The Union Budget for India for the year 2025 is scheduled to be presented on February 1, 2025. This budget will outline the government’s expenditure plans, revenue targets, and policy priorities for the financial year 2025-2026 (which runs from April 1, 2025, to March 31, 2026).

The Union Budget 2025 carries high expectations for India’s middle class, with a strong focus on providing tax relief to stimulate consumption and address slowing economic growth. As private consumption accounts for 60% of India’s GDP, and with urban demand showing signs of decline, there is growing anticipation for measures such as tax cuts, simplified tax compliance, and higher exemption limits to encourage spending and bolster economic activity. These steps are expected to support the middle class, drive demand, and help reinvigorate economic growth.

Automobile:

• Reduced GST on Hybrid Vehicles: The sector expects a reduction in the GST on hybrid vehicles, which are currently taxed at the highest rate of 28%. This will help make hybrid vehicles more affordable and encourage their adoption as an intermediate step toward fully electric vehicles (EVs). It could also promote the development of hybrid technology in the country.
  
  
• Continuation of the Production Linked Incentive (PLI) Scheme: The automobile sector expects the government to continue the PLI scheme, which has been crucial in attracting investments and boosting domestic manufacturing. How- ever, the industry also wants the government to address shortcomings, such as stringent domestic value addition (DVA) computation and delays in the disbursement of incentives. They expect relaxation in DVA criteria and streamlining of the disbursement process.

Healthcare:

• Streamlined Regulatory Framework: The healthcare industry anticipates a move towards a "one regulator" approach to simplify the complex licensing and compliance landscape. Multiple regulators currently oversee various aspects of pharmaceuticals and medical devices, creating inefficiencies. The industry hopes for a unified system for licenses, clinical trials, and approvals.
  
  
• Ayushman Bharat Yojna: The healthcare industry has high expectations from the Union Budget 2025-26, including the expansion of Ayushman Bharat to provide broader insurance coverage and financial relief for treatments like dialysis. Strengthening health insurance, particularly for rural and underserved areas, along with subsidized premiums and private sector involvement, is key. Emphasis on preventive healthcare through investments in infrastructure, workforce, and digital innovation is essential to reduce disease burdens. Additionally, tax relief for healthcare consumables and equipment by placing them in the lowest tax bracket would help reduce costs and improve affordability for providers and patients.
  
  
• Incentives for R&D and Domestic Manufacturing: The healthcare sector seeks additional incentives to promote research and development (R&D) and domestic manufacturing of pharmaceutical products. This includes expanding research grants to private Contract Research Organizations (CROs), financial support for early discovery and clinical research, and promoting participation in schemes like the Scheme for Promotion of Research and Innovation in the Pharma MedTech Sector (PRIP) and Production Linked Incentive (PLI) schemes.

Retail:

• Higher Income Tax Exemptions: The upcoming budget is expected to introduce tax benefits for individuals earning up to Rs. 15 lakh annually. This is expected to increase disposable income for middle-income households, leading to higher consumer spending.
  
  
• Targeted Tax Incentives for Rural Development: The retail industry hopes for targeted tax incentives for rural market development and innovation. This includes the allocation of funds to strengthen rural distribution networks and tax rebates for companies that invest in affordable rural product lines. This is expected to boost rural FMCG sales and promote innovation.

IT:

• Boost in AI investments: The Union Budget 2025 is anticipated to prioritize advancements in AI, machine learning, and other emerging technologies. Stakeholders emphasize increased R&D funding, especially for AI, quantum computing, and block chain, alongside fostering tech ecosystems in Tier 2 and Tier 3 cities through broadband expansion, affordable 5G, and startup support. Tax incentives, regulatory reforms, and sustainability-focused initiatives such as energy-efficient data centers and EV infrastructure are also key asks. Industry leaders call for policies to enhance mobile advertising, bolster AI-driven public sector services, and foster international collaborations for AI talent development, positioning India as a global tech powerhouse.

BANKS:

• Bankers Propose Tax Incentives for Fixed Deposits in Union Budget: Bank representatives and financial sector stakeholders have suggested tax incentives for fixed deposits to promote savings in the upcoming Union Budget. Other proposals include enhancing capital market efficiency, encouraging long-term savings, and creating a re-finance window for green finance and electric vehicles, discussed in a meeting chaired by Finance Minister Nirmala Sitharaman.

NBFC:

• NBFCs Request Reforms to Improve Liquidity and Operations: In pre-budget talks, the Finance Industry Development Council (FIDC) requested key reforms for Non-Banking Financial Companies (NBFCs), including reducing the loan threshold under the SARFAESI Act from Rs 20 lakh to Rs 1 lakh. They also called for easing regulatory norms, tax exemptions on interest payments, and dedicated funds for emerging sectors.
  
  
• FIDC Proposes Key Measures for NBFC Sector: The Finance Industry Development Council (FIDC) has urged the government to create a dedicated re-finance window for non-banking finance companies (NBFCs) and improve funding sources. Proposals include expanding the corporate bond market, reducing loan thresholds, and aligning MSME financing regulations, aiming to strengthen NBFCs and support economic growth.
  
  Overall the Union Budget plays as extremely significant role in shaping the financial plans for the upcoming fiscal year. The decisions laid out in the Union Budget reflect the priorities of the Government to maintain order and balance in the various sectors such as Banking, Healthcare, Infrastructure, Education, Manufacturing, etc. while ensuring the various other macroeconomic factors are also kept under control such as inflation, unemployment etc. The Government needs to keep a wholesome focus on growth, innovation and sustainability in order to position India as one of the Global Leaders

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