Union Budget 2026 brings relief with cheaper cancer drugs, a major push for AI and data centres, a 15 per cent hike in defence spending, Rs 10,000 crore for biopharma and targeted support for MSMEs, while triggering mixed political reactions
Representation Pic/Istock
As many as 17 cancer drugs, along with medicines and food for special medical needs for seven rare diseases are set to become cheaper with Finance Minister Nirmala Sitharaman announcing cuts in customs duty in the Union Budget 2026-27.
In her speech, Sitharaman said, “To provide relief to patients, particularly those suffering from cancer, I propose to exempt basic customs duty on 17 drugs or medicines.” Moreover, the Budget has also proposed setting up 1000 clinical trial sites and strengthening the Central Drugs Standard Control Organisation.
AI booster
The Budget proposed a tax holiday till 2047 for foreign companies that provide cloud services to customers globally using data centres located in India, signalling the government’s push to make the country a major hub for AI and digital infrastructure.
The big push on data centres comes at a time when India is gearing up to take the centrestage in global discourse on AI. It is expected to position India not just as a consumer of global cloud and AI services, but as a thriving base for the world’s digital backbone.
With AI, cloud computing and digital payments growing, data centres are becoming as critical as roads and power plants, forming the backbone of India’s digital economy. India is eyeing a leading role in global AI conversations with New Delhi all set to host the India AI Impact Summit.
Defence gets major boost
India on Sunday set aside Rs 7,84,678 crore as defence outlay for 2026-27 over the current fiscal’s allocation of Rs 6.81 lakh crore with a major increase in capital expenditure as the military focuses on modernisation in the face of security challenges from China and Pakistan. The increase in the defence outlay against the backdrop of “historic success of Operation Sindoor” has further strengthened our resolve to make India’s defence system even more robust, Defence Minister Rajnath Singh said. The overall defence budget has seen a hike of 15 per cent over last year’s outlay.
India-developed Pinaka missiles. REPRESENTATION PIC/ISTOCK
Out of the total allocation, Rs 2,19,306 crore has been earmarked for capital expenditure to the armed forces that largely includes purchasing new weapons, aircraft, warships and other military hardware. The revenue expenditure has been put at Rs 5,53,668 crore that includes Rs 1,71,338 crore for pensions. The budgetary allocation to the Defence Research and Development Organisation (DRDO) has been increased to R29,100 crore from Rs 26,816.82 crore in 2025-26. Out of this allocation, Rs 17,250.25 crore is allocated for capital expenditure.
Defence Minister Rajnath Singh said the “most important” aspect of the budget is the modernisation of the three services. “I express my heartfelt gratitude to our Prime Minister Modi ji for allocating R7.85 lakh crore for the defence sector,” he said. “Coming after the historic success of Operation Sindoor, this budget has further strengthened our resolve to make the country’s defence system even more robust,” he added.
Singh said a provision of Rs 2.19 lakh crore has been made for the overall capital expenditure of the armed forces.
Rs 10K cr for biopharma
REPRESENTATION PIC/ISTOCK
Sitharaman proposed Rs 10,000 crore investment over the next five years to develop India as a biopharma manufacturing hub, set up 1,000 clinical trial sites and strengthen the Central Drugs Standard Control Organisation. Biopharmaceuticals, or biologics, are complex medicines manufactured from living organisms, cells, or tissues rather than through chemical synthesis. India’s disease burden is observed to be shifting towards non-communicable diseases, like diabetes, cancer, and autoimmune disorders. Biologic medicines are key to longevity and quality of life at affordable costs, Sitharaman stated.
‘Champion’ MSMEs
The FM on Sunday proposed a three-pronged strategy, including a Rs 10,000 dedicated fund, to help MSMEs grow as ‘Champions’. Sitharaman said the Modi government has undertaken comprehensive economic reforms towards creating employment, boosting productivity and accelerating growth. The “Reform Express” is well on its way and will maintain its momentum to help fulfil “our kartavya”, she said. Earlier, the Budget used to be prepared in the North Block.
Recognising MSMEs as a vital engine of growth, Sitharaman outlined a three-pronged approach — Equity Support, Liquidity Support and Professional Support — to help MSME grow as ‘Champions’. She also proposed to top up the Self-Reliant India Fund set up in 2021, with Rs 2000 crore to continue support to micro enterprises and maintain their access to risk capital.
The minister also said the government will set up an ‘Education to Employment and Enterprise’ Standing Committee to recommend measures focusing on the services sector. The cadre of “corporate mitras” will help MSMEs to meet their compliance requirements at affordable costs.
Opposition reacts to the budget...
‘Lacklustre, disappointing’
Rahul Gandhi, LoP
“Union Budget as totally lacklustre and blind to India’s real crises and did not offer any solution to the country’s economic, social and political challenges. This Budget offers no solutions, not even slogans to hide the absence of policy! Youth without jobs. Falling manufacturing. Investors pulling out capital. Household savings plummeting. Farmers in distress. Looming global shocks - all ignored. It is a Budget that refuses course correction.”
‘No solution Budget’
Mallikarjun Kharge, Congress chief
“The Modi Government has run out of ideas. Budget 2026 does not provide a single solution to India’s many economic, social, and political challenges. ‘Mission Mode is now Challenge Route’”.
‘Nothing to offer’
Mamata Banerjee, Bengal CM
“This Budget is directionless, visionless, actionless and anti-people. It is also anti-women, anti-farmer, anti-education and against the SC, ST and OBC... There is nothing on offer for Bengal in the Budget.”
Budget 2026: What gets cheaper, what gets costlier
Cheaper
Cancer drugs
TV equipment
Leather goods
Cameras
Footwear
Liquor scrap (empty bottles, expired products)
Foreign education
Overseas tour packages
Imports of goods for nuclear power projects till 2035
Video games’ manufacturing parts
Energy transition equipment
Microwave ovens
Costlier
>> Coffee and vending machines
>> Income tax misreporting - Penalty equal to 100 per cent of the tax amount
>> Non-disclosure of movable assets
>> Stock options and futures trading
>> Coal
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