Discover key expectations from Union Budget 2025, including tax reforms, MSME subsidies, EV infrastructure, and digital transformation policies.
As India gears up for the Union Budget 2025, presented by Finance Minister Nirmala Sitharaman on February 1, stakeholders across various sectors are eagerly awaiting reforms and incentives that could drive economic growth. With a focus on tax relief, sustainable development, and innovation, this year’s budget holds the potential to address the needs of salaried employees, MSMEs, and emerging industries like EVs and digital technology. Here’s a comprehensive look at what to expect.
Table of Contents
Relief for Salaried Employees
Tax Reforms and Increased Deductions
One of the most anticipated aspects of the Union Budget 2025 is relief for salaried individuals. Rising inflation and stagnant tax slabs have increased the financial burden on middle-class taxpayers. The government is reportedly considering:
- Revised Income Tax Slabs: Raising the basic exemption limit under the new tax regime from ₹3,00,000 to provide relief to lower-income groups.
- Enhanced Standard Deduction: Offering higher deductions to reduce taxable income for middle-class earners.
Such measures aim to alleviate financial stress and boost disposable income, ultimately driving consumer spending.
Boost for MSMEs
Subsidies and Credit Access
Micro, Small, and Medium Enterprises (MSMEs) have been pivotal to India’s economic growth, contributing significantly to exports. The government is expected to:
- Increase Credit Access: Simplify loan disbursements and offer subsidies to reduce the cost of capital.
- Support Exporters: Enhance incentives to sustain the upward trajectory in MSME exports, which grew from ₹3.96 lakh crore in FY2020-21 to ₹12.39 lakh crore in FY2024-25.
Tariff Adjustments
High import costs for raw materials remain a concern for MSMEs. Industry leaders advocate for reduced import duties on essential inputs like steel and chemicals to enhance global competitiveness.
Accelerating Digital Transformation
Investments in AI and Emerging Technologies
As India aspires to become a global technology hub, the budget is likely to emphasize:
- Innovation in AI, IoT, and Cybersecurity: Increased funding for R&D to position India as a leader in digital transformation.
- Upskilling Initiatives: Programs aligned with Industry 4.0 to create a future-ready workforce capable of excelling in advanced technologies.
Digital Infrastructure Development
Policymakers are expected to introduce measures that bolster digital infrastructure, supporting the seamless integration of financial and technological services.
Electric Vehicles (EVs) and Sustainability
Incentives for EV Adoption
The EV sector anticipates substantial support in the form of:
- Subsidies and Tax Rebates: Financial incentives to make EVs affordable across demographics, especially in tier 2 and tier 3 cities.
- Infrastructure Development: Funding for public charging stations and green mobility solutions.
Skill Development for EV Technicians
Addressing future industry demands, the budget may also allocate funds for upskilling technicians to handle next-generation electric and autonomous vehicles.
Focus on Manufacturing and Real Estate
Support for the Paint Industry
The paint sector, tied closely to infrastructure and real estate development, expects:
- Lower Import Duties: Reduction in tariffs on imported resins and chemicals.
- Boost in Infrastructure Spending: Increased allocations for smart city projects and housing initiatives like PMAY (Grameen).
Production-Linked Incentive (PLI) Schemes
Expanding PLI schemes to other sectors could incentivize local manufacturing and reduce reliance on imports.
Agriculture and Rural Development
Enhancements to MGNREGA
The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) remains a lifeline for rural employment. Key demands include:
- Wage Increases: Raising the national minimum wage to ₹400 per day.
- Extended Workdays: Increasing annual workdays from 100 to 150.
Investment in Agri-Tech
Encouraging innovation in agricultural technology could enhance productivity and sustainability in rural areas.
Key Takeaways for Stakeholders
- Corporates: Tax incentives for Limited Liability Partnerships (LLPs) and clearer guidelines for Global Capability Centers (GCCs).
- Infrastructure Development: Allocations for mobility solutions, inland waterways, and rail projects.
- Health and Wellness: Support for the nutraceutical industry, including research into botanical herbs for wellness solutions.
Conclusion
The Union Budget 2025 has the potential to be transformative, addressing the needs of diverse sectors while fostering economic resilience and innovation. Whether it’s providing relief to salaried employees, empowering MSMEs, or accelerating the adoption of green technologies, this budget could set the stage for a sustainable and inclusive future.
