Budget 2025: India Inc. calls for bold reforms, capex boost, and tax relief

India Inc. is optimistic about the country’s growth prospects in 2025-26 and has called for a slew of measures, including capital expenditure, furthering the ease of doing business, and simplifying the tax regime in the upcoming budget, according to the Pre-Budget 2025-26 survey conducted by industry body Ficci. Respondents highlighted infrastructure, manufacturing (particularly Industry 4.0), and agriculture/rural development as critical areas requiring policy attention.

Participants also stressed the continued need to support MSMEs, given the sector's pivotal role in driving employment creation.

According to the survey findings, about 64% of participants expressed optimism regarding India’s growth prospects ahead of the Union Budget. “Nearly 60% of participants projected a GDP growth rate between 6.5 and 6.9% for 2025-26. Although this marks a moderation from the high growth of over 8.0% seen in 2023-24, it aligns with the persistent headwinds arising from external factors,” Ficci said in a release on the survey's findings.

The survey indicated that India Inc. believes the government’s commitment to fiscal consolidation has put the economy in a strong position, with participants expecting the government to remain on this course. “About 47% of participants expect the government to meet the fiscal deficit target of 4.9% for FY 2024-25, while another 24% believe the government could improve and report a lower fiscal deficit for the current year,” Ficci added.

The survey was conducted between late December 2024 and mid-January 2025, drawing responses from over 150 companies across diverse sectors, offering comprehensive insights into India Inc.’s sentiments amidst moderating economic growth.

Sustaining Capex

The majority of respondents emphasised the need to sustain public capital expenditure, with 68% calling for a greater focus on capex to maintain the growth momentum. At least a 15% increase in capex allocation for FY 2025-26 is expected by members of Indian industry, Ficci said.

Factor Reforms

Additionally, more than half of the respondents stressed the importance of reforms to further enhance the ease of doing business. Reforms related to factors of production—particularly in areas such as land acquisition, labor regulations, and power supply—remain crucial, the industry body noted.

The previous year’s Union Budget had outlined a roadmap for next-generation reforms, and industry members are looking forward to further guidance on these matters, Ficci added.

Tax Relief to Boost Demand

The industry survey also revealed concerns about demand and the need for relaxation in the direct tax slabs. “Further concern was expressed regarding the subdued demand situation. A significant number of industry members have called for a review of the direct tax structure. A reassessment of the tax slabs and rates is necessary, as this could leave more money in the hands of people and spur consumption demand in the economy,” Ficci said.

“The respondents also called for a strong policy push to simplify the tax regime, incentivise the development of green technologies/renewables and EVs, and ease compliance through digitisation. On the taxation front, providing tax certainty, addressing customs duty inversion, and rationalising TDS provisions were highlighted as important issues by the participants,” Ficci added.

The participants also expressed support for an amnesty scheme under customs, with 54% in favour of its introduction to enable swift resolution of disputes.

Exports

Export competitiveness emerged as another priority, with respondents emphasising the need for improvements in logistics efficiency and the continuation of interest equalisation schemes to enhance India’s global trade position.