How the budget’s reforms will help India gain an export edge and make the most of its trade deals

Given the global backdrop, the budget reflects a clear strategy of sustaining India’s development agenda while addressing emerging vulnerabilities and transforming external pressures into opportunities to strengthen the foundations of the economy’s long-term competitiveness.

The proposed scaling up of strategic and frontier manufacturing sectors such as biopharma, semiconductors, electronic components, rare earth magnets, chemicals, capital goods and containers will support industry’s needs. It expands our export-manufacturing base while deepening domestic value addition and reducing critical import dependencies. This reinforces confidence in the Centre’s ‘Make in India’ strategy, which is slowly evolving into a global-oriented manufacturing vision.

Moreover, the long-awaited India-US trade agreement will be a game-changer for India’s economic trajectory. It will turbo-charge exports, deeply embed India into global value chains and unleash the full potential of our manufacturing sector. By restoring investor confidence and catalysing large-scale investments from both countries, the agreement will redefine the India-US economic partnership.

Most importantly, it will fast-track India’s $1 trillion export ambition across goods and services and serve as a critical pillar in realizing the vision of a Viksit Bharat by 2047.

Setting up capacities in SEZs involves significant investment and risks due to global demand changes, currency fluctuations and protectionism. Current regulations prevent SEZ units from using unused capacity for domestic demand. A special one-time measure to facilitate sales of eligible manufacturing units in SEZs to buyers within the domestic tariff area at concessional rates of duty is particularly significant.

In a period of global demand volatility, this flexibility enables SEZ units to maintain capacity utilization, protect employment and manage cash flows while retaining their long-term export orientation. This reflects a realistic understanding of how export ecosystems must be sustained during external shocks.

India’s educated youth and strong IT base provide a recipe for services-led growth. Given trade uncertainty in goods, the budget strengthens India’s services strategy. The proposed High-Powered Committee on Education-to-Employment-and-Enterprise will prioritize areas to optimize services growth, employment and exports. This target is to make India a global leader in services with a 10% global share by 2047.

Supportive tax holidays for foreign firms that provide cloud services to global customers and the provision of safe harbour to data centres are expected to attract FDI in the coming years.

The scheme to establish five Regional Medical Hubs in partnership with states and the private sector shows how sectoral interventions can create export opportunities. These integrated healthcare complexes, combining medical, educational and research facilities with Ayush centres and medical tourism infrastructure, will help capture global demand for quality healthcare services.

The future of trade is green, as global recognition rises of the need to address the environmental impact of industry and trade. Carbon-intensive sectors are under growing pressure to reduce their emission intensity. In a decisive response, the budget allocates ₹20,000 crore over the next five years for carbon capture, utilisation and storage technologies across the sectors of power, steel, cement, refineries and chemicals.

This will directly complement India’s recent conclusion of a free-trade agreement (FTA) with the EU and strengthen the competitiveness of sectors impacted by its Carbon Border Adjustment Mechanism. By doing so, the budget treats sustainability not as a constraint, but as a driver of long-term competitiveness and resilience for Indian industry.

The budget’s exemption of basic customs duty on capital goods for critical mineral processing, along with tax deductions for exploration, supports domestic capacity creation and strengthens participation in global supply chains.

The ₹10,000 crore, five-year container manufacturing plan aims to reduce import dependence, ease supply-chain shortages and boost efficiency for exporters and importers. It will also generate skilled jobs, build a supporting ecosystem and strengthen India’s role as a reliable global partner for container manufacturing.

India’s budget for 2026-27 focuses on boosting growth through infrastructure and manufacturing, with capital expenditure of ₹12.2 trillion and initiatives like high-speed rail and semiconductor missions. It provides clarity and confidence to Indian Industry.

Building a strong future would require reducing critical dependencies, enhancing domestic capacity and also building India’s global capability by expanding its export base, improving competitiveness and capturing new opportunities created by FTAs, including the recently announced deals with the UK, EU and US.

The author is director general, Confederation of Indian Industry.