India Union Budget 2025 : Key Expectations – Century Financial
With Finance Minister Nirmala Sitharaman all set to present Union Budget 2025 on February 1 in the Lok Sabha, industry stakeholders, investors and, rather, the entire country are looking at a slew of measures to be announced. Key demands include increased tax exemptions, deductions, and targeted reforms to boost growth in manufacturing, agriculture, infrastructure, and digital innovation.
Tax Relief and Compliance Simplification
Taxpayers are hoping for increased exemptions, such as raising the basic income tax exemption from ₹3 lakh to ₹5 lakh, as suggested by EY India, which could boost disposable incomes and drive consumer spending. Announcements surrounding simplified compliance for businesses, including virtual place-of-business allowances, could ease operations for SMEs and e-commerce players.
Manufacturing and Exports
India’s manufacturing has a $2 trillion export target by 2030, and the sector will likely take up significance in the Union Budget 2025-26. Measures like tariff rationalisation, duty exemptions, and expanded remission schemes to lower production costs and boost exports are expected. Besides, simplified compliance for foreign investments is anticipated. High-value sectors such as electronics and precision machinery might benefit from targeted incentives, while labour-intensive industries like textiles and food processing could see support. Additionally, fostering innovation by adopting Industry 4.0 technologies such as AI, digital twins, and 3D printing can elevate India’s position as a hub for advanced manufacturing. Companies like Bajaj Auto, Tata Motors, and L&T could benefit from tariff cuts, export incentives, and PLI schemes. Investors should watch out for textile companies like Dixon Technologies and Page Industries.
Infrastructure and Urban Development
Infrastructure development will likely remain a priority, given the ₹11.1 lakh crore allocation from the last budget as a benchmark. A continued focus on projects like Gati Shakti and Make in India and sustainable urban development is likely, with measures to fast-track Tier 2 and Tier 3 city growth. Furthermore, Emphasis on renewable energy, green technologies, sustainable infrastructure, and incentives for green bonds and urban development through PPP models can be expected. Public-private partnerships for building climate-resilient infrastructure could take centre stage. Stocks like IRB Infra, Adani Ports, and UltraTech Cement may gain from higher infrastructure spending.
Agriculture
The upcoming Budget will likely honour its commitment by considerably increasing agricultural R&D allocations, aiming for an uplift from under 0.5% to at least 1% of agricultural GDP. The Budget is expected to emphasise agriculture infrastructure, with a focus on higher yields, cold storage, warehousing, and supply chain improvements to lessen post-harvest losses and enhance market access, alongside measures for water management, climate change mitigation, and investments in technologies like solar pumps, drones, and precision farming to drive efficiency and innovation. Investments in AI, IoT, and satellite data integration are crucial to enhancing productivity and minimising environmental impact.
Green Economy and ESG Investments
Emphasis on renewable energy, green technologies, and ESG-friendly incentives could support India’s growth and help attain sustainability goals.
Overall, it is crucial for the government to strike a balance between fiscal prudence and growth-oriented reforms. Targeted tax relief measures can boost private investment and consumer spending by increasing disposable income, thereby bolstering economic activity. Enhancing support for flagship initiatives like Make-in-India, Ease of Doing Business, and the Production-Linked Incentive scheme is crucial, with a special focus on sectors such as manufacturing, food and beverage, and hospitality. These steps can spur the next phase of India’s economic growth, leveraging the country’s demographic advantage and fostering increased power consumption.
Markets could react positively to announcements around tax relief, infrastructure growth, and export incentives. However, any indication of lower-than-expected reforms or higher fiscal deficits could trigger profit-booking. Investors should monitor sectors closely tied to the budget focus areas for potential trading opportunities.
Last Updated on 4 days by News Desk 1
