Financial Services to Auto: How the Budget 2026-27 affects key sectors

Financial Services

 

• High-level committee on banking for Viksit Bharat to steer banking reforms for next growth phase. 
• FEMA (Non-debt Instruments) Rules to be comprehensively reviewed to simplify foreign investment norms
• Corporate bond market deepening via market-making framework, derivatives bond indices and total return swaps 
• STT increased on Futures from 0.02% to 0.05%; Options premium/exercise to 0.15%
• IFSC tax incentive enhanced: 100% tax deduction window extended to 20 years; post-deduction IFSC business income taxed at 15%
• Municipal bonds: ₹100 crore incentive for single issuance of ₹1,000 crore 
• PSU NBFC reforms: proposed restructuring of PFC and REC to improve scale/efficiency
• No interest-expense deduction against dividend income or mutual fund unit income; no requirement of linking post-sale discount with an agreement for GST adjustment
• No extension on BCD exemption for cash dispenser/ automatic banknote dispenser 

 

Auto

• ISM 2.0 + Electronics Components Manufacturing Scheme expanded (₹40,000 crore) to boost semis/electronics/batteries/EV components.
• Duty exemptions on capital goods for Li-ion cell/BESS manufacturing and critical mineral processing equipment (extended up to 31.03.2028).
• ₹12.2 lakh crore capex improves roads/logistics, supporting commercial vehicle demand.
• TCS on coal/lignite/iron ore enhanced to 2%.
• List expanded; exploration/ prospecting costs eligible for deferred deduction
• Customs duty exemptions extended for Li-ion cell for Battery Pack of EV or Hybrid Vehicles 
• Deferment of duty for AEO 2 and 3 increased from 15 days to 30 days
• No requirement of linking post-sale discount with an agreement for GST adjustment

 

Telecom and IT Software

 

• Tax holiday till 2047 to foreign company that provides cloud services to customers globally by using data centre services from India. Services to be provided Indian customers through an Indian reseller entity
• Clubbed multiple services in IT and safe harbour margin fixed at 15.5% and enhanced threshold to ~2,000 crore
• Safe harbour to non-residents for component warehousing in a bonded warehouse at a profit margin of 2 percent of the invoice value
• Fast-track APA process introduced for IT and ITES with 2 years completion target.
• Export benefits allowed on intermediary services basis recipient location
• No requirement of linking post-sale discount with an agreement for GST adjustment

 

Pharma and life sciences 

 

• Budget outlay of ₹1.04 trillion for healthcare
• Biopharma SHAKTI, with ₹10,000 crore outlay, will build domestic ecosystem for biologics and biosimilars, including three new National Institutes of Pharmaceutical Education and Research, upgrades to seven NIPERs, and over 1,000 clinical trial sites
• The Allied Health Professionals workforce will expand by adding 1 lakh professionals across 10 disciplines through upgraded institutions and new centres
• Five Regional Medical Hubs, 3 new All India Institutes of Ayurveda will be established, along with upgrades to AYUSH pharmacies, drug-testing labs
• Provision of loan-linked capital subsidy for veterinary colleges, hospitals, labs, and breeding facilities, targeting 20,000+ professionals
• TCS on LRS remittances for medical treatment reduced to 2%
• Custom duty exemption on additional 17 new drugs/ medicines 
• Custom duty exemption on drugs, medicines or food for Special Medical Purposes used for treatment of additional seven rare diseases

 

Steel and infrastructures

 

• Public capital expenditure raised to ₹12.2 trillion 
• Focus on infrastructure development in Tier II and Tier III cities with over 5 lakh population
• Launch of an Infrastructure Risk Guarantee Fund to provide partial credit guarantees and de-risk private developers during construction
• Accelerating recycling of significant real estate assets of CPSEs through dedicated REITs
• Development of new Dedicated Freight Corridor and Integrated East Coast Industrial Corridor 
• Mapping and development of City Economic Regions, with ₹5,000 crore per region over 5 years
• Rollout of seven High Speed Rail Corridors
• Implementation of CCUS roadmap with ₹20,000 crore outlay
• Strengthening capital goods via Hi-Tech Tool Rooms and Construction and Infrastructure Equipment Scheme, and Container Manufacturing Scheme
• Development of Rare Earth Corridors and revival of 200 legacy industrial clusters

 

Disclaimer: The data have been provided by EY. Neither EY nor Business Standard is liable for any action taken on the basis of this data