By: N Jayalakshmi
Last updated : February 03, 2026 11:42 am
With a focus on structural reforms across industries, boost in capital expenditure, infrastructural development and digital economy, among others, the Union Budget 2026 just announced by the Finance Minister, promises long-term stability and has the potential to drive growth for industries like Retail, feel industry leaders.
The Union Budget 2026 presented by Finance Minister Nirmala Sitharaman, her ninth consecutive one, has been welcomed by many for its message of stability, focus on manufacturing, capital expenditure, and long-term structural reforms.
The capital expenditure allocation of ₹12.22 trillion, representing 4.4 per cent of GDP, is reportedly the highest in at least a decade.
For the retail eco-system comprising brands and retailers across categories, and the allied industries, what does the Union Budget offer?
According to Kumar Rajagopalan, CEO, Retailers Association of India, “Union Budget 2026–27 is not designed to stimulate consumption in the short term. Instead, it focuses on shaping the operating environment for retail through fiscal consolidation, infrastructure investment, MSME enablement, skilling, and regional growth. For the retail sector, its impact will be gradual and uneven, driven more by improvements in supply chains, workforce readiness, and rural and non-metro demand than by direct policy support.”
Overall the industry has given a thumbs-up to the emphasis on long term macroeconomic stability, infrastructure development, MSME growth, and the push toward technology and AI adoption, besides support for skill development, women empowerment, research and development, and knowledge hubs.
Some key aspects of Union Budget 2026 that have the potential to make a difference to the retail industry:
MSME focus
As RAI says in its statement, “MSMEs remain central to retail manufacturing, sourcing, logistics, and store operations. Compliance simplification, access to capital, and TReDS-based payment systems address key constraints. The measures can improve vendor stability and working capital cycles.
According to ZOFF Foods Co-founder Akash Agrawalla, “The revival of 2,000 industry clusters and the ₹10,000-crore MSME Growth Fund are masterstrokes for the manufacturing ecosystem. By integrating platforms like GeM and TReDS, the government is effectively solving the liquidity bottlenecks that often hinder small enterprises.”
Tarun Agrawal, Co-founder & CEO, Healthy Master, also feels the Budget offers growth catalysts for startups and D2C brands. "For the D2C and healthy snacking sector, the Budget 2026 serves as a strong growth catalyst. The introduction of the ₹10,000 crore MSME Growth Fund creates a vital liquidity avenue for startups looking to scale beyond the early stage. The structural reforms will empower brands like ours to make healthy living more accessible to the masses."
Growth of tier 2/3/4 markets
The budget also reflects a sustained focus on boosting growth across tier 2, tier 3, tier 4 and smaller towns which will help improve consumption. As Suvankar Sen, MD and CEO, Senco Gold and Diamonds says, “As infrastructure and income levels rise, consumption is expected to deepen significantly across tier 2, tier 3, tier 4 cities and smaller towns, which will be a key driver for organised retail and jewellery demand.”
Akash Agrawalla agrees, "The Union Budget 2026–27 is a forward-looking blueprint that democratises growth across India. As a brand rooted in Raipur, we welcome the focus on Tier-2 and Tier-3 cities as the Bharat's new growth engines.”
Agro boost- Sowing the seeds for tech-led growth
The focus on improving farmers’ incomes across agriculture, fisheries, and animal husbandry and facilitating tech support for farmers with the introduction of Bharat Vistar, a multilingual, AI-driven platform integrated with AgriStack, can help address challenges in the eco-system and improve last mile distribution and supply chain. As Gaurav Manchanda, Founder & Director - The Organic World, says, “The push for AI-enabled agritech can help bridge information gaps and enhance productivity across diverse farming communities. Collectively, the measures can support stronger rural livelihoods and enable wider access to clean, sustainable, and nutritious food for consumers across the country.”
Prashant Peres, General Manager-India, Mars Snacking, agrees, “Budget 2026 takes a pragmatic approach to stabilising the operating environment for FMCG and food businesses amid global uncertainty. Measures to support rural incomes and enhance access to emerging consumption centers beyond metros are also likely to strengthen demand, paving the way for more balanced and sustainable growth.”
The view is echoed by other FMCG industry leaders. As Aman Choudhary, Executive Director, Anmol Industries, says, “The Budget’s support for infrastructure and MSME growth, including a ₹10,000 crore growth fund, will help strengthen supply chains and ease working capital constraints for food and FMCG manufacturers. Continued focus on logistics networks and rural connectivity can help companies like ours expand reach while keeping everyday food products affordable.”
Draping the Textile Sector with Support Measures
Union Budget 2026 also announced a slew of measures to revive what has traditionally been one of India’s strongest industries – Textiles.
As Santosh Katariya, President, Clothing Manufacturers Association of India (CMAI), says,“We welcome the Finance Minister’s Budget 2026-27 and the comprehensive measures announced for India’s textile value chain. The package signals a clear, outcomes-oriented intent to modernise the sector, strengthen livelihoods across the value chain, and accelerate India’s competitiveness in domestic and global markets. The key initiatives announced address the textile economy end to end.”
Of particular highlight is the planned establishment of new Mega Textile Parks in mission mode, which, according to CMAI, will attract investment, improve compliance and traceability, and create integrated hubs for scale, quality control and exports.
All of these measures are of course significant for brands and manufacturing companies operating in the textiles/apparels eco-system.
As Sandeep Kapoor, Chairman & Managing Director of SHREE (SHR Lifestyles Pvt. Ltd.), says, “Indian apparel brands do not struggle with demand; they struggle when supply is weak. This budget recognises that reality. The focus on textile clusters, skilling, and organised manufacturing goes to the heart of the industry’s scale problem. Having built a brand across markets, I have seen that growth only sustains when manufacturing, artisans, and retail move together.”
Priyavrata Mafatlal, Vice-Chairman at Arvind Mafatlal Group & Managing Director at Mafatlal Industries, echoes the above view, “The thrust on modernization of textile clusters and technical and value-added manufacturing is expected to improve productivity, quality, and speed-to-market, which are critical drivers of global competitiveness.”
Akhil Jain, CEO & MD, Madame, agrees, “The Union Budget 2026–27 takes a meaningful step towards strengthening India’s textile and apparel ecosystem. For contemporary fashion brands, the emphasis on fibre self-reliance, upgraded manufacturing clusters, and initiatives like Text-ECON and SAMARTH 2.0 will support more agile, responsible, and design-led growth. “
Sujata Biswas & Taniya Biswas, Founders, Suta Sarees, feels the measures announced in the Budget will “not only preserve our legacy but also propel Indian textiles onto the global stage as a champion of both tradition and innovation”.
The Budget also reflects a heightened focus on improving the digital economy and leveraging tech as an enabler across diverse industries.
Of course, not industries are equally buoyant. Jignesh Mehta, MD and Founder, Divine Solitaires, feels, “ While the Finance Minister’s long-term focus on infrastructure development, skill development, and AI/technology-enabled growth elevate the manufacturing ecosystem at a broader level, the absence of key announcements for the natural diamonds industry and the Gems & Jewellery sector was a disappointment. We were expecting more targeted reforms, given India’s position as one of the largest diamond manufacturing and processing hubs globally.”
It also remains to be seen how much of the perceived benefits will percolate down to the respective industry eco-systems in a tangible way in the near future. But if the focus on structural reforms translate into end to end implementation, then it can go a long way in strengthening industries like Retail where factors like MSME growth, consumption, consumer spending and supply chain have a critical role to play.