The Union Budget 2026–27 continues India’s strategic shift toward enterprise competitiveness, formalisation, production-led growth, and structural demand creation. It delivers mixed cost outcomes for the food & beverage (F&B) ecosystem, targeted support for FMCG industry expansion, a calibrated policy framework for MSMEs and compliance enablement, and dedicated platforms for women-led enterprise growth. The budget refrains from broad consumption subsidies, instead prioritising sector incentives, rural retail integration, value-chain formalisation, and export competitiveness.
Food & Beverage Sector: Mixed Cost Signals
Budget recalibrations will have uneven cost implications for F&B producers, processors, retailers, and commercial operators:
Cheaper / Cost Reductions
- Biogas-mixed CNG: Full excise duty exclusion on biogas inputs lowers the cost of biogas-mixed CNG, supporting cleaner fuel adoption and agri-linked energy supply chains.
- Microwave oven manufacturing inputs: Customs duty exempted on specified components — expected to reduce manufacturing cost and support domestic value addition.
- Seafood processing inputs: Duty-free import cap raised from 1% to 3% of FOB export value, improving sourcing flexibility and global competitiveness for seafood processors.
Simplification
- Alcohol TCS rationalised to a flat 2% — simplifies compliance for sellers, though retail prices may not fall.
Cost Increases
- Commercial LPG cylinders: Price for 19-kg cylinders increased by Rs 49, raising operating costs for restaurants, hotels, cafés, and food vendors reliant on LPG.
- Coffee roasting, brewing & vending machines: Withdrawal of duty exemptions will inflate capital costs for cafés and corporate beverage counters.
Static
- Milk prices: No revision under the 2026–27 budget cycle.
FMCG Sector: Moderately Positive Outlook with Structural Support
Analyst commentary and sector reports indicate the budget’s measures should have a moderately positive influence on FMCG demand and supply dynamics by bolstering rural incomes and supporting agri-linked output:
- Rural consumption catalysts like enhanced agricultural information infrastructure (e.g., AI-driven platforms) aim to stimulate consumption growth in non-urban markets — a key demand engine for FMCG firms.
- PLI and global branding initiatives are designed to strengthen segmental production capabilities, with targeted outlays for processed foods and export-oriented products.
- Duty tweaks across hygiene, personal care, and related inputs support localisation without immediate negative impact on core sector competitiveness.
Funding & Growth
- Rs 10,000 crore SME Growth Fund established to enhance competitiveness and scale.
- Top-up to existing Self-Reliant India Fund expands the equity cushion for emerging firms.
Liquidity & Market Access
- Mandatory TReDS use by Central PSUs for MSME supplier settlements improves payment cycles and cash flow.
- GeM-TReDS integration and invoice financing support via guarantee schemes unlock capital via discounting and securitisation pathways.
Collectively, these interventions are aimed at formalising MSME operations, reducing governance costs, and facilitating access to finance and markets. and related inputs support localisation without immediate negative impact on core-sector competitiveness.
Sector headwinds remain, including raw-material inflation and cost pressure on palm oil, coffee, and cereal inputs that continue to squeeze margins.
MSMEs: Growth Funding, Compliance Facilitation, and Liquidity Enhancements
Budget 2026 emphasised enterprise scalability and formalisation for MSMEs with multi-pronged interventions:
Funding & Growth
- Rs 10,000 crore SME Growth Fund established to enhance competitiveness and scale.
- Top-up to existing Self-Reliant India Fund expands the equity cushion for emerging firms.
Liquidity & Market Access
- Mandatory TReDS use by Central PSUs for MSME supplier settlements improves payment cycles and cash flow.
- GeM-TReDS integration and invoice financing support via guarantee schemes unlock capital via discounting and securitisation pathways.
- Corporate Mitras cadre to assist MSMEs with compliance, reporting, and statutory obligations at a lower cost — a tier-2/tier-3 focus aiming to reduce regulatory friction.
Collectively, these interventions are aimed at formalising MSME operations, reducing governance costs, and facilitating access to finance and markets.
Women-Led Enterprise Enablement: SHE-Marts Initiative
The budget introduced SHE-Marts, a cluster-level retail and entrepreneurial platform for women, particularly in rural regions.
- Designed to transition women from loan recipients to business owners, SHE-Marts provide market access, branding opportunities, and product showcase platforms for female entrepreneurs.
- The initiative builds on existing rural self-help models and is expected to strengthen women-led microenterprise ecosystems.
Agriculture Push in Budget 2026–27
Finance Minister Nirmala Sitharaman positioned agriculture as a cornerstone of India’s growth and “Viksit Bharat” vision, emphasising technology, high-value crop support, and rural livelihoods. Key announcements included the launch of Bharat VISTAAR, a multilingual AI platform integrating AgriStack and ICAR advisories to deliver data-driven advisories on crops, weather, and markets, aimed at boosting farm productivity and reducing decision-making risk.
The budget also targeted diversification and value addition in farming: dedicated programmes for high-value crops such as coconut, sandalwood, cashew, cocoa, and nuts; market and value chain strengthening for fisheries and animal husbandry; and support for livestock, dairy, and poultry enterprises. These efforts are designed to increase incomes for small and marginal farmers while expanding rural enterprise opportunities.
What The Sector Is Saying
Jayesh Desai, Chairman, Rajhans Group
Budget 2026–27 provides a strong and timely impetus to India’s textile and manufacturing ecosystem. The proposed mega textile parks, modernisation of traditional clusters, and focused support for technical and sustainable textiles will significantly enhance India’s global competitiveness and export readiness. Equally important is the emphasis on logistics and infrastructure, particularly the announcement of new Dedicated Freight Corridors, including enhanced east–west connectivity linking Surat with major production and consumption centres. These measures will improve supply chain efficiency, reduce logistics costs, and strengthen India’s position as a reliable global sourcing destination. In all, the Budget demonstrates a long-term, integrated approach to industrial growth, employment generation, and value-added manufacturing.
Ekansh Garg, Co-founder & CEO, Cravicious Foods
It’s encouraging to see the Union Budget 2026–27 put the spotlight firmly on India’s food processing sector. Support for the Pradhan Mantri Formalisation of Micro Food Processing Enterprises (PMFME) Scheme, along with the proposed Rs. 28,000 crore allocation over five years for flagship food processing initiatives signals a serious push to modernize infrastructure, expand cold storage, and strengthen production and testing facilities. For companies like ours, this creates the foundation to grow responsibly, maintain high quality, and ensure compliance. Strong infrastructure not only helps reduce wastage but also enables brands to scale efficiently and deliver products that meet both domestic and global standards. This approach makes it clear that India is committed to becoming a global hub for clean, ready-to-cook, and frozen foods, giving businesses the confidence to innovate and bring better solutions to consumers everywhere.
Shakir Haq, CEO, NKP Empire
The Budget sends a clear signal that growth over the next few years will be driven by better infrastructure, stronger tourism, and deeper development across Tier 2 and Tier 3 cities. As connectivity improves and more destinations open up, travel and local consumption will naturally rise, creating new demand for food and hospitality businesses beyond the metros. For restaurant groups like NKP Empire, this is an opportunity to expand into emerging markets where organised dining is still evolving. Improved logistics and a growing tourism ecosystem also make it easier to scale operations while maintaining quality and consistency. Overall, the Budget creates a supportive environment for hospitality brands to grow alongside India’s changing travel and consumption patterns, especially in cities that are just beginning to see increased footfall and economic activity.
Dhruv Taneja, Founder and Global CEO, MatchLog Solutions
“The Union Budget 2026–27 delivers a visionary blueprint for India’s logistics backbone, with public capex rising to ₹12.2 lakh crore, new freight corridors between Dankuni and Surat, 20 additional national waterways, coastal cargo promotion, and seven high-speed rail corridors all pointing to a clear focus on faster, greener cargo movement and last-mile connectivity. The creation of an Infrastructure Risk Guarantee Fund, dedicated REITs for CPSE real estate recycling, and a ₹5,000 crore outlay for City Economic Regions in Tier II and III cities further underline the intent to de-risk long-gestation projects and anchor logistics growth where demand is actually emerging.
Equally important are the trust-based customs and warehousing reforms and the proposed container manufacturing scheme, which can strengthen India’s position in global trade flows. The next big unlock now lies in directly incentivising container reuse and reduction of empty runs, backed by data-driven frameworks for measurable emission reduction. Clear signals on technology adoption, reuse-led models, and outcome-based incentives would help scale digital platforms faster and make India’s supply chains not just more efficient, but genuinely sustainable.”
Paritosh Ladhani, Joint Managing Director, SLMG Beverages
“The Union Budget 2026 strongly reinforces a manufacturing-first, ‘Make in India’ approach, which is encouraging for companies that are deeply invested in domestic production and local supply chains. The continued push on infrastructure, with capital expenditure raised to ₹12.2 lakh crore, will directly benefit beverage manufacturers by improving logistics efficiency, distribution reach, and last-mile connectivity across markets. The focus on localisation across bottling, packaging and allied inputs supports greater cost stability and resilience, while sustained support for MSMEs remains critical given their integral role in our vendor and transport ecosystem. Although there were no direct tax incentives for non-alcoholic beverages, the broader pro-manufacturing and pro-consumption policy environment, along with ongoing discussions on GST rationalisation, provides a positive foundation for volume-led growth and long-term expansion of India’s packaged beverage sector.”
Gaurav Manchanda, Founder & Director, The Organic World
“The introduction of Bharat Vistar, a multilingual, AI-driven platform integrated with AgriStack, is a positive step towards expanding access to agricultural knowledge and equipping farmers with advanced tools to make better-informed decisions. The push for AI-enabled agritech can help bridge information gaps and enhance productivity across diverse farming communities. As the Founder and Director of The Organic World, I view these measures as important building blocks for a more inclusive and future-ready agricultural ecosystem. Collectively, they can support stronger rural livelihoods and enable wider access to clean, sustainable, and nutritious food for consumers across the country.”
Abhay Parnerkar, CEO, Godrej Foods Ltd.
“The Union Budget 2026 reflects a strong and welcome focus on strengthening India’s Agri and animal husbandry ecosystem. The government’s push towards credit-linked support for animal husbandry, development of farmer-producer organizations, and integrated approaches to improving farmer incomes will go a long way in reinforcing resilient, future-ready food value chains. At Godrej Foods Ltd, our farm-to-fork model is built on deep partnerships with farmers, who remain central to everything we do, from quality and traceability to consumer trust. Continued investment in agricultural infrastructure, innovation, and manufacturing capabilities not only empowers farmers but also enables food brands to deliver safe, nutritious, and responsibly produced food to Indian households. These measures signal a positive step towards building a more sustainable and inclusive food economy.”
Dr. Ashvini Jakhar, Founder and CEO, Prozo
“The Budget 2026–27 sends a strong signal that resilient, technology-led supply chains are central to India’s growth strategy. The Government’s continued emphasis on public capital expenditure, scaled up to ₹12.2 lakh crore, along with new Dedicated Freight Corridors, the operationalisation of 20 National Waterways, and a clear push for modal shift to greener logistics, will materially reduce friction and improve the speed and reliability of goods movement across the country.
By prioritising infrastructure development, domestic manufacturing, and MSME enablement, the Budget reinforces the link between efficient logistics networks and economic competitiveness. Measures such as the ₹10,000 crore SME Growth Fund, enhanced TReDS-based liquidity, and logistics-linked industrial corridors will help smaller enterprises integrate more effectively into domestic and global value chains.
For integrated supply chain platforms like Prozo, this Budget is an enabler for scalable, end-to-end logistics models combining warehousing, fulfilment, and data-driven visibility. As India accelerates its manufacturing and export ambitions, technology-enabled and transparent logistics infrastructure will be critical to ensure businesses of all sizes can compete efficiently in both domestic and global markets.”
Mohit Malhotra, CEO, Dabur India Limited
“The Union Budget 2026–27 was on expected lines as it reflects quiet strength and continuity. This is not a Budget driven by short-term populism. Instead, it places its faith in continuity, institution-building, and resilience. With a sustained focus on enhancing farmer income, institution-building, infrastructur,e and maintaining fiscal discipline, the Budget reinforces confidence in India’s medium-term growth trajectory, even as it avoids dramatic policy shifts.
The continued emphasis on public investment is a key positive, with capital expenditure rising nearly 9% to ₹12.2 lakh crore for 2026–27, underscoring the government’s commitment to infrastructure-led growth. The sharper focus on Tier-2 and Tier-3 cities, along with the recognition of Global Capability Centres as a growth driver, is expected to broaden India’s economic footprint beyond metros. For companies like Dabur, these measures will help drive deeper penetration of branded consumer products by improving access, logistics efficiency, and income resilience across Bharat.
The Budget’s systematic push to strengthen India’s traditional medicine ecosystem is particularly encouraging. Announcements, including the setting up of three new All India Institutes of Ayurveda, training of caregivers in yoga and Ayurveda services, creation of integrated AYUSH-led medical hubs, and the upgradation of AYUSH pharmacies and testing laboratories, mark a significant step towards mainstreaming Ayurveda through scale, standards, and skills. This aligns well with our long-standing engagement with Ayurveda and rural livelihoods, including partnerships with over 13,000 farmers cultivating medicinal plants across the country.
At the macro level, the commitment to fiscal discipline, with the fiscal deficit pegged at 4.3% of GDP, provides reassurance on policy credibility and economic stability. While the absence of a stronger near-term consumption stimulus and the increase in STT on futures and options remain areas of concern, the Budget’s balanced approach strengthens the foundation for sustainable growth in an uncertain global environment.”
Ankit Kedia, Founder and Lead Investor, Capital-A
“The announcements made today mark a clear inflection point in India’s manufacturing and deep-tech journey. The expansion of the India Semiconductor Mission into equipment, materials, and full-stack IP reflects an important recognition that semiconductors and advanced manufacturing cannot be built in silos, and that value creation sits across the entire supply chain. “By coupling this with higher allocations for electronics components, capital goods, and critical inputs such as rare earths, the Budget lays the groundwork for durable industrial growth and stronger capital formation. However, these sectors are defined by long investment cycles and high execution risk. To translate today’s intent into sustained growth, investors will need greater clarity on implementation timelines, incentive design, and the role of private capital in scaling these ecosystems.”
Aayush Madhusudan Agrawal, Founder and Director, Lenexis Foodworks
“The Union Budget 2026 reflects a strong commitment to sustainable growth, infrastructure-led development, and ease of doing business. For the QSR industry, the focus on Tier 2 and Tier 3 cities, logistics efficiency, and skilling creates a powerful foundation for the next phase of expansion. At Lenexis Foodworks, we see this as an opportunity to deepen our presence, strengthen our supply chains, and deliver greater value to consumers across India.”
Meenakshi Kumarr, Chef & Founder, Anahata Cafe
“The Budget’s focus on strengthening the hospitality and food & beverages ecosystem is a welcome step for emerging brands like Anahata Café. Upgrading the National Council for Hotel Management into a National Institute of Hospitality will help create a stronger talent pipeline by aligning academia with industry needs—something the F&B sector has long required. The Divyangjan Kaushal Yojana is especially encouraging, as hospitality and food processing offer meaningful, task-oriented roles that can enable dignified and inclusive employment when supported by customised training. Additionally, the creation of a Rs. 10,000 crore SME Growth Fund, along with the Self-Reliant India Fund, will help to nurture SMEs. For women-led F&B and FMCG startups, access to equity capital and risk funding is critical to scaling operations and building resilient supply chains.”
Akash Agrawalla, Co-founder, ZOFF Foods
“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 Bharat’s new growth engines.
The revival of 2,000 industry clusters and the Rs. 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. Furthermore, the expansion of dedicated freight corridors and national waterways will drastically reduce logistics overheads, which is critical for the food processing industry to remain competitive globally.
The emphasis on SHE Mart and high-value agriculture—particularly the support for coastal crops and rural value chains—demonstrates a deep commitment to empowering women-led enterprises and farmers alike. Coupled with the reduction in the MAT rate to 14%, this budget doesn’t just sustain economic momentum; it empowers the next generation of home-grown entrepreneurs to scale sustainably from the heart of India.”
Nischal C, Head of Corporate Communications, QNET India region
“The Union Budget is reform-oriented, introducing measures to empower entrepreneurs and strengthen the business ecosystem. The launch of ‘She Marts’ for women entrepreneurs will provide community-owned retail outlets, enabling women to expand their businesses at the grassroots level.
Additionally, simplification of tax compliance will ease operational challenges for small business owners and distributors, allowing them to focus more on growth. Improvements in digital infrastructure and payments will enhance online connectivity and transaction efficiency, supporting businesses that rely heavily on digital platforms.
These measures will encourage innovation, improve access to resources, and reinforce sustainable growth opportunities for entrepreneurs across sectors.”
