The Union Budget 2026-27 prioritizes public capital expenditure and urban infrastructure as key components of India’s medium-term growth strategy, having direct repercussions for the real estate, construction, and related industries.
The Budget presented by Finance Minister Nirmala Sitharaman increases capital spending, enhances urban housing projects, and establishes targeted funding for city regeneration, while maintaining support for industrial clusters and infrastructure. Housing allocations, urban renewal financing, and manufacturing-related incentives indicate a calibrated approach that prioritizes asset completion, capacity creation, and supply-side efficiency. In addition, tax and customs initiatives seek to lower costs for capital items, contractors, and MSMEs.
Get a quick overview of all the key announcements and provisions in this year’s budget for the real estate and infrastructure sectors:
Real estate and housing
The allocation for PMAY-Urban in Budget Estimates (BE) 2026-27 is ₹18,625 crore, with an extra ₹3,000 crore for PMAY-Urban 2.0 to boost urban housing building.
Establishment of new dedicated freight corridors connecting Dankuni in the east with Surat in the west.
Recycling of CPSEs’ real estate assets through the formation of dedicated Real Estate Investment Trusts (REITs).
The Budget allocates ₹10,000 crore for the Urban Challenge Fund, which supports urban redevelopment, brownfield projects, and innovative city infrastructure.
20 new national waterways will be operationalized, connecting mineral-rich areas, industrial centers, and ports.
A Coastal Cargo Promotion Scheme will be launched with the goal of increasing inland waterways and coastal shipping’s contribution from 6% to 12% by 2047.
AMRUT has received ₹8,000 crore under BE 2026-27 for urban water supply, sewerage, and drainage development.
Construction and infrastructure
The expected capital expenditure for BE 2026-27 is ₹12.22 lakh crore, compared to ₹10.96 lakh crore for RE 2025-26.
Setting up the Infrastructure Risk Guarantee Fund to offer lenders with appropriately adjusted partial credit guarantees.
The budget for effective capital expenditure, including grants for asset creation, is ₹17.14 lakh crore in BE 2026-27.
The budget contains ₹7,350 crore for infrastructure maintenance, an increase from ₹7,000 crore in RE 2025–26.
A plan has been announced to revitalise 200 legacy industrial clusters by addressing common infrastructure, utilities, and industrial facilities.
Infrastructure equipment and capital goods
The budget proposes specific initiatives to boost local production of high-value construction and infrastructure equipment, such as production-linked and cluster-based subsidies.
Non-residents who sell capital goods, equipment, or tooling to toll manufacturers in bonded zones are excused from paying income taxes for five years.
A postponed customs duty payment window has been established for reputable manufacturers, hence boosting cash flows for capital goods makers.
Power and energy
Energy security has been designated as a key growth pillar, with a continuous emphasis on building local capacity and reducing essential import dependence.
Customs duty exemptions have been offered for specific components used in aircraft and sophisticated manufacturing, which will indirectly benefit power and energy equipment supply chains.
The scheme aims to invest ₹20,000 crore in Carbon Capture, Utilisation, and Storage (CCUS).
Import of sodium antimonate for use in the fabrication of solar glass is exempt from basic customs duty (BCD).
Extending the BCD exemption to capital goods used in the production of lithium-ion cells for use in battery energy storage systems.
Extend the existing basic customs duty exemption on imports of commodities essential for nuclear power projects until 2035, and expand it to include all nuclear facilities, regardless of capacity.
The entire value of biogas is excluded from the Central Excise levy on biogas-blended CNG.
BCD exemption on imports of capital items for vital mineral processing in India.
Commercial vehicles and logistics
Sustained public expenditure of 12.22 lakh crore and industrial cluster resurgence are likely to boost freight transportation in infrastructure, mining, and construction sectors.
Export logistics innovations include electronic cargo sealing and factory-to-port clearance, which aim to reduce turnaround time and logistical costs.
Concluding
Overall, while Budget 2026 supports long-term urban and infrastructure development, industry stakeholders say the lack of focused housing initiatives has left important expectations unmet.
