Budget 2026: Comprehensive Overview of Policy Measures and Tax Proposals
Budget 2026 positions itself as a forward-looking, inclusive and reform-oriented financial blueprint. It seeks to simultaneously drive high‑growth sectors, protect traditional occupations, deepen financial markets, and rationalise the tax ecosystem through the proposed Income Tax Act, 2025 slated to apply from 1st April 2026.
The policy thrust spans:
- Strategic support to sunrise manufacturing sectors such as pharmaceuticals, semiconductors, electronic components, rare earth permanent magnets, chemicals, capital goods and textiles
- A stronger ecosystem for Micro, Small and Medium Enterprises (MSMEs) and traditional crafts
- Targeted infrastructure development in Tier II and Tier III cities
- A calibrated opening for foreign portfolio capital
- Focused initiatives for technology, research, and design
- Significant changes in the taxation of buyback, market transactions, and select incomes
Below is a structured analysis of the major policy and tax announcements in Budget 2026.
1. Strategic Push to the Textile and Traditional Craft Ecosystem
1.1 Mega Textile Parks
Recognising the textile industry as one of the largest employment generators—especially for women and rural households—Budget 2026 proposes creation of Mega Textile Parks. These are envisaged as integrated manufacturing hubs offering:
- World‑class common infrastructure and utilities
- Shared logistics and warehousing
- Clusters for spinning, weaving, processing, and garmenting
Key objectives of Mega Textile Parks:
- Lower per‑unit production and logistics costs through economies of scale
- Enhance global competitiveness and boost export potential
- Create large‑scale employment opportunities in and around textile clusters
- Encourage private sector investments through better plug‑and‑play facilities
Note: The intent is to move from fragmented, small‑scale units to integrated value chains, enabling Indian textiles to compete with leading manufacturing nations.
1.2 Mahatma Gandhi Gram Swaraj Initiative
To ensure that traditional and rural crafts are not left behind in the race for industrial expansion, a new Mahatma Gandhi Gram Swaraj Initiative has been introduced. This initiative specifically focuses on:
- Khadi
- Handloom
- Handicrafts
Core elements of the initiative include:
- Strengthening rural artisan clusters through improved marketing, branding and design support
- Enhancing access to credit, raw material, and technology for artisans
- Supporting value addition and diversification of traditional products
- Promoting sustainable and eco‑friendly production methods
The scheme aims to provide a more secure livelihood base for rural artisans, ensuring that the benefits of formal growth percolate to the grassroots cultural economy.
2. Reinforced Support Framework for MSMEs
MSMEs continue to be treated as the backbone of India’s industrial and employment structure. Budget 2026 focuses on creating what it terms “Champion MSMEs” by significantly enhancing access to funding, professional support, and compliance facilitation.
2.1 SME Growth Fund – Rs. 10,000 crore
A dedicated SME Growth Fund of Rs. 10,000 crore has been proposed. The fund is designed to:
- Assist MSMEs in scaling operations domestically and internationally
- Enable upgradation of technology, processes and machinery
- Promote formalisation and improved corporate governance practices
- Bridge the growth capital gap often faced by mid‑sized enterprises
This measure is expected to be particularly beneficial for manufacturing and export‑oriented MSMEs that require substantial capex to modernise and remain competitive.
2.2 Additional Corpus for Self-Reliant India Fund
Budget 2026 allocates an additional Rs. 2,000 crore to the Self-Reliant India Fund with the intention of strengthening:
- Access to risk capital for MSMEs and emerging enterprises
- Funding for innovation, product development and market expansion
- Support for sectors aligned with the Atmanirbhar Bharat vision