Union Budget 2026 has reshaped the investment landscape, with a focus on capital expenditure, domestic manufacturing, and long-term capacity building, with capital expenditure fixed at ₹12.2 lakh crore. These funds are targeted towards tech, MSMEs, and logistics, which materialise opportunities for sector growth.
The Budget further announced allocations which include ₹40,000 crore for electronics manufacturing, and ₹10,000 crore earmarked for biopharma under Biopharma Shakti, high-speed rail projects, and dedicated rare earth corridors across four states.
These create a policy backdrop for industries to prosper, demand, infrastructure, and strong supply chains. For the investors, aligning capital with these drivers can capture growth grounded in fiscal numbers and government priorities.
Read further to know more about the best sectors to invest in after Budget 2026!
Stock Market Overview
On Budget day, 1 February 2026, the stock market witnessed strong volatility, where the benchmark indices Nifty 50 fell by 495.20 points and Sensex by 1800 points, after the STT hike for futures and options was announced.
After the Budget announcement, on 2 February 2026, Nifty 50 opened at 24,796.50, slightly below its previous close of 24,825.45. It later moved higher to 24,873.25, gaining 47.80 points, or 0.19%. The Sensex began the session at 80,555.68 compared to its earlier close of 80,722.94. During the trading sessions, it climbed up to 80,966.47, by 243.53 points, marking a 0.30% rise.
Biopharma Sector
The government has launched Biopharma Shakti with a ₹10,000 crore allocation over 5 years to strengthen India’s capabilities in biologics and biosimilars manufacturing. The initiative focuses on building domestic research, production capacity and supply chains to position India as a competitive global player in advanced biopharmaceuticals.
This strategy includes 3 new NIPERs and the upgradation of 7 existing ones. Additionally, it also creates 1,000-plus Clinical Trial Sites for strengthening R&D and manufacturing infrastructure.
Semiconductors
The government launched India Semiconductor Mission (ISM) 2.0, with ₹1,000 crore outlay, in order to support the manufacturing of semiconductor equipment and material, R&D, and supply chain.
Rare Earth & Mining
The government is building on the ₹7,280 crore PLI scheme for rare earths by advancing a rare-earth corridor across Odisha, Andhra Pradesh, Tamil Nadu, and Kerala, which strengthen the role of metal and mining PSUs.
Alongside this, ₹10,000 crore has been allocated for domestic container manufacturing. A PLI-style scheme for tunnel borers, cranes, and construction equipment aims to replace imports from China and South Korea in the range of ₹14,000-16,000 crore.
Real Estate, Infrastructure, and Logistics
Infrastructure takes centre stage in the Union Budget 2026-27, with capital expenditure being increased to ₹12.2 lakh crore for FY 2026-27.
A Dedicated Freight Corridor linking Dankuni in the East to Surat in the West has been proposed to improve cargo movement, and over the next 5 years, 20 new National Waterways will be operationalised, starting with NW-5 in Odisha. Additionally, a City Economic Region (CER) fund of ₹5,000 crore per CER is aimed at developing Tier-II and Tier-III cities over five years to support planned urban expansion.
Textiles
The Union budget 2026 introduced an integrated programme with 5 sub-categories for the labour-intensive textile sector. The programme includes schemes such as the National Fibre Scheme, Textile Expansion and Employment Scheme, National Handloom and Handicraft programme, Tex-Eco Initiative, and Samarth 2.0.
These initiatives are aimed at reliance on fibres, technological upgradation, employment, global competitiveness, and upskilling the textile ecosystem.
MSMEs
The MSME sector will benefit from the Union Budget 2026, with ₹10,000 crore dedicated towards the SME Growth Fund for supporting job-generating future enterprises. There is also a ₹2,000 crore top-up contribution to the Self-Reliant India Fund for risk capital.
Other Sectors
There are also initiatives made for other sectors such as healthcare, AVGC, travel and tourism, and electronics. Let’s discuss them briefly!
Healthcare and pharma
The government has allocated ₹1,05,530.42 crores to the Ministry of Health and Family Welfare in order to strengthen India’s healthcare systems and provide access to quality medical services.
AVGC
The Animation, Visual Effects, Gaming, and Comics (AVGC) sector in India is stated as a growing industry,and is expected to need around 2 million skilled professionals by 2030, reflecting rising demand for creative and digital talent across entertainment and technology sectors. The government will support the Indian Institute of Creative Technologies in Mumbai to establish AVGC content creator labs in 15,000 secondary schools and 500 colleges nationwide, expanding access to structured creative and digital media training.
Travel and Tourism
The government prioritises tourism with reduced TCS on overseas travel to 2%. A programme for training 10,000 tourist guides across 20 destinations is announced, to promote Buddhist, heritage, and eco-tourism circuits to strengthen domestic and inbound travel.
Agriculture
The agriculture budget has been raised to ₹1.32 lakh crore, emphasising farmer progress and development. A provision of ₹9,967 crore has been set aside for agricultural education and research through ICAR, while ₹1,70,944 crore will go toward fertiliser subsidy to lower input costs for farmers.
Electronics
The Electronics Components Manufacturing Scheme (ECMS), which has been in place since April 2025, will see its outlay increased to ₹40,000 crore to build on existing momentum.
IT and ITeS
Budget 2026-27 makes tax rules more predictable for IT companies, and all major tech services, such as software, IT services, KPO, and software R&D, will now be treated as one category, with a fixed 15.5 percent margin for tax purposes.
The turnover limit to use this benefit jumps from ₹300 crore to ₹2,000 crore, so now the bigger firms qualify as well, and the approval will be automatic and valid for 5 years.
The companies can also settle transfer pricing faster within 2 years. Additionally, foreign companies using Indian data centres get a tax holiday till 2047.
Final Takeaway
Budget 2026 clearly signals where long-term growth is building. With ₹12.2 lakh crore in capex, ₹40,000 crore for electronics, ₹10,000 crore for biopharma, and strong support for MSMEs, infrastructure, and tech, the policy direction is visible.
