The Budget reflects a sober reading of the global economy at a time of heightened uncertainty.
As private investment remains cautious, public spending is anchoring growth. Total outlays have risen to roughly ₹53 lakh crore, an increase of about 9 per cent over the previous year. The emphasis is most evident in capital expenditure, which has climbed to over ₹12 lakh crore, extending a multi-year shift towards asset creation rather than short-term stimulus. Defence spending has also risen, crossing ₹7.8 lakh crore, up around 15 per cent year on year, reinforcing the view that hard power has become integral to economic security.
This posture reflects an altered external environment. Globally, growth is sluggish at around 3 per cent while trade is effectively stagnant. Tariffs, subsidies and strategic alignment have displaced comparative advantage as the organising logic of commerce.
The consequences are stark. After a post-pandemic recovery, export momentum has slowed. Labour-intensive, export-dependent sectors have been hit hardest by steep US tariffs. These industries rely on cost competitiveness and scale and are poorly placed to absorb sudden trade shocks.
The budget responds with selective adjustment. A one-time concession allowing eligible manufacturing units in Special Economic Zones to sell a capped share of output into the domestic market at concessional duties reflects a pragmatic recalibration. Export platforms are being encouraged to integrate more closely with domestic demand, improving capacity utilisation and reducing vulnerability to external shocks.
Textiles receive particular attention. The sector employs over 45 million people and contributes roughly 2 per cent of the GDP, yet remains among the most tariff-exposed.
The integrated programme focuses on fibre self-reliance, cluster modernisation, sustainability standards and skilling. Mega Textile Parks, along with enhanced support for handlooms and handicrafts, aim to move the sector towards higher value addition, stronger branding and compliance with demanding global norms.
The underlying message is clear: India’s traditional B2B strengths now need to be complemented by a stronger push towards branding and value capture.
Beyond labour-intensive industries, the budget places a clear bet on technology. Allocations rise for semiconductors, advanced manufacturing, biopharma and critical minerals, alongside support for AI-related infrastructure. Future productivity gains are likely to accrue disproportionately to those who control data and platforms.
Consumption, which accounts for close to two-thirds of the GDP, is likely to recover only gradually. GST rate rationalisation, investment-led job creation and rural income support should lift demand over time, while progress on several bilateral trade agreements offers some counterweight to weaker global conditions.
This is not a budget built on optimism about the world. It recognises that the Indian economy is encountering stronger headwinds precisely at a moment of ascension. Protectionism has returned, exports are contested, and global trade is increasingly shaped by a China exporting its domestic slowdown.
The wager is that by adding scale, resilience and strategic power to the economy, this budget provides the ballast needed to sustain growth and competitiveness.
Rudra Chatterjee is MD of Luxmi Tea and chairman of Obeetee
