The Union Budget FY 2025-26 lays out India’s economic roadmap for the upcoming fiscal year with an vision to propel key sectors such as agriculture, MSMEs, exports, technology, taxation, and education. With the government’s focus on self-reliance, technological innovation, and economic resilience, these budget announcements aim to strengthen India’s global positioning while ensuring inclusive growth at home. From strategic reforms in taxation to robust policy frameworks for manufacturing and trade, this budget underscores the commitment to sustainable progress. Below, we explore the major highlights that will shape India’s economic and social fabric in the upcoming year (and even beyond).

Agriculture: Strengthening the Backbone of India

The agriculture sector remains a critical pillar of the Indian economy, and the government has launched several targeted schemes to enhance productivity, irrigation, storage, and credit access.

• Prime Minister Dhan-Dhaanya Krishi Yojana: Covering 100 districts, this initiative is designed to improve agricultural productivity by ensuring better irrigation facilities, enhanced storage solutions, and seamless credit access for farmers.
• Mission for Aatmanirbharta in Pulses: A six-year program focusing on Tur, Urad, and Masoor dal to achieve self-sufficiency in pulse production, reducing dependency on imports.
• Mission for Cotton Productivity: A five-year plan that integrates modern agricultural science and technology to enhance cotton yield and benefit Indian farmers.
• New Urea Plant in Assam: With an annual production capacity of 12.7 lakh metric tons, this plant is set to boost domestic fertilizer supply, ensuring that farmers have access to essential agricultural inputs at competitive prices.

MSMEs and Manufacturing: Strengthening Domestic Production

Micro, Small, and Medium Enterprises (MSMEs) serve as the backbone of India’s economy, contributing significantly to employment and GDP growth. The government’s strategic interventions aim to boost ‘Make in India’ while enabling MSMEs to thrive in a competitive global market.

• Revised MSME Classification: Investment and turnover limits for all MSMEs will be enhanced to 2.5 times and 2 times, respectively, ensuring broader eligibility for benefits and financial aid.

• National Manufacturing Mission: This initiative provides policy support and financial incentives to MSMEs, fostering indigenous manufacturing and reducing import dependency.
• Scheme for Footwear Industry: A dedicated scheme to support design capacity, component manufacturing, and machinery for leather and non-leather footwear production, helping India emerge as a global footwear manufacturing hub.
• Toy Manufacturing Boost: Under the National Action Plan for Toys, the government will implement a scheme to position India as a global hub for toy manufacturing, tapping into the multi-billion-dollar industry.

Export Promotion: Strengthening India’s Global Presence

Export-driven growth remains a priority for the government, with multiple initiatives aimed at boosting India’s trade competitiveness and integration into global supply chains.

• Export Promotion Mission: A coordinated effort by the Ministries of Commerce, MSME, and Finance to drive targeted export growth across various industries.
• BharatTradeNet: A new digital public infrastructure that will streamline trade documentation and financing, enhancing ease of doing business for exporters.
• Warehousing for Air Cargo: Special emphasis on high-value perishable goods, including horticulture and seafood exports, to ensure seamless global trade.
• Integration with Global Supply Chains: Policy support for Industry 4.0, electronics manufacturing, and advanced technology sectors, facilitating global partnerships.
• National Framework for Global Capability Centres (GCCs): Promotion of IT and R&D hubs in Tier-2 cities to strengthen India’s position as a global outsourcing and innovation hub.

Technology and Innovation: Powering India’s Digital Transformation

Technology is a key driver of modern economic growth, and the government is committed to fostering a digital and innovation-led economy.

• National Geospatial Mission: Modernizing land records, urban planning, and infrastructure design using advanced geospatial technologies.
• Deep Tech Fund of Funds: A new initiative aimed at supporting startups engaged in advanced research and innovation.
• Gene Bank for Crop Germplasm: Establishment of the second national gene bank to ensure food security and biodiversity conservation.
• Nuclear Energy Mission: With an ambitious target of achieving 100 GW of nuclear energy by 2047, the government will invest in Small Modular Reactors (SMRs) to drive clean energy production.

Custom Tariff Rationalization: Boosting Domestic Industry

To enhance domestic manufacturing competitiveness and streamline import duties, the budget introduces several crucial tariff adjustments.

• Lifesaving Medicines: 36 new drugs will be fully exempted from Basic Customs Duty (BCD), with six more added to the concessional 5% duty list.
• Raw Material Exemptions: Full exemption on BCD for cobalt powder, lithium-ion battery waste, lead, zinc, and 12 other critical minerals.
• Textile Industry Support: Two additional types of shuttle-less looms will receive full exemptions to boost domestic textile production.
• Knitted Fabrics Tariff Revision: BCD on knitted fabrics under nine tariff lines revised from “10% or 20%” to “20% or Rs. 115 per kg, whichever is higher.”
• Electronics Manufacturing Adjustments: BCD on Interactive Flat Panel Displays (IFPD) will be increased from 10% to 20%, while Open Cell components will now be exempted to reduce the cost of manufacturing displays in India.
• EV and Mobile Battery Manufacturing: 35 additional capital goods for EV battery manufacturing and 28 for mobile phone battery production have been added to the list of exempted capital goods.

Personal Income and Direct Taxes: Providing Relief to Taxpayers

The new tax reforms aim to simplify taxation and provide relief to middle-income earners and senior citizens.

• New Tax Slabs (New Regime):
  • Rs. 0-4 lakh: Nil
  • Rs. 4-8 lakh: 5%
  • Rs. 8-12 lakh: 10%
  • Rs. 12-16 lakh: 15%
  • Rs. 16-20 lakh: 20%
  • Rs. 20-24 lakh: 25%
  • Above Rs. 24 lakh: 30%

• Higher Tax Rebate: Individuals earning up to Rs. 12 lakh (Rs. 12.75 lakh for salaried employees) will pay no income tax.
• TDS/TCS Reforms:
  • Threshold for deducting TDS on rental income increased from Rs. 2.4 lakh to Rs. 6 lakh per year.
  • Updated return filing window extended from two years to four years, allowing taxpayers more time to correct tax filings.

Education and Skill Development: Investing in Future Generations

To build a future-ready workforce, the government has prioritized education and skill development through several initiatives.

• 50,000 Atal Tinkering Labs: To be established in government schools over the next five years to promote STEM learning.
• Broadband Connectivity for Schools: Under BharatNet, all government secondary schools will receive high-speed internet connectivity.
• 5 National Centres of Excellence for Skilling: Focused on advanced manufacturing training through industry collaboration.
• Centre of Excellence in AI for Education: Rs. 500 crore allocated for AI-driven education research.
• Medical College Expansion: 10,000 new UG/PG seats to be added in 2025-26, with a target of 75,000 seats over five years.

A Roadmap for India’s Growth

The 2025 budget represents a strategic and forward-thinking approach to India’s economic and social development. By focusing on agriculture, MSMEs, exports, technology, taxation, and education, the government has laid the groundwork for sustainable growth and self-reliance. These measures not only enhance India’s global competitiveness but also ensure a prosperous future for its citizens. As these policies unfold, they will play a crucial role in shaping India’s trajectory as an economic powerhouse.