Agriculture and Allied (Fertilisers)
The government’s initial provision for a total subsidy of Rs 1.64 lakh crore in the FY25 budget was later increased by an additional NPK subsidy of Rs 3500/MT for DAP fertiliser. This is expected to result in an additional subsidy of around Rs 3,850 crore, bringing the aggregate subsidy budget for FY25 to approximately Rs 1.68 lakh crore. Timely increases in the subsidy budget and disbursement of subsidy dues have helped the fertiliser industry maintain manageable subsidy receivables, with leverage levels remaining comfortable.
According to CareEdge Ratings, the industry is expecting an allocation of Rs 1.75 lakh crore for subsidies towards urea and non-urea fertilizers in the upcoming FY26 budget. There has been a long-standing demand to reduce import duty on phosphoric acid and rock phosphate imports to enhance the competitiveness of domestic fertiliser manufacturers. There is also an expectation for incentives to promote organic fertilisers and make India a hub for organic fertiliser production.
Auto and Auto Components
In the FY24 and FY25 budgets, there was a focus on accelerating the adoption of Electric Vehicles. The upcoming FY26 budget is expected to continue this focus while also introducing incentives aimed at improving EV charging infrastructure.
CareEdge Ratings anticipates that the Union Budget will address a simplified classification and GST framework for auto and auto components. It also expects incentives for expanding EV charging infrastructure, promoting sustainable transportation ecosystem nationwide, and encouraging faster deployment of electric buses and trucks. Other expectations include a uniform GST rate on batteries, tax incentives for hybrid vehicles, and relaxation/modifications in the PLI scheme to facilitate the participation of smaller players.
Financial Services
The banking sector has shown improvements in capital buffers, asset quality, and profitability amid significant business expansion. The growth in bank credit has been converging towards deposits, with industrial credit rising but remaining below the growth in loans to other major sectors. Services and personal loans have led overall credit growth, with asset quality improvements seen across the board.
Non-Banking Financial Companies (NBFCs) have maintained robust credit growth, with personal loan growth decelerating and loans to industry and services accelerating. The sector has witnessed a downward trajectory in the GNPA ratio, while the capital position remains steady. Challenges in asset quality have been observed in the Microfinance Institution (MFI) and unsecured business loan segments.
CareEdge’s expectations for the sector include incentivizing deposit inflows into the banking sector, improving credit flow to MSMEs, agriculture, and infrastructure through interest subvention schemes and expanded credit guarantees. There is also a focus on sectoral reforms, affordable housing finance, and measures to address challenges faced by MFIs and NBFCs.
Insurance and Others
Infusion of capital in public sector general insurance companies is expected to lower solvency ratios and provide growth capital. Sectoral reforms, such as composite licensing and GST reduction on term life and health insurance policies, are anticipated. Optimisation of the Insolvency and Bankruptcy Code (IBC) to enhance speed of resolution and increase recoveries is also expected.
Hospitality & Tourism
Positive demand, limited room supply, and increasing international traffic are expected to continue impacting hotel pricing. The budget is anticipated to introduce reforms such as granting “infrastructure” status to the hotel industry, promoting investments in sustainable tourism, and rationalizing taxes for hotels and convention centres.
Pharma and Healthcare
The pharmaceutical sector witnessed robust growth in FY24, with further growth expected in the coming years. CareEdge Ratings anticipates an increase in healthcare budget allocation to enhance infrastructure in rural areas and promote R&D in the pharmaceutical sector. Other expectations include a reduction in the GST rate on health insurance premiums, incentives for domestic healthcare device manufacturers, and measures to encourage R&D in the sector.
Real Estate
The real estate sector has shown growth in the mid and luxury segments post-pandemic, with affordability being a key priority in the upcoming budget. Expectations include the reintroduction of schemes for affordable housing, tax benefits for developers, and measures to support completion of stalled projects.
CareEdge Ratings expects industry status for real estate, tax holidays for affordable housing projects, and incentives for affordable housing in the budget. Other expectations include an increase in deductions for home loan interest and principal, and reduction in GST rates for construction materials.
Thermal Power, distribution and transmission
The power sector has witnessed strong demand growth, with a focus on increasing renewable capacity. CareEdge Ratings expects initiatives in the budget to bring electricity under the GST regime, allocate funds for transmission and distribution infrastructure, and promote energy efficiency measures.
Renewable Power
CareEdge Ratings expects measures in the budget to promote the renewable energy sector such as extension of ISTS charge waiver, increased capital allocation towards Green Energy Corridor projects, and incentives for offshore wind capacity development and green hydrogen production.
Roads & Highways
The government’s emphasis on infrastructure development is expected to continue with a focus on expanding road networks, logistics parks, and asset monetisation. CareEdge Ratings expects an increase in budgetary allocation for roads & highways and a shift towards BOT-Toll models for project awarding.
Sugar and Allied Sector
Expectations for the sugar and allied sectors include an increase in Minimum Support Price for Sugar, relaxation of restrictions on sugar exports, and upward revision in procurement prices of ethanol made from sugarcane juice. CareEdge Ratings expects the industry to be included in the ‘Priority Sector’ category for enhanced benefits.
Telecom Sector
The telecom industry expects PLI schemes for domestic telecom equipment manufacturing, tax concessions for data centres, and clarity on income taxation for non-resident operators in the upcoming budget. CareEdge Ratings anticipates measures to support sustainable growth in the sector.
Textile
The Indian textile industry is expected to grow at a steady pace, benefiting from global demand and potential FTAs. Expectations for the sector include interest equalisation for export credit, PLI schemes, and reduction in BCD rates for raw materials.
Steel
Domestic steel consumption is projected to grow, driven by infrastructure spending and the ‘Make in India’ initiative. Expectations include measures to curb imports and boost domestic production.
