The Union Budget, presented by Finance Minister Nirmala Sitharaman on February 1, 2026, can be read as a carefully sequenced policy statement — one that clearly sets the tone for the Indian economy’s priorities in the year ahead. Rather than relying on short-term stimulus measures, the Budget places emphasis on durable growth drivers and long-term structural enablers. At a macro level, its most notable strength lies in the reaffirmation of a sustained growth agenda without compromising fiscal discipline. This balance between supporting economic momentum and preserving macroeconomic stability enhances policy credibility and provides greater confidence to investors and markets alike.

Across sectors, the Budget adopts a “many engines, one direction” approach. Micro, small, and medium enterprises (MSMEs), agriculture, skilling, and digital enablers have all received focused attention, reflecting a coherent and well-aligned growth strategy. On the technology front, the extension of tax incentives for cloud data centres through 2047, along with a renewed push towards semiconductor self-reliance, signals that the government is not merely responding to the global artificial intelligence (AI) and digital race, but is actively positioning India to lead it. Over time, these measures are likely to deliver higher payoffs in the form of employment generation and rising incomes. The introduction of a simplified income tax code from April, together with changes that allow promoters to buy back shares following the withdrawal of the earlier buyback tax regime, enhances corporate flexibility and contributes to improved market stability.

From a capital markets perspective, the Budget’s proposals to deepen the corporate bond market clearly stand out. Improving access to long-term capital for emerging and sunrise sectors has long been a structural gap, and the measures announced are a step towards addressing this constraint. The increase in the aggregate investment limit for Persons Resident Outside India (PROIs) to 24 per cent is a positive move, as it broadens the pool of overseas capital participation in Indian markets. Additionally, the extension of tax incentives for GIFT City is likely to attract a wider set of global investors, strengthening the GIFT International Financial Services Centre’s (IFSC’s) positioning as a credible alternative to established international financial centres such as Hong Kong, Singapore and Dubai, and enabling greater participation in India’s growth story.

On the taxation front, the decision to maintain the status quo on capital gains tax may be viewed by some investors as a near-term disappointment. The marginal increase in securities transaction tax (STT) on futures and options (F&O) could temper derivatives activity at the margin, but it also signals a policy intent to encourage a gradual shift towards the cash market and long-term investing through mutual funds. Importantly, the mutual fund industry remains structurally positive and despite tactical tax adjustments, the broader policy direction continues to favour disciplined, long-term participation in capital markets.

Overall, the Budget emerges as a measured, credible and forward-looking policy document that reinforces India’s commitment to remaining a stable, reform-oriented economy amid an increasingly fragmented global landscape, an outlook that continues to support India’s standing as a preferred destination for both domestic and global investors.