WHAT BUDGET MEANS FOR...

Roshan Kishore analyses the impact of the third full budget in Prime Minister Narendra Modi's third term

- Roshan Kishore

...Reforms

Not all reforms are announced in the budget. More so in a world where rules of the game are being constantly rewritten as well as being rigged. This year's Union Budget comes less than a week after India signed a Free Trade Agreement (FTA) with the European Union, offering unprecedented tariff concessions to a large economic block. That many more trade deals, including the one with the US, are currently being negotiated, perhaps ruled out blanket big-bang announcements on the customs duty front in the budget. After the rollout and rationalisation of Goods and Services Tax (GST) in 2017 and 2025, slashing of corporate tax rates in 2019 and a new income tax law and significantly relaxed slabs in 2025, customs are the only tax head to have escaped radical reforms. Here, the 2026-27 Budget has followed the incrementalism of trying to correct what experts have termed as inverted duty structure - input imports being taxed more than output exports - impediment to India increasing its share in global value chains rather than any big-bang announcements. While consistent with the government's established practice, this year's budget will underwhelm observers on this front given the finance minister's bold declaration of customs being her next big priority at the Hindustan Times Leadership Summit last year. Perhaps it is a reflection of the fragmentation in geo-economics at large than the government's thinking where deals are being made on a one-on-one basis than with the world at large. Perhaps, the government believed that it had completed its required credits for the reform course before the budget by things such as roll-out of labour codes and increasing FDI limits in sectors such as insurance and opening up critical sectors such as nuclear power (the finance minister mentioned that India had undertaken 350 reforms since August 2025). Be that as it may, there are no big-bang immediately applicable reforms in this budget.