
The most significant takeaway from Budget 2025 is the revision of income tax slabs, offering major relief to taxpayers and boosting disposable income. This, along with strategic reforms in agriculture, MSMEs, startups, healthcare, and infrastructure, sets the stage for inclusive economic growth.
Income Tax Relief For Middle Class India
In a significant relief for middle-class taxpayers, Finance Minister Nirmala Sitharaman raised the Section 87A rebate, making income up to ₹12 lakh tax-free under the new regime.
New Income Tax Slabs:
- ₹0 - ₹4 lakh : No tax
- ₹4 lakh - ₹8 lakh : 5%
- ₹8 lakh - ₹12 lakh : 10%
- ₹12 lakh - ₹16 lakh : 15%
- ₹16 lakh - ₹20 lakh : 20%
- ₹20 lakh - ₹24 lakh : 25%
- Above ₹24 lakh : 30%
Impact:
- No income tax up to ₹12 lakh increases disposable income for taxpayers.
- Positive for the automobile sector, especially two-wheelers and passenger vehicles, as higher disposable income could drive demand.
- Consumer staple companies may benefit as increased rural and urban consumer sentiment is expected due to tax relief and agricultural scheme benefits.
Agriculture Rural Development
Key Announcements:
- Dhan Dhanya Krishi Yojna: A scheme in collaboration with states to improve farm productivity in 100 low-productivity districts, benefiting 1.7 crore farmers.
- Makhana Board in Bihar: A new initiative to support Makhana farmers in Bihar, focusing on training and skill development.
- Cotton Productivity Mission: A 5-year mission to enhance cotton production, specifically benefiting the textile sector.
- Kisan Credit Card Limit: The credit limit under KCC is raised from ₹3 lakh to ₹5 lakh.
Impact:
- The cotton productivity mission is positive for textile sector companies, including yarn and garment manufacturers.
- The Dhan Dhanya Krishi Yojna will boost farm output and crop diversity, which is positive for agrochemical players.
- Rural income improvements may also benefit the automobile sector, particularly in two-wheeler and passenger vehicle segments.
MSMEs & Manufacturing
Key Announcements:
- MSMEs account for 45% of India’s exports; the government aims to support 7.5 crore MSME jobs.
- National Manufacturing Mission to strengthen small, mid, and large-scale industries.
- A new initiative to make India the Global Hub for Toys.
- Increase in credit guarantee cover for MSMEs to ease access to finance.
- New policies aimed to boost domestic production of non-leather footwear & support to the leather segment.
Impact:
- More credit availability for MSMEs means better growth prospects for small and mid-scale industries.
- The toys manufacturing sector will receive a boost, positioning India as a leader in toy exports.
- The Jal Jeevan Mission extension to 2028 is positive for domestic pipe manufacturers.
- New policy for the leather & non-leather footwear will enhance India's footwear exports in global markets.
Aviation & Tourism
Key Announcements:
- Udaan Connectivity Scheme aims to expand air travel by adding 120 new destinations.
- 4 crore additional passengers are expected over the next 10 years.
Impact:
- Positive for airline ancillaries, hotels, and the tourism sector, as better connectivity boosts travel demand.
Financial Sector & Insurance
Key Announcements:
- FDI limit in insurance raised from 74% to 100%.
- ₹10,000 crore AIF Fund of Funds to support startup investments.
ICICI Direct Research Impact:
- Higher FDI in insurance could increase capital inflows and support sectoral growth.
- The AIF Fund of Funds will enhance early-stage capital availability, driving startup innovations.
Power & Renewable Energy
Key Announcements:
- Import duty exemption on capital equipment used in lithium-ion battery manufacturing.
- Customs duty scrapped on cobalt, lithium, lead, and zinc waste, supporting metal recycling.
Impact:
- Encourages domestic Li-Ion battery production, positive for battery manufacturers.
- Scrapping customs duties on metals is positive for metal recycler companies.
Healthcare & Medical Tourism
Key Announcements:
- Heal in India initiative to promote medical tourism.
- Streamlined visa norms for foreign medical patients.
- Exemption of customs duty on 36 life-saving drugs for cancer and rare diseases.
Impact:
- The Heal in India initiative is positive for private hospitals, supporting their expansion.
- Customs duty exemption on life-saving drugs will benefit pharmaceutical companies importing and distributing these medicines.
Customs & Manufacturing Reforms
Key Announcements:
- Customs Duty on TV Components:
- Basic Customs Duty on flat-panel displays raised from 10% to 15%.
- Duty on open cells used in TV manufacturing reduced to 5%.
Impact:
- Positive for TV manufacturers as reduced duty on open cells lowers production costs.
Fiscal Deficit Reduction
Key Announcements:
- Fiscal Deficit Target: FY25: 4.8% | FY26: 4.4%
Impact:
- Continued fiscal consolidation indicates stronger economic discipline.
Conclusion: A Budget for Growth & Consumption
The biggest winner from Budget 2025 is the Indian consumer, with lower income tax rates putting more money into people's pockets. This is expected to boost demand across automobiles, real estate, consumer goods, and travel.
Sectors like agriculture, MSMEs, startups, insurance, and EV manufacturing will also benefit from targeted government initiatives. With fiscal prudence, tax relief, and strategic sectoral incentives, the budget sets India up for long-term growth and economic stability.