Union Budget 2026: Expectations of the Infrastructure Sector 

As Union Budget 2026 approaches, the infrastructure sector is again expected to be positioned as a key driver of growth. Industry bodies argue that sustained public capital expenditure (Capex) helps crowd in private investment and strengthens the economy’s competitiveness. Media reports suggest that stakeholders across major infrastructure developers and industry participants expect the Centre to use public investment in roads, railways, and urban infrastructure to continue to support India’s growth story.​ 

Continued Push on Capex 

The industry expects the Union Budget 2026 to maintain a strong capital expenditure push, with more calibrated growth in the outlay than the double-digit expansions of earlier years. The focus is likely to remain on high-multiplier sectors such as national highways, logistics, urban infrastructure, and affordable housing to support job creation and to support private investments.​ 

Modernisation of Railways in Budget 2026 

Railways are expected to receive another year of higher allocation to fund station redevelopment, expansion of dedicated freight corridors, and continued rollout of modern trains like Vande Bharat (the long-distance sleeper version of which was to unveiled in January 2026) and similar high-speed services. Based on media reports, industry stakeholders also expect a higher spend on signalling and safety upgrades and multimodal connectivity. This is expected to hep Indian Railways can take a larger share of freight movement across India, and support manufacturing hubs.​ 

The focus on the budget for railways is also expected on decongestion (track doubling, new lines, gauge conversion), safety systems like Kavach 4.0, and advanced signalling instead of sharp jumps in spending.  

Attracting private capital & emphasis on Public-Private Partnerships (PPP) 

Infrastructure developers anticipate a renewed push on public-private partnerships (PPP) for large projects in roads, ports, airports, warehousing, and urban infra. There is strong demand for more flexible viability gap funding (VGF), clearer risk-sharing frameworks, and faster dispute resolution to revive PPP appetite among private players and global funds.​ 

Industry commentary continues to emphasise that private participation is essential to scale infrastructure faster especially via models that reduce disputes. Separately, Confederation of Indian Industry (CII) has urged faster privatisation/disinvestment with a clearer pipeline, arguing this can help resource mobilisation for capex. CII also called for a 12% increase in central capex and higher financial support to states and pitched a new National Infrastructure Pipeline (NIP) for 2026–32 to improve visibility on long-term projects.  

Tax Measures to Drive Infrastructure Growth 

Infra companies and investors are seeking targeted tax measures like clarity and relief on Special Purpose Vehicle (SPV) taxation, interest deductibility, and pass-through treatment for Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs). There are expectations that the Budget will consider more favourable tax treatment for long-gestation infrastructure assets and rationalise indirect tax costs on key construction inputs to lower overall project cost.​ 

Focus on Green and Sustainable Energy 

Green infrastructure is likely to remain a key theme, with expectations of higher allocation and incentives for renewable energy, grid modernisation, and green hydrogen-related infra. Developers are also looking for clarity on carbon markets, potential tax treatment for carbon credits, and incentives for energy-efficient buildings and sustainable transport corridors.​ 

Through clean-energy buildout and industrial decarbonisation financing, industry bodies have sought larger green finance support for heavy industries transitioning to low-carbon processes.  

By sustaining capital expenditure, modernising railways, strengthening PPP frameworks, introducing supportive tax measures, and prioritising green infrastructure, Union Budget 2026 is expected to reinforce infrastructure as a core driver of India’s medium-term growth story. These steps could help unlock private capital, improve connectivity, and support more inclusive development across regions.