Will Budget 2026 offer clarity and continuity for India’s fast-growing AIF industry? Expert breaks it down
Shital Gharge, Senior Vice President, Kotak Alternate Asset Managers Limited, said that presented amid global volatility and shifting geopolitical dynamics, Budget 2026 charts a steady, reform-driven course for India’s economic priorities at a time when the domestic AIF industry is expanding rapidly.
- Feb 10, 2026,
- Updated Feb 10, 2026 4:56 PM IST
Union Budget 2026 has struck a measured note for India’s alternative investment funds (AIF) industry, prioritising stability, fiscal discipline and long-term growth over surprise announcements. Market participants say the approach provides policy clarity at a time when private capital is increasingly focused on predictable frameworks, especially amid global economic uncertainty.
From an AIF perspective, the Budget expands investible themes across manufacturing, infrastructure, services, climate, healthcare, semiconductors and logistics, while reinforcing India’s commitment to a reform-led growth path. The emphasis on execution, inclusivity and capital market deepening is expected to support sustained fundraising and deployment by alternative asset managers.
Shital Gharge, Senior Vice President, Kotak Alternate Asset Managers Limited, said that presented amid global volatility and shifting geopolitical dynamics, Budget 2026 charts a steady, reform-driven course for India’s economic priorities at a time when the domestic AIF industry is expanding rapidly. The priorities outlined this year reflect the aspirations of growth-oriented businesses, emphasising execution, rising consumer and entrepreneurial ambition, and a commitment to broad-based development. The government’s reaffirmation of fiscal consolidation, with a fiscal deficit target of 4.3% for FY27, further strengthens confidence in macroeconomic stability.
According to Gharge, several measures in the Budget provide reassurance to global limited partners (LPs) and reinforce India’s positioning as a long-term capital destination. A clear policy direction remains supportive of patient private capital, with continued reforms in manufacturing, financial sector resilience and inclusive growth enhancing predictability—an essential requirement for institutional AIF investors.
Manufacturing and technology received a strong push, with substantial public resources earmarked for seven priority sectors, including advanced electronics, semiconductors, container manufacturing and capital goods. These initiatives are expected to widen the opportunity set for private equity, growth capital and private credit strategies.
Infrastructure continues to anchor India’s growth engine. The government has raised capital expenditure to ₹12.2 lakh crore for FY27, providing multi-year visibility. The proposed Infrastructure Risk Guarantee Fund, offering calibrated partial credit guarantees to lenders, marks a significant evolution in infrastructure financing and could unlock deal flow across infrastructure credit, hybrid structures, logistics and regional development themes.
The Budget also focused on strengthening the MSME, services and youth ecosystem. A ₹10,000 crore SME Growth Fund, along with liquidity enhancement measures and administrative support, is expected to broaden opportunities for early-stage, growth-phase and services-focused AIF strategies.
Healthcare, green technology and sustainability gained momentum, offering strong tailwinds for impact funds, climate-focused strategies and healthcare-oriented AIFs. Simultaneously, steps toward financial sector deepening—including a review of the banking architecture and incentives to strengthen municipal bonds, corporate bonds and carbon capture financing—reinforce governance standards and capital allocation efficiency.
On the social and human capital front, proposals to set up educational institutions supporting the orange economy and tourism, along with initiatives such as SHE-marts to promote women entrepreneurship, align inclusion with enterprise creation through innovative financing instruments.
On taxation, the Budget avoided sweeping rate changes, opting instead for targeted reforms. These include a new Income Tax Act to replace the 1961 framework, a more favourable treatment of share buybacks for minority shareholders, tax incentives for global cloud service providers using India-based data centres, and a higher Securities Transaction Tax on derivatives to moderate speculative activity.
In conclusion, Gharge noted, “This may not be a Dhurandhar Budget, but the direction is unmistakable. India is building a deeper, more resilient capital ecosystem, and AIFs are well positioned to play a pivotal role in the next phase of growth towards Viksit Bharat.”
Union Budget 2026 has struck a measured note for India’s alternative investment funds (AIF) industry, prioritising stability, fiscal discipline and long-term growth over surprise announcements. Market participants say the approach provides policy clarity at a time when private capital is increasingly focused on predictable frameworks, especially amid global economic uncertainty.
From an AIF perspective, the Budget expands investible themes across manufacturing, infrastructure, services, climate, healthcare, semiconductors and logistics, while reinforcing India’s commitment to a reform-led growth path. The emphasis on execution, inclusivity and capital market deepening is expected to support sustained fundraising and deployment by alternative asset managers.
Shital Gharge, Senior Vice President, Kotak Alternate Asset Managers Limited, said that presented amid global volatility and shifting geopolitical dynamics, Budget 2026 charts a steady, reform-driven course for India’s economic priorities at a time when the domestic AIF industry is expanding rapidly. The priorities outlined this year reflect the aspirations of growth-oriented businesses, emphasising execution, rising consumer and entrepreneurial ambition, and a commitment to broad-based development. The government’s reaffirmation of fiscal consolidation, with a fiscal deficit target of 4.3% for FY27, further strengthens confidence in macroeconomic stability.
According to Gharge, several measures in the Budget provide reassurance to global limited partners (LPs) and reinforce India’s positioning as a long-term capital destination. A clear policy direction remains supportive of patient private capital, with continued reforms in manufacturing, financial sector resilience and inclusive growth enhancing predictability—an essential requirement for institutional AIF investors.
Manufacturing and technology received a strong push, with substantial public resources earmarked for seven priority sectors, including advanced electronics, semiconductors, container manufacturing and capital goods. These initiatives are expected to widen the opportunity set for private equity, growth capital and private credit strategies.
Infrastructure continues to anchor India’s growth engine. The government has raised capital expenditure to ₹12.2 lakh crore for FY27, providing multi-year visibility. The proposed Infrastructure Risk Guarantee Fund, offering calibrated partial credit guarantees to lenders, marks a significant evolution in infrastructure financing and could unlock deal flow across infrastructure credit, hybrid structures, logistics and regional development themes.
The Budget also focused on strengthening the MSME, services and youth ecosystem. A ₹10,000 crore SME Growth Fund, along with liquidity enhancement measures and administrative support, is expected to broaden opportunities for early-stage, growth-phase and services-focused AIF strategies.
Healthcare, green technology and sustainability gained momentum, offering strong tailwinds for impact funds, climate-focused strategies and healthcare-oriented AIFs. Simultaneously, steps toward financial sector deepening—including a review of the banking architecture and incentives to strengthen municipal bonds, corporate bonds and carbon capture financing—reinforce governance standards and capital allocation efficiency.
On the social and human capital front, proposals to set up educational institutions supporting the orange economy and tourism, along with initiatives such as SHE-marts to promote women entrepreneurship, align inclusion with enterprise creation through innovative financing instruments.
On taxation, the Budget avoided sweeping rate changes, opting instead for targeted reforms. These include a new Income Tax Act to replace the 1961 framework, a more favourable treatment of share buybacks for minority shareholders, tax incentives for global cloud service providers using India-based data centres, and a higher Securities Transaction Tax on derivatives to moderate speculative activity.
In conclusion, Gharge noted, “This may not be a Dhurandhar Budget, but the direction is unmistakable. India is building a deeper, more resilient capital ecosystem, and AIFs are well positioned to play a pivotal role in the next phase of growth towards Viksit Bharat.”