Union Budget 2026: From semiconductors to rare-earth hubs, key takeaways

Budget 2026: The Budget lays out new schemes and higher spending on infrastructure, technology, healthcare and jobs, while offering support for industry and students

Finance Minister Nirmala Sitharaman on Sunday presented the Union Budget for the financial year 2026-27 in the Lok Sabha. This was her ninth consecutive Budget.

 

The Budget focused on boosting manufacturing, infrastructure, technology, healthcare and skilling, while pushing India’s long-term growth. Here is a look at all major schemes and announcements made in the Union Budget 2026

 

India Semiconductor Mission 2.0

 

The government will launch India Semiconductor Mission (ISM) 2.0 with an outlay of ₹40,000 crore to strengthen semiconductor equipment manufacturing, materials and research.

 

"India's semiconductor mission 1.0 expanded India's semiconductor sector capabilities. Building on this, we will launch ISM 2.0 to produce semiconductor equipment and materials, develop full-stack Indian IP, and strengthen supply chains," Sitharaman announced.

 

 

She said the government will promote industry-led research and training centres to support innovation and create a skilled workforce for the electronics and chip-making sector.

 

Biopharma Shakti initiative

 

The Budget announced ‘Biopharma Shakti’, a ₹10,000 crore programme to position India as a global biopharma manufacturing hub.

 

“BioPharma Shakti, meaning BioPharma Strategy for Health Advancement through Knowledge, Technology and Innovation. India’s digital disease burden is observed to be shifting towards non-communicable diseases like diabetes, cancer and autoimmune disorders,” Sitharaman announced.

 

As part of the initiative, the government will build a strong institutional network focused on biopharma research, manufacturing, and innovation.

 

Rare-earth hubs in four states

 

To boost domestic manufacturing of rare-earth magnets, the government will support dedicated rare-earth corridors in Odisha, Kerala, Andhra Pradesh and Tamil Nadu.

 

In December last year, the government had approved the 'Scheme to Promote Manufacturing of Sintered Rare Earth Permanent' worth ₹7,280 crore. The scheme aims to create 6,000 tonnes per annum*of integrated magnet manufacturing capacity covering the entire value chain.   

 

Seven high-speed rail corridors

 

Budget 2026 proposed the development of seven high-speed rail corridors connecting major growth centres.

 

These include:

• Mumbai-Pune

• Pune-Hyderabad

• Hyderabad-Bengaluru

• Hyderabad-Chennai

• Chennai-Bengaluru

• Delhi-Varanasi

• Varanasi-Siliguri

 

Container manufacturing, waterways expansion

 

The government earmarked ₹10,000 crore for a container manufacturing scheme, along with plans to expand 20 inland waterways over the next five years.

 

New ship-repair hubs will be developed in Varanasi and Patna, and a separate scheme will promote coastal shipping. The container scheme will also support the manufacturing of construction and infrastructure equipment.

 

Income Tax Act, 2025 from April 1

 

The Income Tax Act, 2025 will come into force from April 1, replacing the existing six-decade-old law.

 

Rules and tax return forms will be notified soon, with all Budget 2026 tax changes incorporated into the new legislation.

 

Electronics component manufacturing scheme

 

The outlay for the Electronics Component Manufacturing Scheme has been increased to ₹40,000 crore.

 

Launched in May last year, the scheme has already received 46 applications with committed investments of ₹54,567 crore across 11 states. These projects are expected to create 51,000 jobs.

 

One girls’ hostel in every district

 

As a major step for women’s education, the government will establish one girls’ hostel in every district under the viability gap funding (VGF) scheme.

 

Capital expenditure raised to ₹12.2 trillion

 

Infrastructure spending remains a key priority, with capital expenditure increased to ₹12.2 trillion in FY26-27, compared to ₹11.2 trillion in the current year.

 

The focus will be on cities with populations above 500,000, especially fast-growing Tier-II and Tier-III cities.   

 

Three chemical parks

 

The Budget proposed a scheme to help states set up three dedicated chemical parks. The projects have been allotted ₹600 crore in FY27, marking the first time direct budgetary support has been provided for chemical park infrastructure.

 

₹10,000 crore SME fund and textile push

 

The government announced a ₹10,000 crore fund to develop champion small and medium enterprises (SMEs). It also proposed mega textile parks focused on technical textiles and value addition, along with an integrated textile programme.

 

The government also announced the Mahatma Gandhi Gram Swaraj initiative, which will strengthen the khadi and handloom sectors.

 

Khelo India mission

 

The flagship Khelo India programme will be expanded into a full-fledged Khelo India mission.

 

The mission will focus on long-term development of training centres, coaches and integrated talent pathways to strengthen India’s sports ecosystem over the next decade.

 

Customs duty exemptions across sectors

 

Several customs duty exemptions were announced to support industry, exports, and healthcare.

 

Customs duty on goods imported for personal use will be reduced from 20 per cent to 10 per cent. Basic customs duty will be removed on 17 cancer medicines, and seven rare diseases have been added to the duty-free list.

 

Duty-free import limits for seafood processing inputs will rise to 3 per cent of FOB value, and similar benefits will extend to exporters of shoe uppers. Certain electronic components used in microwave ovens will also get duty relief.

 

Panel to study AI impact on services sector

 

A high-powered committee will be set up to study the impact of emerging technologies like artificial intelligence on India’s services sector.

 

The panel will work towards making India a global services leader, with a goal of achieving 10 per cent share in the global services market by 2047.

 

Carbon capture scheme worth ₹20,000 cr

 

The government will launch a ₹20,000 crore scheme over five years to promote carbon capture, utilisation and storage (CCUS) technologies.

 

The scheme will cover emission-heavy sectors such as power, steel, cement, refineries and chemicals, supporting India’s climate goals.

 

National Institute of Hospitality and tourism push

 

The National Council of Hotel Management will be upgraded into the National Institute of Hospitality to strengthen links between academia, industry and government.

 

To promote tourism, TCS on overseas tour packages will be reduced to a uniform 2 per cent under the Liberalised Remittance Scheme.   

 

Five medical tourism hubs

 

The government will set up five regional medical tourism hubs in partnership with states and the private sector.

 

These hubs will offer modern healthcare along with Ayush facilities. The government will also train 150,000 caregivers and roll out skill programmes aligned with the National Qualifications Skills Framework.

 

16th Finance Commission report tabled

 

Finance Minister Sitharaman tabled the 16th Finance Commission report in the Lok Sabha, covering tax devolution between the Centre and states for 2026-2031.

 

The commission, chaired by former NITI Aayog vice-chairman Arvind Panagariya, was constituted on December 31, 2023.