He underlined that the government is now looking beyond domestic needs in health, education and tourism, and is positioning these sectors as export-oriented engines of long-term growth.
He also described the Budget as forward-looking in its approach to sustainability and competitiveness, highlighting the plan to channel green and climate finance through existing financial institutions, remove tax and regulatory pain points for investment, and build city economic regions and new freight corridors to drive the next phase of industrial and services expansion, particularly in eastern India.
These are edited excerpts of the interview.
Q: Several sectors are being addressed, and several measures are being taken. Of course, the theme of continuity runs throughout the Budget. Your highlights, and what you believe the maximum impact is likely to be on account of Budget 2026.
A: This is a Budget of a middle-income country — that’s the first thing. And this is a Budget for Viksit Bharat. And you can see huge elements, and the Finance Minister Nirmala Sitharaman laid that out very early on. She talked about three kartavyas (duties). The three kartavyas are for economic growth, aspiration and inclusivity across regions, individuals and communities. And within that, you should see the three Budgets of last year and the year before as a package deal.
The Budget two years ago was all about jobs and employment as the key focus, with supportive things. The previous Budget was a lot about manufacturing. If there is one big area of focus in this Budget, it is services. So, if I were to give a name to this Budget, it is a services Budget, and continuing the good work of the previous two Budgets, which is manufacturing and job employment.
Q: Let me double down on that. Why do you believe that this is a services Budget, sir? Because there was a lot in the Budget to also try and push the manufacturing sector more. What specifically makes you believe that this is a services Budget?
A: Just wait for the key highlights of the Budget to come out. The maximum number of pages is devoted to services. Number one. Number two, let me explain what all is there.
Also Read: Market falls after Budget 2026: What spooked investors, what next
First of all, the Prime Minister has announced a high-level Standing Committee, which is not a one-time committee, a standing committee on services that is expected to drive a whole host of service reforms. So, unlike a manufacturing mission, services actually require a large number of issues to be tackled over 30–40 ministries. So, the FM said that she will be creating a Standing Committee.
Two, look at all the sectors that she has been covering. I mean, in services, she has talked about the entire health sector — five medical hubs, medical tourism. In education, she has talked about five university cities. What are these university cities? They are education hubs — where you have universities, you have research parks, you have manufacturing, all in those places.
She has given a lot of attention to tourism. She has given a lot of attention to AYUSH — three All-India institutes of AYUSH. She has talked about sports and talked about a Khelo India mission. She has talked about the orange economy, the Indian Institute of Creative Technology, and setting up these creativity centres in 50,000 schools and 500 colleges.
All this, put together, makes this a very strong Budget pushing the services sector. And it is not that manufacturing does not get importance. We are building on the work of the previous Budget as far as manufacturing is concerned. The National Manufacturing Mission was announced in the previous Budget. It is in the final stages and should get operationalised any moment, as we speak.
Also Read: Budget 2026: Finance Minister announces changes to share buyback taxation
And there you have biopharma, which is an add-on. You have the electronic components scheme, which is a build-up on an earlier scheme which was announced last year. It was hugely successful. She has expanded it from ₹25,000 crore to ₹40,000 crore. There is a mention of a container programme. Huge emphasis on labour-intensive textiles and sports goods.
And you can see that manufacturing builds on what was announced last time, and the new emphasis and focus is on services. We are not talking about health, education, etc., for servicing our population alone. Now we are talking about making India a global services hub, and she gave a very clear target — 10% of global services output to come from India. That is the goal she has laid out.
Q: On manufacturing specifically, I want you to put on your former Commerce Secretary hat as well. The expectation was that we would see a significant further import duty rationalisation. That has not been the case. There are, of course, specific exemptions to specific sectors — for instance, nuclear power, cloud service providers and so on and so forth. Do you believe that has not been done because various free trade agreements (FTAs) are being inked and are at various stages of being implemented?
A: We already have FTAs with almost one-third or more of the world economy. We have an FTA with the EU. We have FTAs anyway with Japan, etc. We have an FTA with the UK. There is a deal in the pipeline with the US. The FTAs are anyway going around cutting tariffs. The residual tariffs are now left with countries with whom we do not want to, or may not want to, get into FTAs.
Having said that, look at the amount of time she has spent on the indirect taxes part. There has been a lot of tinkering. They are all removing pain points. Take electronic components; for warehouses, she has cut down the tax structure to 2%. She has allowed greater imports for a large number of export-intensive sectors like leather and textiles. She has allowed, I think, 5% of their export value to be imported for a lot of other inputs which are there.
So, there is a lot of tinkering that has gone on to help manufacturing as far as inputs are concerned. And on the direct taxes side also, you will see that a lot of direct tax measures are targeting foreign direct investment (FDI). The word may or may not appear too often, but when you look at the safe harbour rules, the expansion of safe harbour to companies up to ₹2,000 crore turnover, and fixing the safe harbour at a lower rate of 15%, actually targets the global capability centres (GCCs). 1,600 GCCs are going to benefit from that safe harbour provision.
They have also decriminalised a lot of Income Tax provisions in an Act which is yet to come into place from April 1. So that is actually a very, very forward-looking step she has taken. And then she has also reduced the safe harbour for people who are going to take up presumptive taxation
Even for SEZs, she has given a one-off relaxation in being able to sell in the domestic tariff area. So, the big things have already been done. What needs to be done is to address these minor pain points, and she is going around removing them.
And the other thing is, she has talked about setting up a committee to look at the forex debt-borrowing rules and regulations. So, we have so far been focusing only on FPI, which is equity. She is focusing on debt as well. So as that committee comes out with its results, you will see an improvement in foreign investment flows into the country also.
Q: There was another mention by the Finance Minister, and I am wondering if you have any more clarity on what this restructuring of Power Finance Corporation (PFC) and REC could potentially mean, because those were the two companies that she listed out that are going to be up for restructuring. Any idea on what the plan is?
A: We will need a bit more clarity as we go along. But the way I look at it is, one of the challenges of Viksit Bharat is also going to be sustainability. So, there is going to be a lot of retooling of our energy sector. And the retooling of the energy sector requires a lot of green and climate finance.
So, this green finance, if it has to come through, it has to come through existing financial institutions, rather than setting up new institutions. So, when she talks about this, the way I would read it is — enabling these companies to become the funnels for getting a lot of green finance and climate finance into India, into the energy sector and the transport sector. Because climate change in India is going to be resolved largely through the electrification of the entire energy system.
And who are the big financing agencies, as far as electrification is concerned? REC and PFC. I think that is the way I would see that.
I would like to draw your attention to one more point, which people may or may not have noticed. She talked about city economic regions. This is actually the work of Niti Aayog. Niti Aayog has prepared city economic region plans for Mumbai, Varanasi, Visakhapatnam and Surat, and we are going to release one for Bhubaneswar. Seven or eight more are in the pipeline. And she said, “I will give ₹5,000 crore for city economic regions in a challenge mode.”
This will then enable these cities to actually compete and become global cities, like New York and London. So, we can have Mumbai become a New York. We can have Surat become, say, Amsterdam. You can have Visakhapatnam become Singapore. I think that is the intent behind the city economic region announcement.
The seven areas of focus she announced in the beginning had city economic regions as one of them. So, if this Budget has to be remembered, it is for services; for removing a lot of pain points in taxation, both for foreign investment flows and to promote manufacturing, particularly for exports; and the third is focusing on critical infrastructure in various parts.
That is, cities as economic regions. She has talked about seven high-speed rail corridors, which means the bullet trains are going to stay. We are also going to produce bullet trains in the long run in the country. And the third is for Purvodaya, for the Eastern Region, a large number of announcements.
And the most important one, a new, dedicated freight corridor, Dankuni, please read it as Kolkata, at one end, up to Surat. That is east-west. We have Delhi–Mumbai. We have Delhi–Kolkata. She is completing the triangle, Delhi–Kolkata, with a lot of other projects going on with that. This is going to give a big boost to industrial and other services in eastern India.
Catch all the latest updates from the stock market here
Also, follow live updates from the Budget 2026 here
