviewing the alignment of voting rights with ownership stakes. Currently, voting rights are capped at 26%, and relaxing this could sweeten deals for overseas investors interested in running Indian banks.
• Foreign Investment Caps: The panel is expected to examine the 20% foreign direct investment (FDI) cap in state-run banks and move toward more uniform, transparent rules for foreign ownership.

Industry Perspectives Banking leaders have welcomed the move as timely given the fundamental shifts in the industry. Amitabh Chaudhry, MD and CEO at Axis Bank, noted that the sources of bank deposits have changed significantly, making this an opportune moment for the government and the RBI to reassess next-generation reforms.

Rajiv Anand, MD and CEO at IndusInd Bank, identified the "disconnect between ownership and voting rights" as one of the two big issues currently plaguing the sector. While balance sheets are currently strong, bankers believe a structural review will improve capital deployment efficiency and strengthen risk monitoring frameworks.

Future Vision While the specific details of the committee’s composition are yet to be announced, it is expected to consist of senior bankers and experts. Their ultimate goal is to determine the scale and scope of the banking industry required to support the needs of a growing economy toward 2047.

Based on the sources, the article titled "Beyond Basics, Clear and Present Prudence" describes the budget as a pragmatic statement of intent that prioritizes stability and long-term growth architecture over short-term stimulus.

The following is a reproduction of the reporting and analysis found in the sources:

Beyond Basics, Clear and Present Prudence

STRONG INTENT: With the ease of doing business, a focus on ease of living and creating jobs.

Fiscal Discipline as an Anchor The budget is characterized as a pragmatic and prudent statement of intent. Despite a highly volatile global environment and significant geopolitical uncertainties, the Finance Minister chose to anchor the budget in fiscal discipline, a move described as both timely and reassuring. By remaining committed to the "basics" of fiscal prudence while sustaining growth momentum, the government aims to provide stability for the financial sector.

Investment and Infrastructure The government has prioritized investment, productivity, and job creation, with public capital expenditure (capex) remaining the backbone of the budget. With public capex targeted at ₹12.2 lakh crore, the government intends to maintain momentum in infrastructure creation, which is viewed as essential for attracting private investment. Specific measures to support this include:

• Infrastructure Risk Guarantee Fund: A proposed fund aimed at reducing implementation risks to attract long-term capital and overseas investors.
• Nuclear Power: Extending zero basic customs duty on imports for new projects until 2035 to lower capital costs and ensure energy security.
• Logistics: A focus on dedicated freight corridors and ship repair operations (MROs) to improve industrial efficiency.

Advanced Manufacturing and Technology The budget acknowledges a significant transformation in India's industrial landscape, moving towards an advanced, technology-driven economy. Key strategic initiatives include:

• Data Centres: A long-term tax holiday until 2047 for foreign companies providing global cloud services, aimed at accelerating the AI ecosystem.
• Semiconductors: Expansion of the India Semiconductor Mission to encourage private investment in fabrication, design, and equipment manufacturing.
• Rare Earth Corridors: A proposal to create dedicated corridors to develop strategic supply chains and an end-to-end domestic value chain in a geopolitically sensitive sector.

Services and GCCs The sources highlight a shift toward institutionalizing India's competitiveness in technology and digital operations. The budget incentivizes Global Capability Centres (GCCs) as powerful drivers of services exports and advanced skills development. To enhance tax certainty, the government decided to unify all IT services under a single category with a common safe harbour margin of 15.5%.

Support for MSMEs and Employment The budget's focus on emerging sectors is expected to have a strong trickle-down effect on India’s 10 million registered MSMEs. Key support measures include:

• The proposed ₹10,000-crore SME Growth Fund.
• Credit guarantee schemes for invoice discounting to provide additional capital for small businesses.
• Recognition of tourism and healthcare as high-employment sectors with the potential for large-scale livelihood opportunities.

Banking Reforms A high-level committee on banking will be established to focus on the next generation of banking reforms. While the current system is described as robust with healthy capital ratios, the committee will evaluate measures to prepare the sector for a "more demanding future".

Based on the sources provided, the article titled "Laying Rare Earth Corridors for Manufacturing" outlines the government's strategy to develop a domestic ecosystem for critical minerals to ensure supply chain resilience.

The following is a reproduction of the reporting and analysis from the sources:

Laying Rare Earth Corridors for Manufacturing

Mining belts in ODISHA, KERALA, AP AND TN to link minerals, manufacturing.

Strategic Mineral Corridors India plans to create dedicated rare-earth corridors in the mineral-rich states of Odisha, Kerala, Andhra Pradesh, and Tamil Nadu to promote integrated mining, processing, research, and manufacturing. These four states together account for 89% of India's 12.73 million tonnes of monazite reserves, the key mineral containing rare-earth elements.

Securing Supply Chains Finance Minister Nirmala Sitharaman emphasized that these measures are vital to reduce import dependence in an external environment where trade is imperilled and supply chains are frequently disrupted. The initiative is designed to achieve self-reliance in the manufacturing of rare earth permanent magnets (REPM), which are critical for upstream industries including:

• Electric vehicles (EVs)
• Renewable energy
• Electronics
• Aerospace and Defence

The push for indigenization was catalyzed after China, the world’s largest supplier, previously curbed REPM exports, triggering global shortages that threatened multiple industries.

Fiscal and Policy Support Heavy Industries and Steel Minister H.D. Kumaraswamy stated that these corridors will position India as a global hub for high-value and sustainable manufacturing. To support this, the budget proposed:

• Customs Duty Scrapped: The 2.5% basic customs duty on monazite has been removed.
• Capital Goods Exemption: Import duties are waived for capital goods required for the processing of critical minerals.
• Tax Incentives: Certain critical minerals have been added to Schedule XII of the Income Tax Act, allowing expenditures on prospecting and exploring to be eligible for deductions under Section 51.
• Existing Funding: This initiative builds upon a ₹7,280 crore scheme for rare earth permanent magnets launched in November 2025.

Regional Impact Experts noted that the inclusion of Tamil Nadu is strategic due to its status as an automotive manufacturing hub, while for Kerala, the corridors could be a "game-changer" by helping the state harness its mineral wealth with ecological sensitivity. The initiative aims to create an integrated mining-to-manufacturing ecosystem, facilitating an end-to-end domestic value chain in a geopolitically sensitive sector.

Based on the sources, the article titled "Check MAT: Nudge Towards an Alternate" discusses the government's overhaul of the Minimum Alternate Tax (MAT) framework in the Finance Bill, 2026.

The following is a reproduction of the reporting and analysis from the sources:

Check MAT: Nudge Towards an Alternate

FINANCE BILL 2026 overhauls the MAT framework, cutting the rate to 14% and sharply limiting its credits to nudge cos towards 22% regime.

A Significant Policy Shift The Finance Bill, 2026 has proposed a major reset of India's Minimum Alternate Tax (MAT) framework, lowering the rate from 15% to 14%. Under the new proposal, MAT will become a final tax effective April 1, 2026, and no new MAT credits will be allowed to accrue after this date. The changes are designed to streamline corporate tax calculations and nudge more companies toward the concessional 22% corporate tax regime.

New Limits on Tax Credits The sources state that the transition marks a shift from the previous system where MAT—originally a "backstop tax" to ensure companies with high book profits paid a minimum levy—effectively functioned as an advance tax with credits freely available for set-off. Under the new rules:

• Set-off Cap: Companies opting for the 22% concessional regime can set off brought-forward MAT credit accumulated up to March 31, 2026, but only up to 25% of their tax liability in a single year.
• Carry-Forward Window: These credits remain usable only within the existing 15-year carry-forward window starting from the year they arose.
• "Use-it-or-Lose-it": Experts describe the tighter conditions as a "use-it-or-lose-it" situation, forcing companies to re-evaluate their migration timing and cash-flow strategies.

Impact on Large and Small Firms Tax experts note that the impact will be highly company-specific. Firms that have operated for long periods under tax-incentivized structures, such as Special Economic Zones (SEZs), have accumulated substantial legacy credits and may find staying in the older regime more financially optimal in the near term. Conversely, newer or late-cycle companies with smaller credit pools may be more willing to migrate to benefit from the lower headline tax rate and simplified compliance.

Government Objectives From the government’s perspective, these amendments aim to address persistent concerns regarding indefinite credit accumulation and the administrative burden of managing two parallel tax systems. Additionally, the Finance Bill provides clarity by excluding non-residents taxed under presumptive schemes (such as foreign shipping and aviation firms) from the MAT framework.

Based on the sources, the article titled "On the Mark to Make it Happen Faster" details the government's strategy to significantly expand India's manufacturing sector.

The following is a reproduction of the reporting and analysis from the sources:

On the Mark to Make it Happen Faster

EYEING A QUARTER OF GDP: Manufacturing takes centre stage with allocations across seven strategic sectors.

A Strategic Core The budget places manufacturing at the core of India’s expenditure priorities, utilizing targeted allocations across strategic and industrial sectors. The government aims for the sector to contribute one-quarter (25%) of India's gross domestic product (GDP), a substantial increase from the current 16-17%. This push comes at a critical time as India remains one of the fastest-growing major economies, despite record selling of Indian equities by foreign investors and the rupee weakening to all-time lows.

Scaling Strategic Sectors The government’s primary focus is on scaling up seven strategic and frontier sectors, including semiconductors, rare earths, electronics, and textiles. Key fiscal commitments include:

• Chemical Parks: A first-time allocation of ₹600 crore to launch three dedicated parks.
• Semiconductors: ₹1,000 crore allocated to the India Semiconductor Mission (ISM) 2.0, which focuses on indigenous design and manufacturing of materials and machinery.
• Electronics: A massive ₹40,000 crore outlay for the Electronics Components Manufacturing Scheme to fortify domestic supply chains.
• White Goods: Funding for the production-linked incentive (PLI) scheme for ACs and LED lights rose more than threefold to ₹1,004 crore.
• Biopharma: The ₹10,000-crore Biopharma SHAKTI mission was introduced to build an ecosystem for the domestic production of biologics and biosimilars.

Ensuring Atmanirbharta Finance Minister Nirmala Sitharaman emphasized that these measures, guided by the principle of Atmanirbharta (self-reliance), are intended to build domestic capacity, ensure energy security, and reduce critical import dependencies while supporting job creation. The focus extends to specialized industries, including schemes for container manufacturing, seaplane production, and a dedicated initiative for sports goods.

Trade and Regulatory Support To bolster these industrial goals, the budget simplifies customs tariffs by rationalizing exemptions and embedding effective rates. A significant one-time measure includes allowing eligible manufacturing units in Special Economic Zones (SEZs) to supply the domestic tariff area at a concessional rate, further strengthening the link between domestic manufacturing and export capabilities.

Based on the sources provided, the article titled "Duty Relief for Exports to Brave Trade Winds" details the government's strategy to protect key Indian export sectors from global trade volatility and high tariffs.

The following is a reproduction of the reporting and analysis from the sources:

Duty Relief for Exports to Brave Trade Winds

Cushioning the impact of 50% US tariffs through eased import rules for key export sectors.

Targeted Relief for Marine and Footwear Sectors To mitigate the effects of high US tariffs, the budget has eased duty-free imports for certain inputs used in the export of processed marine products and leather or synthetic footwear, which are among India’s primary exports.

Specific measures include:

• Seafood Processing: The limit for duty-free imports of certain inputs will be increased to 3% of the free on board (FoB) value of the previous year's export turnover, up from the current 1%.
• Fish Catch: The budget now allows for the duty-free export of fish catch taken in the high seas and the Exclusive Economic Zone.
• Footwear Inputs: The scope of duty-free inputs has been expanded to include shoe uppers, rather than just finished footwear, to ease supply constraints for exporters.

Addressing Sectoral Declines These measures are seen as vital interventions following a marginal 0.23% dip in leather and leather product shipments, which totaled $3.3$ billion between April and December FY26. By expanding the scope of duty-free inputs, the government aims to lower production costs and enhance the global competitiveness of traditional labor-intensive sectors.

Operational and Logistic Support Beyond direct duty relief, the government is providing structural support through:

• SEZ Flexibility: Eligible manufacturing units in Special Economic Zones (SEZs) are now permitted to supply the domestic tariff area at a concessional duty rate.
• Logistics Efficiency: A renewed focus on improving logistics via dedicated freight corridors is expected to aid the export sector.
• Working Capital: Officials noted that these changes provide exporters with more time to ship orders, reducing working-capital stress and lowering the risk of penalties.

Customs Modernization The broader customs overhaul mentioned in the sources includes the introduction of a single digital window for faster clearances and the use of technology to replace intrusive manual container inspections. These steps are intended to help Indian exporters integrate more smoothly into global value chains that have low tolerance for delays.

Based on the sources provided, the article titled "Operation No Turbulence" provides a critical analysis of the macro backdrop and structural challenges facing the Indian economy at the time of the budget.

The following is a reproduction of the reporting and expert analysis from that article:

Operation No Turbulence

A Straight and Narrow Pathway, With Heavy Lifting Still Ahead: With temporary supports fading, deep structural weaknesses persist.

Macro Backdrop and Demand Shifts The budget was presented against a backdrop where supportive measures from 2025—including GST and I-T cuts, lower crude prices, and a strong monsoon—had driven a cyclical recovery. However, as these temporary boosts fade, demand must shift more sustainably toward government infrastructure spending and real estate, both of which are now slowing after several years of rapid growth.

Structural Malaise in Investment and Consumption Experts in the article argue that the economic challenges are structural rather than cyclical. Specifically:

• Flatlined Investment: Corporate investment has remained stagnant at around 12% of GDP since FY13.
• Depressed Consumption: While private consumption saw a "pop up" after GST cuts, it remains well below its pre-pandemic trend.
• Excess Capacity: Slowing nominal growth and 25 months of falling core inflation signal persistent and possibly widening excess capacity.

External and Technology Risks India faces significant uncertainty on the external front, particularly regarding trade and technology. While India softened the blow of 50% US tariffs by tapping alternative markets, permanent trade resolutions remain delayed.

In the technology sector, the article notes that India is struggling to keep pace in the global AI race, lagging in every segment of the value chain from upstream chip manufacturing to midstream large language models. Additionally, software services exports are threatened by AI-led job displacement and new restrictions on H-1B visas.

The Fiscal Strategy Against this "cloudy background," the budget chose to tread the path of the "straight and narrow," continuing fiscal consolidation with a target deficit of 4.3% of GDP. However, achieving this goal is heavily dependent on nominal GDP growth rebounding to the projected 10%; if growth falls short, meeting the deficit target will be challenging. The article concludes that while these reforms mark progress, their scale appears modest compared to the entrenched challenges of private consumption and investment.

Based on the sources, the article titled "Strong on Intent, But Whatever Happened to Reforms Express?" provides a critical evaluation of the budget against five strategic imperatives: boosting domestic demand, enhancing export competitiveness, building supply chain resilience, accelerating reforms, and ensuring fiscal discipline.

The following is a reproduction of the reporting and analysis from the sources:

Strong on Intent, But Whatever Happened to Reforms Express?

The budget shows strategic clarity in its pivot back to investment over consumption, but its reform agenda appears more procedural than transformational.

Investment Over Consumption To boost domestic demand against an increasingly protectionist global environment, this budget prioritizes investment over consumption. This marks a significant shift from the previous year’s approach, which utilized personal income tax and GST rate cuts to stimulate spending. Public capex is maintained at 3.1% of GDP, demonstrating a continued commitment to growth through infrastructure, including:

• New dedicated freight corridors.
• An infrastructure risk guarantee fund to boost private developer confidence.
• Seven high-speed rail corridors serving as "growth connectors".

Export Integration and Resilience The budget aims to position India as a competitive manufacturing hub by deepening value addition in electronics and supporting capital goods manufacturing through hi-tech tool rooms and container manufacturing schemes. It maintains a focus on labour-intensive manufacturing through dedicated schemes for mega textile parks and sports goods.

To build resilience, the government has proposed:

• Rare earth corridors for integrated mining, processing, and research to secure critical minerals.
• Energy resilience through customs duty exemptions for nuclear power projects until 2035.
• A 21.8% boost in defence capital outlay to modernize military hardware and reduce dependence on foreign suppliers.

Procedural vs. Transformational Reforms The sources characterize the budget’s reforms for competitiveness as limited in scope. Measures such as customs duty rationalization and trust-based systems are described as procedural improvements rather than a major transformational overhaul. While the Finance Bill establishes a high-level committee for the banking sector and mentions the restructuring of Power Finance Corporation and REC, implementation timelines remain unclear. The sources suggest that "heavy lifting" on structural reforms will require policy initiatives and legislative changes that typically occur outside the budget cycle.

Underwhelming Fiscal Signals The sources find the fiscal signals to be underwhelming, noting that the fiscal deficit target of 4.3% of GDP indicates less aggressive tightening than anticipated. Similarly, the debt target of 55.6% of GDP suggests that the government will need a much faster consolidation pace in the coming years to reach its 50% goal by FY31. This slower trajectory raises concerns regarding supply pressure in bond markets and potential crowding-out effects.

Conclusion While the budget is viewed as largely growth- and inflation-neutral in the near term, its medium-term impact will depend critically on the government’s ability to execute announced measures and deliver substantial policy action beyond the budget framework.

Based on the sources, the article titled "Lead Roles for Services, Biopharma & Textiles" outlines the government's strategic pivot toward high-value services and specialized manufacturing to drive India's goal of becoming a developed nation by 2047.

The following is a reproduction of the reporting and analysis from the sources:

Lead Roles for Services, Biopharma & Textiles

FOR A DEVELOPED NATION: Panel to suggest measures for doubling India’s share in global services sector to 10% by 2047.

Doubling the Services Edge India intends to more than double its global share in the services sector to 10% by 2047. To achieve this, the budget proposed forming the Education to Employment and Enterprise Standing Committee to identify priority areas for high growth, employment, and exports. This high-powered panel will also gauge the impact of emerging technologies, including artificial intelligence (AI), on jobs and skill requirements.

Fulfilling Youth Aspirations Finance Minister Nirmala Sitharaman stated that a renewed emphasis on the services sector is necessary to fulfill the aspirations of a youthful India, noting that nearly 250 million individuals have moved out of multidimensional poverty over the last decade. Proposed interventions span various career pathways, including:

• Digital and AI-enabled services.
• Health and medical tourism.
• Yoga, Ayurveda, and hospitality.
• Creative services and skill development.

The services sector currently accounts for more than 55% of India’s economy and 47% of its exports, making it a primary driver of job creation. The budget further supports this by providing greater safe harbour protection for IT services and a tax holiday until 2047 for foreign companies providing global cloud services via Indian data centers.

Offsetting Trade Deficits The services sector plays a critical role in macroeconomic stability, as its trade surplus significantly offsets the goods trade deficit. In the first three quarters of the current fiscal year, the services trade surplus reached $152 billion, helping to balance a goods trade deficit of $248 billion.

Strategic Push for Biopharma The budget announced the ₹10,000-crore Biopharma SHAKTI mission to establish India as a global manufacturing hub for biologics and biosimilars. This initiative shifts policy focus beyond generics to complex biologic medicines, which are viewed as key to longevity and affordable healthcare. The program will involve:

• Strengthening the regulatory capacity of the CDSCO to meet global standards.
• Establishing a network of 1,000 accredited clinical trial sites.
• Investing in new NIPER institutions to build specialized talent.

Scaling Textile Exports To capitalize on new free trade agreements (FTAs) with the UK, Oman, and the EU, the government is launching several coordinated missions to scale textile exports. These include:

• The National Fibre Mission for self-reliance in special-use fibres.
• The Mahatma Gandhi Gram Swaraj Initiative to link handloom and handicrafts to global markets.
• The creation of Mega Textile Parks in mission mode.
• The Samarth 2.0 upgraded skilling program to modernize the textile workforce.

These combined efforts represent a "balanced and forward-looking approach" to raise the productivity of India's labor force while building resilience against global trade volatility.