India’s Budget 2025-2026: A Vision for Inclusive Growth and Global Competitiveness
Unlocking Opportunities for Economic Expansion and International Collaboration
The Indian government has unveiled its Budget for the fiscal year 2025-2026, emphasizing rapid economic growth, social inclusivity, and global competitiveness. The budget aims to invigorate private sector investments, uplift household sentiments, and strengthen key economic sectors. With a vision of achieving ‘Viksit Bharat’ (Developed India), the government has outlined transformative initiatives across agriculture, Micro, Small, and Medium Enterprises (MSMEs), investment, and exports, driven by a comprehensive reform strategy.
Key Pillars of the Budget
The budget is structured around four main growth drivers:
- Agriculture: Strengthening food security and positioning India as the “food basket of the world.”
- MSMEs: Expanding opportunities for small businesses and startups through better access to credit and incentives.
- Investment: Facilitating domestic and foreign investments to spur industrial growth and innovation.
- Exports: Enhancing trade policies and digital infrastructure to boost India’s global trade footprint.
Agriculture: Enhancing Productivity and Sustainability
The government has introduced the Prime Minister Dhan-Dhaanya Krishi Yojana, which will focus on increasing agricultural productivity, post-harvest storage, and irrigation in 100 districts. Additionally, a new Mission for Aatmanirbharta in Pulses aims to make India self-reliant in pulse production, ensuring stable pricing and availability.
Other initiatives include:
- Mission for Cotton Productivity: Enhancing cotton farming with technology and research support.
- Urea Production Expansion: Strengthening fertilizer production to reduce dependency on imports.
- Fisheries Development: Promoting sustainable fishing practices to enhance seafood exports.
MSMEs: Strengthening Small Businesses and Startups
Recognizing MSMEs as a critical driver of economic growth, the budget proposes increasing investment and turnover limits for MSME classification, enabling higher efficiencies and capital access. To further support MSMEs and startups, the government will:
- Enhance credit guarantee cover for micro and small enterprises, exporters, and new ventures.
- Launch a scheme offering term loans of up to ₹2 crore for women, Scheduled Castes (SCs), and Scheduled Tribes (STs) first-time entrepreneurs.
Investment: Driving Industrial Growth and Innovation
To boost domestic investment, the government will:
- Establish 50,000 Atal Tinkering Labs in government schools to foster innovation and scientific learning.
- Expand broadband connectivity to government schools and primary health centers under the BharatNet project.
- Set up five National Centres of Excellence for Skilling, equipping youth with the skills needed for modern manufacturing industries.
Exports: Expanding India’s Global Trade Influence
The budget prioritizes increasing exports through:
- Export Promotion Mission: Setting sectoral and ministerial targets, coordinated by the Commerce, MSME, and Finance Ministries.
- BharatTradeNet (BTN): A unified digital platform for trade documentation and financing.
- Encouraging Global Capability Centers (GCCs): Developing tier-2 cities as hubs for multinational service centers.
Reforms and Fiscal Policy
Reforms are at the core of the budget, with key changes such as:
- Foreign Direct Investment (FDI) in Insurance: Raising the FDI limit from 74% to 100% for insurers investing premiums in India.
- Infrastructure Financing: Establishing a Partial Credit Enhancement Facility for corporate bonds.
- Grameen Credit Score: A framework to improve rural credit access.
The fiscal deficit is projected at 4.4% of GDP for 2025-26, with market borrowings estimated at ₹11.54 lakh crore.
Taxation and Financial Relief
The budget proposes major tax reforms, including:
- Simplifying the income tax structure for clarity and compliance.
- Rationalizing Tax Deduction at Source (TDS) by reducing the number of rates and thresholds.
- Extending the time-limit for filing updated tax returns from two years to four years.
- Expanding customs duty exemptions for 36 life-saving drugs.
Opportunities for Israeli Companies
The 2025-2026 Indian Budget presents several business opportunities for Israeli companies, particularly in the following areas:
- Agricultural Technology:
- Advanced irrigation solutions and precision farming technologies can complement India’s agricultural reforms.
- Collaboration on climate-resilient seeds and sustainable farming practices.
- High-Tech and Startups:
- Opportunities in setting up Atal Tinkering Labs and skill development programs.
- Digital transformation initiatives like BharatTradeNet offer potential partnerships in fintech and cybersecurity.
- Defense and Security:
- India’s push for self-reliance in defense manufacturing opens doors for Israeli defense tech firms.
- Healthcare and Life Sciences:
- With a focus on healthcare access, there is demand for innovative medical devices and AI-driven diagnostics.
- Infrastructure and Smart Cities:
- Broadband expansion and infrastructure financing create possibilities for Israeli telecom and construction firms.
Conclusion
India’s 2025-2026 budget reflects a bold vision for inclusive economic growth, technological advancement, and global trade expansion. For Israeli companies, this presents unique opportunities to collaborate in agriculture, digital transformation, defense, healthcare, and infrastructure. As India moves toward its goal of becoming a developed nation, strategic partnerships with global innovators will be crucial in shaping its future.
(Explanatory note: Rs. 1 lakh equals Rs. 100,000; Rs. 1 crore equals Rs. 100,000,000)
Box: GIFT IFSC: India’s Emerging Global Financial Hub
The Gujarat International Financial Tec-City (GIFT IFSC) is India’s first International Financial Services Centre (IFSC), designed to be a global financial hub with a competitive tax regime and seamless foreign currency transactions. Established as a special financial jurisdiction, it operates as a non-resident zone under the Foreign Exchange Management Act, allowing transactions in multiple foreign currencies without capital control restrictions.
Since October 2020, the International Financial Services Centres Authority (IFSCA) has been regulating GIFT IFSC across banking, capital markets, insurance, and fintech. Over 725 entities, including banks, aircraft leasing firms, and bullion exchanges, have set up operations here. The centre has rapidly expanded in key sectors, including:
- Banking: IFSC banks have surpassed USD 78 billion in assets, with transactions exceeding USD 1 trillion.
- Funds Industry: GIFT IFSC is attracting global investments and venture capital into India.
- Aircraft Leasing: Tax incentives and regulatory support are positioning India as a leasing hub.
- Education: Foreign universities like Deakin and Wollongong are establishing campuses.
- Global In-House Centres: Companies like Bank of America are using GIFT IFSC for offshore operations.
With its strategic location, skilled workforce, and regulatory advantages, GIFT IFSC is poised to play a crucial role in India’s economic vision for 2047.
