India Union Budget 2026

The Union Budget 2026 aimed to expand the ecosystem of the real estate sector by enhancing connectivity between emerging and established urban centers and by promoting the development of economic regions. It outlined a clear roadmap towards ‘Viksit Bharat 2047’ by strengthening the business ecosystem in metro cities along with increased focus on tier-2 and tier-3 cities, which are expected to drive the next phase of the nation’s growth.

As India progresses towards its USD 5 Tn economic ambition, the budget announced several measures aimed at enhancing the quality of life and upskilling the workforce. This may bridge the gap between demand and supply of skilled labor, thereby strengthening the ecosystem for GCCs.

The budget also provided a significant boost to the tourism sector by promoting key tourist destinations across the country, which is expected to accelerate growth in the hospitality industry. Furthermore, the data centre industry received a major fillip with the announcement of a tax holiday until 2047, aimed at encouraging large-scale investments and supporting the expansion of India’s digital economy.

Data Centers to Strengthen Digital Backbone

Announcements

• Long-term tax holiday (till 2047) for foreign companies delivering global cloud services using India-based data center infrastructure. However, it needs to provide services to Indian customers through an Indian reseller entity.
• 15% safe harbor on cost for Indian data center entities providing services to related foreign cloud companies.

Impact

The budget enhances India’s attractiveness as a global cloud and data center destination by offering long-term tax certainty and minimizing transfer-pricing risks. Indian cloud resellers and channel partners can expect stronger collaborations with global providers, driving revenue growth and job creation. Data centre operators, along with sectors such as industrial real estate, power, cooling, and network infrastructure, are likely to witness increased demand.

Warehousing & Logistics Demand to Increase

Announcements

• New Dedicated Freight Corridors from Dankuni to Surat to promote environmentally sustainable cargo movement.
• Provision of safe harbor to non-residents for component warehousing in bonded warehouses at a profit margin of 2% of invoice value, enabling efficient just-in-time logistics for electronic manufacturing at a significantly lower tax incidence.
• Introduction of incentives to indigenize seaplane manufacturing, along with a Seaplane VGF Scheme to support operations and enhance last-mile connectivity and tourism.
• Launching a Container Manufacturing Scheme with a budgetary outlay of INR 10,000 crore over five years to build a globally competitive container manufacturing ecosystem.

Impact

These initiatives are expected to stimulate warehousing demand by accelerating cargo movement across the nation, expanding bonded warehousing, and containerized trade, all of which require strategically located warehousing facilities to optimize logistics operations. The absorption of grade-A warehousing assets is likely to increase near industrial zones, freight corridors, and coastal gateways.

Holistic Tourism Infrastructure Upgrade to Stimulate Growth in the Hospitality Industry

Announcements

• Establish a National Institute of Hospitality to serve as a bridge between academia, industry, and government.
• Launch a pilot initiative to upskill 10,000 tourist guides across 20 iconic tourist destinations.
• Develop a National Destination Digital Knowledge Grid to digitally document places of national significance.
• Create ecologically sustainable tourism trails, including mountain trails, turtle trails, and bird-watching trails in selected states.
• Transform 15 archaeological sites into vibrant, experiential cultural destinations.
• Develop Buddhist tourism circuits in the Northeast Region.
• Introduce schemes under Medical and Wellness Tourism to support states in establishing five Medical Value Tourism hubs in partnership with the private sector.
• Fast-tracking of the East Coast Development Corridor to support the development of five tourism hubs in Purvodaya states.
• Lower TCS rate on the sale of overseas tour program packages from existing 5% and 20% rates to 2%, and remove any minimum amount threshold for its applicability.

Impact

These announcements will make India’s tourism ecosystem more skilled, connected, and globally competitive, boosting the demand for hotels across the country. Better infrastructure, digital access, and upgraded destinations will increase tourist footfall, longer stays, and higher spending. Niche segments like eco, heritage, Buddhist, medical, and wellness tourism will see faster growth and private investment. Improved rail connectivity and lower TCS on overseas packages also stimulate travel demand, benefiting hotels, tour operators, and allied services.

Upgrading Infrastructure to Drive Growth Beyond Metro Cities

Announcements

• Public capex to increase from INR 2 lakh crore in FY15 to INR 12.2 lakh crore in FY27.
• Set up of Infrastructure Risk Guarantee Fund to provide prudently calibrated partial credit guarantees to lenders to make the private developers more risk-averse during the infrastructure development and construction phase.
• Recycling of real estate assets of Central Public Sector Enterprises (CPSEs) through the creation of dedicated REITs.
• Establishment of new Dedicated Freight Corridors connecting Dankuni (East) to Surat (West).
• 20 new National Waterways to be operationalized over the next 5 years. Training institutes to be set up as Regional Centers of Excellence for the development of the required manpower to facilitate efficient operations of the waterways. Moreover, a ship repair ecosystem catering to inland waterways will be established at Varanasi and Patna.
• To increase the share of inland waterways and coastal shipping from 6% to 12% by 2047, the Coastal Cargo Promotion Scheme will be launched.
• To enhance last-mile and remote connectivity, a Seaplane VGF Scheme will be launched to indigenize the manufacturing of Seaplane.
• Development of an integrated East Coast Industrial Corridor with a well-connected node at Durgapur.
• Government to emphasize strongly on the provision and development of modern infrastructure and basic amenities in cities with over 5 lakh population (Tier II and Tier III), and including even temple-towns which have expanded to become growth centers.
• City Economic Regions (CERs) will be mapped based on their specific growth drivers to amplify urban agglomeration potential, with a proposed allocation of INR 5,000 crore per CER over five years through a challenge mode with a reform-cum-results based financing mechanism.
• Seven High-Speed Rail corridors between cities as ‘growth connectors’ will be developed to promote environmentally sustainable passenger systems. These include- Mumbai-Pune, Pune-Hyderabad, Hyderabad-Bengaluru, Hyderabad-Chennai, Chennai-Bengaluru, Delhi-Varanasi, Varanasi-Siliguri.

Impact

The budget aims to strengthen the growth ecosystem of the real estate sector by enhancing connectivity between emerging and established urban centers and by promoting the development of economic regions. These measures are expected to attract GCCs to tier-2 and tier-3 cities, enabling them to leverage cost efficiencies and long-term growth opportunities. Higher public spending, CPSE-led REIT monetisation, and risk-sharing mechanisms will not only improve liquidity but also attract more participation from the private investors. Further, investments in high-speed rail and national waterways will unlock the economic potential of emerging cities and create sustainable growth centers beyond the metro cities.

Upskilling Local Talent to Lure Foreign Companies

Announcements

• Proposed to set up an ‘Education to Employment and Enterprise’ standing committee to strengthen the services sector as a core driver of Viksit Bharat, to achieve 10% global share by 2047 by prioritizing growth, employment, and exports, while assessing the impact of emerging technologies, including AI, on jobs and skill requirements.
• Establishment of a new National Institute of Design in eastern India through the challenge route to strengthen design education and development.
• Government will support States to develop five university townships near major industrial and logistics corridors, integrating universities, research institutions, skill centers, and residential complexes.
• Launch of Biopharma SHAKTI with an outlay of INR 10,000 crore over five years to develop India as a global biopharma manufacturing hub, including the creation of a biopharma-focused network with three new National Institutes of Pharmaceutical Education and Research (NIPER) and the upgradation of seven existing ones.

Impact

Large-scale upskilling in AI, quantum computing, and advanced services is expected to expand India’s skilled talent pool, directly supporting global firms to establish their bases, R&D centers, and innovation-led operations in the country. As enterprises scale operations to tap this talent, demand for grade-A office spaces, tech-enabled campuses, and integrated work environments is anticipated to strengthen across major cities and emerging hubs. Additionally, improved employment outcomes and inclusion-driven growth will support residential demand near key employment clusters, reinforcing real estate’s role as an enabler of Viksit Bharat.