India enters 2026 at a moment of relative economic strength, even as global uncertainty persists. Recent measures like GST rationalisation and I-T relief have begun to revive domestic consumption by improving disposable incomes. Fiscal consolidation has remained credible, with both fiscal and revenue deficits steadily declining from pandemic-era peaks.

This balance between supporting growth and preserving macroeconomic stability has been central to India's recent economic management. As Nirmala Sitharaman has noted, bringing down India's debt-to-GDP ratio will be a key focus in the years ahead.

Against this backdrop, the budget presents an opportunity to reinforce confidence by staying the course on consolidation while decisively strengthening domestic growth levers. Emphasis on capex alongside essential social spending must continue.

Defence spending Future conflicts will be multi-domain, information-centric and tech-intensive, spanning land, sea, air, cyber and space. Preparing for this requires moving beyond platform-centric approaches towards integrated, networked and AI-enabled capabilities.

Which is why defence spending should be viewed not merely as expenditure but as strategic investment. There's a strong case for increasing share of capex to accelerate modernisation, particularly in areas like UAVs, counter-UAV systems, electronic warfare, air defence, and frontier technologies including AI, quantum computing and hypersonics.

Strengthening indigenous R&D through higher allocations to DRDO, deeper collaboration with private industry and support for deep-tech development would further advance indigenisation in defence. Defence production has reached record levels. A more coordinated approach, supported by an institutional mechanism, could help India achieve its export ambitions while strengthening supply chains.

Electronics manufacturing India must focus on scale, ecosystem depth and value addition. Global experience shows that competitiveness depends on dense, well-integrated clusters where OEMs, EMS players and component suppliers co-locate, supported by plug-and-play infrastructure and swift clearances.

A mega electronics industrial park - building on existing strengths in regions like Chennai-Sriperumbudur corridor and Noida - could be transformative. Such a cluster would help localise components, reduce import dependence, support MSMEs through shared facilities and align manufacturing growth with sustainability goals. Rationalised tariff structures and simplified HS codes, particularly for printed circuit board assemblies, would further ease compliance and improve competitiveness.

Critical minerals India's ambitions in clean energy, electric mobility, semiconductors and advanced manufacturing will sharply increase demand for critical minerals. While primary reserves are limited, the country has substantial untapped potential in mine tailings, overburden, fly ash and industrial waste streams.

National Critical Mineral Mission has laid a strong foundation. The challenge is execution. Combining technology scale-up with fast, on-site pilot projects can unlock secondary sources. A dedicated programme focused on tailings recovery - supported by regulatory clarity, targeted financing and collaboration between miners, technology providers and research institutions - would strengthen resource security while advancing circular economy objectives.

Exports Rising protectionism and proliferation of new trade barriers pose risks to India's export performance. Initiatives like Export Promotion Mission and credit guarantee schemes are welcome. However, ensuring duty neutrality remains essential.

Remission of Duties and Taxes on Exported Products (RoDTEP) scheme plays a critical role in offsetting embedded taxes. Providing it with a predictable, adequately funded multi-year framework would give exporters certainty, improve sectoral coverage and help firms compete in a more hostile global trade environment.

GCCs India has emerged as the world's leading hub for global capability centres, which are increasingly undertaking high-value, innovation-led functions. Yet, transfer pricing uncertainty - around cost allocations, employee-related expenses and functional characterisation - has emerged as a growing concern.

Updating the transfer pricing framework to reflect modern business realities through clearer guidance, simplified safe harbours and faster dispute resolution would reinforce India's attractiveness for next-gen GCC investments in AI, R&D and digital engineering.

By staying committed to fiscal prudence while sharpening focus on strategic investment, industrial depth and policy certainty, the upcoming budget can reinforce confidence among businesses and investors.