In a strategic move to bolster India's economic growth and global competitiveness, the Union Budget 2026, presented by Finance Minister Nirmala Sitharaman, emphasizes key sectors, including semiconductors, pharmaceuticals, rare earth elements, infrastructure, and manufacturing with power reforms. The budget outlines a comprehensive plan with a structured framework designed to strengthen emerging sectors, boost industrial capacity, and benefit MSMEs.
Semiconductors: India Semiconductor Mission 2.0
Building upon the foundation laid by India Semiconductor Mission 1.0, the Budget 2026 unveiled ISM 2.0, with an increased outlay for the Electronics Components Manufacturing Scheme to ₹40,000 crore. This initiative aims to promote industry-led research, advanced fabrication capabilities, and specialized training centers to cultivate a globally competitive semiconductor workforce. The focus shifts to producing equipment and materials, designing full-stack Indian intellectual property, and fortifying supply chains, aiming to reduce import dependence and deepen domestic electronics manufacturing.
Pharmaceuticals: Biopharma Shakti
With a substantial outlay of ₹10,000 crore over five years, the "Biopharma Shakti" initiative intends to position India as a global hub for biopharmaceutical manufacturing, particularly for biologics and biosimilars. This initiative aims to strengthen drug regulation systems and expand clinical trial infrastructure by establishing a bio-pharma-focused network and creating 1,000 accredited clinical trial sites to strengthen research and development in the sector. This move is expected to reduce imports, boost R&D, and strengthen India's digital health ecosystem.
Rare Earth Elements: Dedicated Corridors
To reduce reliance on imports and strengthen domestic capabilities in critical minerals, the Budget 2026 proposes establishing dedicated rare earth corridors in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu. These corridors will support mineral-rich states in promoting mining, processing, research, and manufacturing of rare earth elements and permanent magnets, which are crucial for clean energy, electronics, defense, and electric mobility. The scheme for rare earth permanent magnets, launched in November 2025, will be supported through state-specific corridors to promote mining, processing, research, and manufacturing.
Infrastructure: Boost and Modernization
Infrastructure development remains a key priority, with a significant increase in public capital expenditure to ₹12.2 lakh crore in FY 2026-27. The budget also proposed reviving 200 legacy industrial clusters and creating three chemical parks. Experts anticipate a 10-15% increase in government capex to ₹12-12.5 lakh crore, including a potential ₹25,000 crore fund to revive stalled infrastructure projects, benefiting sectors like highways and urban development.
Manufacturing: Power Reforms and Incentives
The Budget 2026 emphasizes scaling up manufacturing across seven strategic sectors, including pharmaceuticals, semiconductors, rare earth magnets, chemicals, capital goods, textiles, and sports goods. To promote container manufacturing, a new scheme received ₹10,000 crore over five years, while the textile sector gained significant support to boost jobs and exports. The government is committed to energy security, expansion of India's semiconductor mission, and reduction of import dependence.
In conclusion, Budget 2026 demonstrates a commitment to long-term economic growth and stability through strategic investments and reforms in key sectors. The initiatives outlined in the budget aim to enhance domestic manufacturing capabilities, reduce import dependence, and position India as a global leader in technology and innovation. Finance Minister Sitharaman's emphasis on "reform over rhetoric" signals a determined approach towards sustainable and inclusive economic development.
