The Union Budget has made several announcements to stimulate investment, access to finance and markets, and encourage cost-effectiveness and innovation in important industries to increase domestic production. The industries that stand to gain the most from the policy measures are the transportation industry, automobiles and auto parts, textiles, and fertilizers. However, industries like pharmaceutical, healthcare, and BFSI might not be significantly affected.
Renewable Energy and Power-Positive Impact:
Potential changes to the Civil Liability for Nuclear Damage Act and the Atomic Energy Act will probably make it easier for the private sector to get involved in the nuclear industry. With an investment of Rs 20,000 crore, a specialized research and development program for Small Modular Reactors (SMRs) will be started. By 2033, at least five SMRs that were constructed domestically are anticipated to be operational as part of this objective. These actions are probably going to increase the expansion of nuclear power capacity.
Backward integration in the home production of solar power plants, wind turbines, and grid-scale battery solutions will be facilitated by the proposed national manufacturing and key mineral mission. This action contributes to the development of a safe alternative supply chain for both domestic and international markets, as China currently controls the majority of the clean tech supply chain.
It is encouraging for the domestic electricity sector that states implementing discom reforms will continue to have 0.5% greater borrowing limitations.
Fertilizers- Positive Impact:
India’s reliance on urea imports has drastically decreased because a sizable urea production capacity was added recently. Import dependence is anticipated to be kept in check with the launch of a new urea plant in Namrup, Assam, with an annual capacity of 12.70 lakh metric tons. In contrast to the FY25 (RE) subsidy budget of 1,71,310 crore, the total subsidy budget for FY26 at at1,67,900 crore (Urea subsidy of Rs 1,18,900 crore and Nutrient Subsidy of `49,000 crore) may be adequate assuming key input prices stay within the current range.
Textiles- Positive Impact:
The “Mission for Cotton Productivity,” which has been allocated ~500 crore, will provide farmers with research and technical assistance to increase the sustainability and productivity of cotton cultivation and to promote extra-long-staple cotton types. Thus, a consistent supply of high-quality cotton will be guaranteed. The exemption of shuttle-less looms from Basic Custom Duty (BCD) will promote the manufacture of technological textiles domestically.
Increased funding for the Rebate of State & Central Taxes and Levies (RoSCTL) and the Remission of Duties and Taxes on Exported Products (RoDTEP) will support export-oriented industries like textiles. In addition to encouraging new investment in the sector, a substantial investment in the production-linked incentive (PLI) program enables prompt payment of rewards to participants.
Auto and Auto Components:
India’s drive for green mobility is in line with the policies of the automobile industry. It is anticipated that the complete exemption from customs duties on cobalt powder, lithium-ion battery trash, lead, zinc, and 12 other essential minerals will guarantee their accessibility for domestic production. India’s production of lithium-ion batteries is expected to increase as a result of the complete exemption of customs duties on 35 capital items and apparatus used in the process. The PLI program will support the expansion of the automotive and auto component industries. It is anticipated that the new regime’s lower tax rates will increase disposable income in both urban and rural areas, which will increase demand for tractors, two-wheelers, and entry-level passenger cars.
