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.

Amar Deo Singh, Senior Vice President, Research, Angel One, shared that this year's budget focus is likely to be boosting consumption, thrust in infrastructure spending and job creation.

"Also, the middle class & the income tax payees are hopeful of some form of tax rebate which could ease their financial situation. Agriculture is also likely to be a key focus area as this sector accounts less than 20% of GDP, but still accounts for almost 55%-60% livelihood," Singh said.

"Given the current domestic Economic slowdown, record FII outflow, Rupee hitting record lows along with global macros & the Trump factor, makes it all the more an interesting budget to watch out for," he said.

The National Stock Exchange (NSE) and the BSE will both remain open on Saturday, Feb. 1 on account of the Budget Day. Both the exchanges have confirmed the news in separate circulars.

The NSE and BSE are typically closed on weekends. However, following the precedent set in previous years, such as in 2020 and 2015, the exchanges have decided to remain open on Budget Day, when Finance Minister Nirmala Sitharaman will present the Union Budget 2025.

"On account of the presentation of the Union Budget, Exchange shall be conducting live trading session on February 01, 2025, as per the standard market timings," the NSE said in its circular.

Budget 2025: Key Macro Numbers Investors Will Watch | In Charts

Volatility Clouds Over Infra Stocks As India's Capex Thrust Likely To Ebb

With expectations of reduced emphasis on capital expenditure in the upcoming budget, CLSA Strategist Vikash Kumar Jain believes "Modi stocks" still need further correction from their elevated valuations.

However, he remains bullish on staple FMCG stocks. Jain advised investors to temper their expectations, forecasting minimal returns from the Nifty this year. Speaking to NDTV Profit, he noted that the market’s normalization process could take longer amid high expectations.

"A large part of the last two years, India was growing higher than potential average growth," he noted. In the long-term, this is not a huge alarm bell but capex stocks can be a little disappointing, according to Jain.

Read story here.

The Union Budget 2025 should have targeted incentives for commercial fleet electrification, reduced financing costs for EV logistics operators, and a more structured GST framework for EV components, as they can significantly accelerate adoption, said Maxson Lewis, founder and chief executive officer of Magenta Mobility.

"Additionally, policy support for localised battery recycling and supply chain development will strengthen India’s self-reliance in the EV ecosystem. With the right measures, the Budget can drive large-scale EV adoption in logistics, making clean mobility more accessible, efficient, and economically viable," he said.

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