Budget 2025 Expectations: Focus On Defence, Aerospace Sector; Tax Incentives For Power Sector

Kavita Shirvaikar, Managing Director of Patel Engineering Ltd., stated, key priorities for India’s infrastructure sector—include increased project funding, stronger central support to states for timely execution, and widespread adopting surety bonds over bank guarantees for bid, performance, and advance securities by government agencies and PSUs to ease financial limits and enable efficient project delivery.

"Granting special status to major projects could further improve access to affordable financing ensuring timely and successful execution. Establishing a dedicated green energy fund to support hydropower and other sustainable projects would drive India’s sustainable energy transition," Shirvaikar said.

“We anticipate that Budget for fiscal 2025-26 will be pivotal in accelerating India’s journey towards self-reliance in the defence and aerospace sectors, both of which are on the brink of significant growth," said Amey Belorkar, fund manager - defence and aerospace venture fund, IDBI Capital Markets and Securities Ltd.

"The government’s emphasis on Atmanirbhar Bharat and Make in India is likely to be bolstered by strategic budgetary allocations that promote innovation, support MSMEs, and streamline defence procurement processes, " he said.

Belorkar highlighted that a particular focus on emerging areas such as unmanned aerial systems (UAS), advanced materials, cyber defence, and space technology could unlock substantial opportunities for private capital engagement.

Amit Jain, CEO and country manager, ENGIE India remains optimistic about the potential introduction of long-term tax incentives. "Expedited land acquisition processes and streamlined approval mechanisms for large-scale renewable energy initiatives are equally crucial to accelerate India’s progress toward its net-zero commitments," he said

"A clear roadmap for energy storage solutions and grid modernization will be essential in addressing intermittency and scalability challenges, ensuring the resilience and sustainability of the renewable energy ecosystem," he said.

I would like to see the budget introduce innovative funding models and asset-light strategies that promote corporate governance and financial transparency, said Tarun Singh, founder and Managing Director of Highbrow Securities.

"Enhancing credit accessibility and simplifying IPO listing procedures will offer vital support. Furthermore, by introducing targeted interest subvention schemes, the government can significantly reduce operational costs. Together, these measures will strengthen the global competitiveness of our MSMEs, ensuring they continue to thrive and grow," he said.

"Policy incentives, including tax reliefs, sector-specific subsidies, and support for digital transformation, will be crucial in driving sustainable growth and long-term value creation. Considering the current economic landscape, I think the budget should also focus on infrastructure development, job creation, and ease of doing business," he further shared.

The real estate sector looks forward to policy initiatives and reforms that can drive growth, enhance affordability, and address long-standing industry challenges, said Prashant Sharma, President, NAREDCO Maharashtra.

"Granting industry status to the real estate sector remains a key demand. This will enable easier access to institutional funding at lower interest rates, particularly for mid-segment and affordable housing projects," he said.