Budget 2026 expectations: Customs duties, PLI expansion, infra and defence spending

Foreign brokerage Nomura in its Budget 2026 preview note said the government may play the long game, with the FY27 Budget expected to align with the “Viksit Bharat 2047” vision and prioritise education, health, job creation and mission-mode reforms. The brokerage said macro stability remained the central objective, with policy measures likely to focus on structural reforms, sector-specific support and ease of doing business rather than fiscal expansion.

PLI incentive 
Nomura said production-linked incentive schemes could be expanded to new and existing manufacturing segments, including green technology, pharmaceuticals, toys and other labour-intensive sectors, with the objective of boosting exports. 

MSME support
It added that MSMEs and exporters could see support through enhanced credit guarantees, interest subvention and improved cash-flow measures, alongside a higher allocation to the Export Promotion Mission, particularly for labour-intensive industries affected by global trade tensions.

Regulatory measures 
On the regulatory front, Nomura said the government could pursue comprehensive ease of doing business reforms, including amendments to the Insolvency and Bankruptcy Code, with an emphasis on deregulation, decriminalisation and a reduction in compliance burdens across sectors. 

Accelerated depreciation
It also said tax incentives and accelerated depreciation benefits could be targeted at data centres and manufacturing to encourage front-loaded capital investment.

Infra financing
Nomura said infrastructure financing remained a key focus area, with the possible introduction of a risk guarantee fund to revive stalled projects and increased allocations of interest-free infrastructure loans to states. 

Defence modernisation
On defence, the brokerage said the budget could provide higher capital outlays aimed at domestic procurement, modernisation and research and development.

Critical minerals
The brokerage also flagged a potential policy push on critical minerals, supported by dedicated financing for start-ups and MSMEs engaged in mineral recovery to address strategic supply chain risks. 

Customs duties
On customs duties, Nomura said the government could rationalise duty slabs from the current eight to around five to six categories, raise duties on non-essential imports, correct inverted duty structures, review discretionary exemptions and consider a customs amnesty scheme.