Union Budget 2027 Continues With Fiscal Discipline And Incremental Reforms

Economy

Union Budget 2027 Continues With Fiscal Discipline And Incremental Reforms

Fiscal consolidation stays on track

Debt-to-GDP eases to 55.6% in 2026–27; fiscal deficit down to 4.3%.
Lower interest burden = more headroom for capex and sectoral support.

Big Spend, Capex-Led Growth

Total expenditure (FY27): ₹53.5 lakh crore
Capex: ~₹11 lakh crore

Textiles – Integrated Support Framework

- National Fibre Scheme for self-reliance in natural fibres such as silk, wool and jute, man-made fibres, and new-age fibres;

- Textile Expansion and Employment Scheme to modernise traditional clusters with capital support for machinery, technology upgradation and common testing and certification centres;

- National Handloom and Handicraft programme to integrate and strengthen existing schemes and ensure targeted support for weavers and artisans;

- Tex-Eco Initiative to promote globally competitive and sustainable textiles and apparels;

- Samarth 2.0 to modernise and upgrade the textile skilling ecosystem through collaboration with industry and academic institutions.

- Mega Textile Parks in challenge mode to build textile and technical textile production capacity and capability in value-addition.

- Mahatma Gandhi Gram Swaraj initiative to strengthen khadi, handloom and handicrafts, in market linkages and branding. The focus will also be on training, skilling, quality of processes and production. The initiative will weavers, village industries, One-District–One-Product initiative and rural youth.

Related sector boost

Chemical manufacturing: To strengthen domestic chemical production and cut import dependence, the government will support States in setting up three dedicated Chemical Parks through a challenge-based, cluster-driven plug-and-play model, aimed at faster project execution and scale efficiencies.

Machinery & Capital Goods: To improve productivity and quality across industries, Hi-Tech Tool Rooms will be set up by CPSEs at two locations as digitally enabled, automated service centres, enabling local design, testing and cost-efficient manufacturing of high-precision components at scale.

Focus on sports goods - A dedicated initiative for sports goods that will promote manufacturing, research and innovation in equipment design as well as material sciences.

Support for SMEs, MSMEs continues

“Champion SMEs” and supporting micro enterprises: A three-pronged approach to help SMEs and MSMEs

- A dedicated ₹10,000 crore SME Growth Fund, to create future Champions, incentivizing enterprises based on select criteria.

- Self-Reliant India Fund set up in 2021, with ₹2,000 crore to continue support to micro enterprises and maintain their access to risk capital.

- MSME Liquidity via TReDS: With over ₹7 lakh crore already facilitated through TReDS, the government will deepen its use by mandating TReDS for all CPSE purchases from MSMEs, providing CGTMSE-backed credit guarantees for invoice discounting, linking GeM with TReDS to enable faster and cheaper financing, and securitising TReDS receivables to create a secondary market and improve liquidity.

`Corporate Mitras’ – Government has proposed to facilitate professional institutions such as ICAI, ICSI, ICMAI to design short-term, modular courses and practical tools to develop a cadre of ‘Corporate Mitras’, especially in Tier-II and Tier-III towns. These accredited para-professionals will help MSMEs meet compliance requirements at affordable costs.

Sustainable Cargo & Logistics: To promote greener freight movement, the government will build a Dedicated Freight Corridor from Dankuni to Surat, operationalise 20 new National Waterways over five years starting with NW-5 in Odisha, set up regional training centres and inland ship-repair hubs at Varanasi and Patna, and launch a Coastal Cargo Promotion Scheme to raise the share of inland waterways and coastal shipping from 6% to 12% by 2047.

MAT Reform and Corporate Tax Clarity

- Companies can use brought-forward MAT credit only if they opt for the new corporate tax regime, with set-off capped at 25% of tax liability.

- MAT to become a final tax from 1 April 2026, with no new MAT credit accumulation thereafter.

- MAT rate reduced to 14% from 15%; existing MAT credit accumulated till 31 March 2026 will remain available for set-off under the new rules.

Other benefits

Export Flexibility for Textiles & Leather: Exporters of textile and leather garments, footwear and related products will get up to one year (instead of six months) to complete exports of final products, easing compliance pressure amid weak and volatile global demand.

SEZ Relief for Manufacturers: As a one-time measure, eligible manufacturing units in SEZs will be allowed to sell a limited portion of their output in the domestic market at concessional duty rates to improve capacity utilisation during global trade disruptions, while maintaining a level playing field with DTA units.

Ease Of Doing Business

- Single Digital Clearance Window: All approvals required for cargo clearance will move to a single, integrated digital window by the end of the financial year.

- Faster Customs Clearance: For goods with no compliance requirements, Customs will allow immediate clearance once online registration is completed and duties are paid, cutting dwell time at ports.

- Integrated Customs Platform: A Customs Integrated System (CIS) will be rolled out over two years as a unified platform for all customs processes, improving speed, transparency and scalability.

- E-commerce Exports Boost: The ₹10 lakh per consignment cap on courier exports is removed, enabling small businesses, artisans and start-ups to ship higher-value goods abroad. Handling of returns and rejected consignments will also be streamlined using technology.

Exporters of textile and leather garments, footwear and related products will get up to one year (instead of six months) to complete exports of final products, easing compliance pressure amid weak and volatile global demand.

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