Budget 2025 Expectations: Increased Allocation For Upskilling, Policies To Stabilise Raw Material Supply

Ahead of the Union Budget, Tata Technologies Ltd. on Monday called for increased allocation toward upskilling initiatives aligned with Industry 4.0 to create a future-ready workforce.

In order to achieve India's ambitious goals outlined in the roadmap for a $5 trillion economy, the budget should prioritise innovation-driven policies, investments in emerging technologies, and the development of products in India, for India and the world, Tata Technologies' Chief Executive Officer and Managing Director Warren Harris said in a statement.

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Ahead of the Union Budget, MakeMyTrip Co-founder and Group Chief Executive Officer Rajesh Magow on Monday said the hospitality sector's long-pending demand for an "industry” status and continued focus on infrastructure development to ensure last-mile connectivity are crucial to realising its full potential.

"The hope is that it should be a growth-oriented budget, which effectively should set the tone for pretty much every sector, including travel and tourism sector for us as well," Magow told PTI.

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However, the government's thrust on capex is expected to continue in FY26. "We expect robust capital spending to remain a key theme in the Budget, both at the centre and state level, notwithstanding the weak trend in the current fiscal year," Morgan Stanley analysts stated in a note.

We advocate for policies that stabilise raw material supply, encourage R&D through tax benefits, and provide subsidies for technological upgrades, shared Kuldip Raina, director-Sales and Marketing at Shalimar Paints. "These steps will reduce production costs, lower energy expenses, and enable greater industry participation," he said.

"The budget has the potential to be a turning point for the paint industry. With heightened investments in construction, including housing, cement, and steel, along with targeted fiscal policies, the industry looks for robust growth. These measures will not only support fiscal deficit reduction goals but also significantly contribute to India's economic development," said Raina.

Shams Tabrej, CEO at Ezeepay expects a further boost to fintech funding, especially for rural regions, which might lead to an investment growth upward of 20-25% at best. 

"The Union Budget will build upon the prodigious leap that India witnessed concerning digital payments with over 12 billion UPI transactions monthly and a transaction volume of over Rs 15 trillion in 2024," Tabrej shared. 

"Fintech innovation funding and sops for tax are likely to dominate. The startups trying to make advances and progress towards making AI the standard in AI for fraud detection and secured payment systems may garner 10-15% R&D budget enhancement. Furthermore, it is also expected that merchant onboarding benefits may be included in Tier 2 and Tier 3 cities, thereby accelerating wider adoption by this sector in the digital payments field," he said.

Subsidies for real-time payment solutions such as the UPI, which now governs more than 75% of the retail digital transactions, could be furthered with the intent to expand their scale and interoperability. Likewise, any expansion of schemes for bringing in 100 million more digital payment users from rural areas will be viewed with much interest. 

Tabrej highlighted that the budget will harness a $350 billion digital economy as India beings going through inclusive growth, innovation, and secure digital payment systems to promote financial inclusion and economic advancement.

We at Finolex Cables look forward to policies that bolster India’s infrastructure and manufacturing sectors, which are key growth drivers for our industry, shared Mahesh Viswanathan, deputy CEO and CFO, Finolex Cables Ltd.

"With the construction sector contributing significantly to the demand for electrical wires and cables, targeted investments in affordable housing and urban development will have a cascading impact on the industry’s growth, Viswanathan said.

He also anticipate incentives for emerging technologies such as renewable energy, electric vehicles, and 5G rollout. These segments will not only boost demand for specialised products like solar and automotive cables but also accelerate the deployment of optic fiber networks, addressing India's underpenetration in digital infrastructure.

"Given rising raw material costs, we hope for measures to ease import duties and stabilise input pricing, ensuring the competitiveness of domestic manufacturers. Furthermore, a supportive capex framework will enable companies to enhance production capabilities, especially in high-growth areas like solar energy and automotive sectors,” he said.

Sachin Jain, Regional CEO, India, World Gold Council, shared that similar to last decade, we expect progressive, people friendly and industry supportive policy announcements.

"The gold industry contributes 1.3% to India's GDP and employs approximately 2-3 million people. The government's decision last July to reduce import duties on gold has significantly had a positive impact on the gold industry. It has reduced unofficial imports, stabilised official channels, and encouraged domestic purchasing of gold. The reduction in taxes on gold has led to a more organised and transparent industry, resulting in a stronger gold market," he said.

Jain said that any increase in import duties in upcoming budget may have adverse effects, potentially leading to an increase in smuggling, higher domestic gold prices, and pushing the industry backwards. "It is imperative that stakeholders, including government bodies, industry players, and financial institutions, collaborate to sustain this positive momentum. By fostering a synergetic environment, we can ensure that the gold industry continues to thrive, innovate and contribute significantly to the India’s economic development and prosperity," he noted.

Jindal Stainless, MD, Abhyuday Jindal, urges the government to raise the basic customs duty on stainless steel products to 15% for all non-Free Trade Agreement countries to safeguard the domestic industry from distortion caused by low-priced imports. "These steps will further strengthen the domestic stainless-steel sector and position it as a vital driver of India’s Viksit Bharat@2047 vision," he further said.

"To boost stainless steel demand, we encourage the government to continue prioritising infrastructure spending, with a strong focus on developing mobility infrastructure like inland waterways, rail infrastructure, and coastal shipping. Securing access to key raw materials is another pressing need," Jindal said.

"We recommend reducing import duties to zero on critical raw materials unavailable in India, such as molybdenum ore, and continuing with zero duties on pure nickel, ferro-nickel, stainless steel scrap, and mild steel scrap. To promote sustainability, we propose making life cycle costing a mandatory criterion for material selection in public procurement," he said.

The real estate sector broadly expects a rise in the price cap for affordable housing, extended home loan tax benefits, and reduced corporate tax rates for affordable housing projects, according to Nitesh Kumar MD &CEO Emami Realty. 

"We anticipate rationalisation of GST rates for affordable housing to stimulate demand and make homeownership more accessible. Enhanced tax benefits for developers, increased infrastructure spending, and expanded affordable housing initiatives under the Pradhan Mantri Awas Yojana (PMAY) are also on our agenda," Kumar said.

Kumar further said, that we support green building incentives and measures to digitize land records, streamline property transactions, and create an interest-free fund for R&D in real estate.  

"The sector also seeks expanded credit guarantee schemes and tax incentives for sustainable materials and technologies. Specifically for Eastern India and West Bengal, increased infrastructure allocation, development of affordable housing projects, tax incentives for developers, and rental housing initiatives are anticipated. Recognising real estate as an industry to facilitate access to cheaper loans is also a key expectation," Kumar further added. 

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The Budget 2025 faces uneven growth, sluggish consumption, and weak private capex, with fiscal consolidation targeting a fiscal deficit of 4.5%. Ex-interest revenue expenditure may drop to 7.7% of GDP, while capex remains steady at 3.1-3.2%, said Madhavi Arora, economist at Emkay Global Financial Services Ltd.

Gross taxes are projected to grow 9%, with gross tax-to-GDP at 11.7%. Personal tax reliefs and incentives for manufacturing hubs/FDIs are expected, while RBI dividends remain strong. Net borrowing is set to drop to Rs 11.15 lakh, with small savings funding 24% of fiscal deficit. The focus may shift to debt/GDP management, leveraging asset sales, disinvestment, and strategic sales for fiscal consolidation.

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