Pre-Budget expectations 2026

The upcoming Budget must strengthen the backbone of India’s auto supply chains to withstand global turbulence while accelerating the shift to cleaner, advanced technologies. Budget 2026 is an opportunity to align localisation, MSME support, and clean-mobility goals so India can build resilient, diversified, and future-ready automotive value chains.

Saket Mehra
Partner and Auto & EV Industry Leader, Grant Thornton Bharat

With the implementation of the expected credit loss (ECL) underway, minimising the value of loss given default (LGD) becomes crucial for banks to keep ECL provisions under check. Reforms in debt recovery rules and the SARFAESI Act are necessary to ensure asset recoveries are maximised and the impact of ECL is minimised.

Vivek Iyer
Partner and Financial Services Risk Leader, Grant Thornton Bharat

The budget-making process has become more methodical and precise over the last decade, clearly signalling the government’s expenditure priorities. This year, we expect a continued focus on capital expenditure, labour-intensive sectors, and emerging areas like IT and AI to support growth.

Rishi Shah
Partner and Economic Advisory Services Leader, Grant Thornton Bharat

Funding hesitance in infrastructure stems less from growth prospects and more from policy uncertainty and other non-commercial risks. An INR 25,000-crore risk guarantee fund would act as effective credit enhancement, and a public-private partnership structure can balance efficiency with governance.

Vivek Iyer
Partner and Financial Services Risk Leader, Grant Thornton Bharat

Budget 2026 is expected to boost pharmaceuticals through expanded PLI schemes, export incentives, and tariff support to strengthen supply chains and global competitiveness. The sector is likely to be positioned as a key growth engine, with a strong focus on R&D, innovation, and affordable care for NCDs.

Bhanu Prakash Kalmath
Partner and Healthcare Industry Leader, Grant Thornton Bharat

Pharmaceutical industry requires significant investment in manufacturing infrastructure and specialised machinery. Inclusion of ITC on capital goods within the refund formula, particularly for exports of goods and services, would support manufacturing activity and help reduce long-term working capital constraints.

Bhanu Prakash Kalmath
Partner and Healthcare Industry Leader, Grant Thornton Bharat

We don’t really foresee any significant changes in this year’s budget, for salaried classes, considering the overhaul of slabs rates done last year in the new tax regime. More than 75% of taxpayers had already moved to the new regime even before the slab rejig, and that number is expected to have increased sharply since Budget 2025.

Richa Sawhney
Partner, Tax, Grant Thornton Bharat

As India positions itself for stronger global integration, a predictable and investment-friendly indirect tax framework anchored in clarity, consistency and digital certainty will be essential. The Budget has the potential to convert the reform trajectory into meaningful, sector-wide ease of doing business.

Manoj Mishra
Partner and Tax Controversy Management Leader, Grant Thornton Bharat

End use-based exemptions may also be brought in to ensure benefits are passed on to targeted businesses. Additionally, streamlining of the remaining eight tariff slabs, in continuation to the previous budget, is also expected to further streamline the customs tariff structure. Integration of ICEGATE, Risk Management System and EDI system into a single platform, which is already on the cards, will streamline data flow and risk-based clearances.

Krishan Arora
Partner and India Investment Advisory Leader, Grant Thornton Bharat

Wealth tax is unlikely to be introduced at this point. There are easier ways of taxing the super-rich. For instance, introducing gift tax. Some learnings from jurisdictions like the US show that a one-time gift tax combined with estate tax has been working. But the basic exemption limits are extremely high. So, if such taxes are introduced in India, it is expected that it will be with very high exemption limits.

Riaz Thingna
Partner, Tax Planning & Optimisation, Grant Thornton Bharat

Changes in the slab rates in the new tax regime have provided a gentle nudge to taxpayers to move voluntarily to this regime. As per last data available, around 75% of the taxpayers had already moved to the new tax regime. While the latest figures are not yet available, this number is expected to have gone up sizably, post the slab rate rejig carried out last year.

Richa Sawhney
Partner, Tax, Grant Thornton Bharat

Budget 2026 should revise interest support for exporters to lower borrowing costs considering moratorium for MSMEs in tariff-hit sectors, expand credit guarantees to encourage bank lending, and widen ECGC cover to protect against payment risks.

Krishan Arora
Partner and India Investment Advisory Leader, Grant Thornton Bharat

Tobacco taxation has already crossed its inflection point, making the forthcoming Budget more of a pause than a pivot. After nearly seven years of relative calm under GST, the government has decisively reset the fiscal architecture for tobacco.

Manoj Mishra
Partner and Tax Controversy Management Leader, Grant Thornton Bharat

Recent budget announcements have consistently enhanced the attractiveness of the new regime—through higher rebate limits and inclusion of standard deductions—while leaving the old regime unchanged. Consequently, the old tax regime is expected to become redundant in the coming years.

To encourage broader adoption of the new regime, it is expected that the government may further increase the standard deduction limit. Additionally, certain reasonable deductions – such as those for health insurance and home loan interest – may also be allowed under the new regime

Akhil Chandna
Partner and Global People Solutions Leader, Grant Thornton Bharat

GST 2.0 should aim to correct inverted duty structures, rationalise rates and embed technology-driven compliance, which could lower supply chain costs and improve pricing transparency for retailers and FMCG companies. Some key industry expectations include clarity on GST classification for borderline products, further rate recalibration for apparel and footwear priced above Rs 2,500, and lower GST on logistics and last-mile delivery services to support quick commerce.

Karan Kakkar
Partner, Tax Planning and Optimisation

Budget 2026 should revise interest support for exporters to lower borrowing costs considering moratorium for MSMEs in tariff-hit sectors, expand credit guarantees to encourage bank lending, and widen ECGC cover to protect against payment risks.

Krishan Arora
Partner and India Investment Advisory Leader, Grant Thornton Bharat

Budget 2026 can accelerate India’s shift from traditional outsourcing to innovation-led growth. With tech exports already at $224 billion and domestic demand expanding steadily, we need a sharper policy focus on commercialising R&D, funding next-generation digital capabilities, and building a resilient cloud and data-centre backbone.

Raja Lahiri
Partner and Technology Industry Leader, Grant Thornton Bharat

Founders are buzzing about practical enablers: streamlined tax regimes with simplified TDS slabs to ease compliance drag. There’s strong expectations for accelerating AI adoption through sovereign compute infrastructure and talent incentives, unlocking India’s projected USD 1.7 trillion AI-driven economic boost by 2035. Market signals echo this tech and ease-of-doing-business reforms are seen as top growth levers, with calls for customs duty waivers on GPUs (Graphics Processing Unit), accelerated depreciation for data-centre assets, and renewable-energy-linked incentives.

Raja Lahiri
Partner and Technology Industry Leader, Grant Thornton Bharat

A reason why gas is not able to penetrate across multiple industries and sectors is that different states have different VAT mechanisms. If you want to spur natural gas sales, you should bring it under the 5% GST slab.

Sourav Mitra
Partner, Oil & Gas, Grant Thornton Bharat

The Union Budget 2026 should prioritise rural spending, trade facilitation and the energy transition. Continued allocations toward rural employment, infrastructure and income-linked schemes remain important for PV and two-wheeler demand. Faster progress on trade negotiations could strengthen auto component exports and reduce geographic concentration risks. The continued support for PM E-DRIVE and higher allocations for power distribution upgrades beyond major cities would be relevant for broader EV adoption.

Saket Mehra
Partner and Auto & EV Industry Leader, Grant Thornton Bharat

The focus must shift to an ecosystem-led approach. Key asks include GST rationalisation for charging and battery swapping, tax parity for EV leasing and a stable multi-year incentive roadmap under PM E-Drive. Faster execution of PLI and advanced cell battery schemes is equally critical. India’s “BYD moment” will come when localisation, cost competitiveness, and ecosystem maturity move together.

Saket Mehra
Partner and Auto & EV Industry Leader, Grant Thornton Bharat

The Economic Survey 2025–26 brings much needed clarity and realism to the global debate on climate finance. It reaffirms that climate finance under the Paris Agreement is a legal obligation for developed countries, not a discretionary flow of private capital. By exposing the wide gap between reported commitments and actual disbursements, the Survey highlights deep structural inequities in the global financial system that increase capital costs for climate vulnerable developing economies. Importantly, it calls for coordinated reforms across multilateral development banks, blended finance structures, and global regulatory frameworks, while warning against excessive fiscal exposure and foreign currency risk.

Manoj Bansal
Partner, Grant Thornton Bharat

As global relationships fragment and economic structures reset, such a state relies less on control and more on smart deregulation, stronger execution capacity, and institutional learning. By shaping markets, structuring risk, and correcting course swiftly, it focuses on delivering durable economic value and resilience for its people.

Rishi Shah
Partner and Economic Advisory Services Leader, Grant Thornton Bharat

The Survey marks a clear shift away from short-term macro management toward a framework of delayed gratification, arguing that durable growth can only be built through sustained investment in productivity, institutions and factor markets. Its core contribution lies in upgrading India’s medium-term growth potential by emphasising capital formation, urbanisation, logistics, and state-level reform—recognising that growth outcomes ultimately depend on execution across states rather than central transfers alone.

Rishi Shah
Partner and Economic Advisory Services Leader, Grant Thornton Bharat

The answer is not an indiscriminate increase in defence outlays, but a strategic reorientation of spending toward domestic manufacturing, R&D, innovation and technology absorption. Such an approach would strengthen strategic autonomy and industrial capabilities, ensuring that security imperatives reinforce—rather than dilute—India’s long-term economic trajectory.

Rishi Shah
Partner and Economic Advisory Services Leader, Grant Thornton Bharat

An entrepreneurial state is quick on its feet—willing to act before certainty emerges, embrace the unconventional, and look for opportunity in periods of flux, much like a successful entrepreneur would. As global relationships fragment and economic structures reset, such a state relies less on control and more on smart deregulation, stronger execution capacity, and institutional learning. By shaping markets, structuring risk, and correcting course swiftly, it focuses on delivering durable economic value and resilience for its people.

Rishi Shah
Partner and Economic Advisory Services Leader, Grant Thornton Bharat

As power demand accelerates driven by renewables, electification and AI data centres, the material intensity of clean energy is becoming the binding constraint. A single gigawatt generated through renewable sources requires thousands of tonnes of copper, translating into the movement of well over a million tonnes of material once real mining conditions are factored in.

Suvendu Bose
Partner, Metals and Mining, Grant Thornton Bharat

The Economic Survey 2026 brings clarity to a long-standing but under-leveraged truth: energy efficiency is the most immediate, cost-effective instrument available to reconcile India’s growth ambitions with its climate objectives. As energy demand accelerates with industrial expansion, urbanisation, and the scale-up of digital infrastructure, policy focus must move decisively beyond capacity creation to reducing energy intensity and improving system performance.

Pradeep Singhvi
Executive Director, Energy and Climate Practice, Grant Thornton Bharat

The Economic Survey reflects ‘cautious pragmatism’ across the document. Despite the uncertainties, the Economic Survey is calling out medium-term growth potential to strengthen from earlier 6.5% to 7.0%. We can expect India to be the fastest growing major economy next year as well. This augurs well for the employment scenario for the country. The rural employment is expected to transform from larger participation in employment guarantee schemes to evolving new employment avenues driven by the greater rural economic activity by the private sector.

Ashok Varma
Partner, Grant Thornton Bharat

Indicators for the FMCG sector continue to be muted due to softening urban consumption and not-so-robust growth in rural areas. Providing tax benefits and relief to individual taxpayers can increase disposable income, thereby enhancing consumer spending power. This approach aligns with industry recommendations to spur consumption through lower taxes. The upcoming budget may look at prioritising enhanced rural infrastructure and direct benefit transfer programmes to increase disposable income in underserved areas, creating a ripple effect on consumption patterns.

Priyanka Duggal
Partner, Grant Thornton Bharat

The Economic Survey 2026 underscores an emerging human capital risk—digital addiction. Excessive screen time, driven by algorithm-led engagement and always-on connectivity, is reshaping behaviour, mental health and productivity, especially among children and young adults. What began as digital inclusion is now tipping into overconsumption, affecting attention spans, learning outcomes and workforce efficiency. Left unaddressed, digital addiction could dilute India’s demographic dividend.

Nilesh Maheshwari
Partner, Health and Human Services, Grant Thornton Bharat

If women’s workforce participation does not continue to rise meaningfully, we are looking at a shortfall of at least 20% of GDP contribution. By 2047, when India is talking about a $30 trillion economy, that could mean a gap of $5–6 trillion simply because women’s participation is not up to par. The biggest challenge is the social norm itself. There are sectors where women are accepted in larger numbers because they are seen as ‘suitable’ jobs. That mindset is the real constraint, and it cannot be changed overnight.

Ashok Varma
Partner, Grant Thornton Bharat

The new labour codes are expected to accelerate the formalisation of the labour market and also provide much-needed recognition and protection to gig economy workers. The critical role to be played by women’s participation in the economy is called out, and a slew of policy and strategic measures such as access to STEM training, urban mobility, affordable housing for working women, and the care economy indicates the policy intent and may get reflected in the upcoming Budget.

Ashok Varma
Partner, Grant Thornton Bharat

The Economic Survey 2026 positions India’s pharmaceutical sector at a strategic inflection point and strengthening R&D incentives, regulatory harmonisation with global markets and API self-reliance will be critical to improving export value share and supply-chain resilience.

Santosh Moses
Partner, Grant Thornton Bharat

The economic survey clearly calls out the fact that India is a bright spot in an otherwise somber world, but not without its share of challenges, due to inherent anomalies. Currency depreciation was a strong metric of macro economic performance in an orderly world, but in the world that we live in today. But investor sentiment is muted, given their anchoring to old metrics. Hence, we believe that private capital, liquidity and regulatory reforms to drive up investor sentiment will be some of the biggest focus areas of the budget.

Vivek Iyer
Partner and Regulatory Ecosystem Leader, Grant Thornton Bharat

The Economic Survey 2025–26 reinforces the growing maturity of indirect taxes, with GST firmly established as a stable and growth-aligned revenue pillar. Gross GST collections of INR 17.4 lakh crore during April–December 2025, with a 6.7% YoY growth, underscore revenue resilience despite lower inflation and calibrated rate rationalisation, driven largely by compliance-led buoyancy.

Manoj Mishra
Partner and Tax Controversy Management Leader, Grant Thornton Bharat

Across tax, trade, and customs, the survey points to a consistent theme: businesses are seeking greater clarity and predictability. Whether it is the transition to a new Income Tax Act, GST administration, or digital integration in customs, the emphasis is on stable frameworks, smoother implementation, and reduced compliance. On the personal taxation front, despite the overhaul of slab rates under the new tax regime, it seems that demand for further tweaks continues to top taxpayers' wishlist.

Richa Sawhney
Partner, Tax, Grant Thornton Bharat

Importantly, the survey clearly outlines the next wave of GST reforms reimagining the e-way bill system as a facilitator of seamless logistics rather than a pure enforcement tool. A shift towards trust-based, technology-driven compliance, including risk-based checks, use of e-seals and vehicle-tracking technologies, could significantly deregulate logistics, reduce trade friction, and enhance ease of doing business without compromising tax oversight.

Manoj Mishra
Partner and Tax Controversy Management Leader, Grant Thornton Bharat

With direct-tax buoyancy improving and fiscal consolidation remaining a priority, future budgets are more likely to focus on incremental rationalisation rather than sweeping rate cuts. The emphasis appears to be on preserving stability in the tax framework rather than introducing disruptive relief measures every year.

Akhil Chandna
Partner and Global People Solutions Leader, Grant Thornton Bharat

There is an opportunity for Budget 2026 to accelerate India’s transition from traditional IT services to an innovation‑first economy. With technology exports already robust and domestic demand rising, this calls for a sharper policy focus on commercialising R&D, building resilient cloud and data centre backbones, and providing investment‑linked incentives for high‑performance computing and AI engineering.

Raja Lahiri
Partner and Technology Industry Leader, Grant Thornton Bharat