Under the Union Budget 2025-26, the centre has re-emphasised its strategic focus on Viksit Bharat 2047 and infrastructure development, a key catalyst in this journey. Other prominent themes include agriculture, MSME, investment, and exports. In order to foster private sector engagement, the infrastructure-related ministries will now come up with a three-year pipeline of projects in the PPP mode. The Union Government will also set up an Urban Challenge Fund of Rs 1 trillion to implement the proposals for ‘Cities as Growth Hubs’, ‘Creative Redevelopment of Cities’ and ‘Water and Sanitation’. Additionally, building on the success of capital recycling efforts, the centre will also launch the second asset monetisation programme for 2025-30, aiming to mobilise funds up to Rs 10 trillion to fund new projects.
Some of the key highlights in various infrastructure sectors are as follows:
Roads
Under the Union Budget 2025-26, the budgetary allocation for the Ministry of Road Transport and Highways (MoRTH) is Rs 2.87 trillion, an annual increase of around 3 per cent from Rs 2.78 trillion (BE) and 2.4 per cent from Rs 2.80 billion (RE) in 2024-25. The budgetary allocation for the National Highways Authority of India (NHAI) now stands at Rs 1.87 trillion, an annual increase of around 11 per cent from Rs 1.68 trillion (BE) and around 10 per cent from Rs 1.69 trillion (RE) in 2024-25. The NHAI’s total debt at the beginning of 2024-25 was around Rs 3.3 trillion, which reduced to Rs 2.8 trillion by end of Q3 2024-25. In a bid to reduce the agency’s debt, the internal and extra budgetary resources (IEBR) for NHAI in 2025-26 remain zero for the fourth year in a row.
Railways
The Union Government has allocated Rs 2,652 billion for Indian Railways under the Union Budget 2025-26, which is similar to the allocations made in the previous year. Of the total outlay, Rs 2,520 billion will be provided by the central government as gross budgetary support (GBS) while a sum of Rs 30 billion will be generated through internal resources of IR, Rs 2 billion through the Nirbhaya fund and Rs 100 billion through extra budgetary resources. Of the total allocation, funds worth Rs 322.35 billion have been allocated for construction of new lines, Rs 320 billion for doubling, Rs 45.50 billion for gauge conversion, Rs 61.50 billion for electrification, Rs 455.30 billion for rolling stock and Rs 68 billion for Signalling and Telecommunication (S&T). Meanwhile, the operating ratio for the financial year 2025-26 is proposed at 98.43 per cent against 98.90 per cent in 2024-25 (Revised estimate).
Airports
The Union Government has allocated Rs 24 billion for the Ministry of Civil Aviation (MoCA) which includes Rs 23.3 billion from revenue and Rs 0.7 billion from the capital. This Rs 24 billion allocation is around 1.8 per cent higher than the budget of Rs 23.57 billion allocated in 2024-25, but around 9.7 per cent lower than the revised estimate for 2024-25. This year’s budget also includes an outlay of Rs 3.3 billion and Rs 0.95 billion to the Directorate General of Civil Aviation (DGCA) and the Bureau of Civil Aviation Security (BCAS) respectively. Funds of Rs 5.4 billion have been earmarked for the regional connectivity scheme (RCS). According to the budget speech, a modified Ude Desh ka Aam Nagrik (UDAN) scheme will be launched targeting to enhance regional connectivity to 120 new destinations, and aiming to carry 40 million passengers in the next 10 years. Helipads and smaller airports would also be supported in hilly, aspirational, and in districts of the North East region under the scheme. Additionally, greenfield airports would be facilitated in Bihar. Further, importance has also been given to air cargo with the government to facilitate the infrastructure and warehousing upgradation for air cargo.
Ports and Shipping
The Ministry of Ports, Shipping and Waterways (MoPSW) has received an allocation of Rs 34.71 billion (budget estimate). The allocation is 46.02 per cent higher than the budget estimate of Rs 23.77 billion and 21.41 per cent higher than the revised estimate of Rs 28.59 billion for FY 2024-25.
Of the total allocation, it has provided Rs 3.65 billion for assistance to ship-building, research and development. The centre has provided a grant of Rs 17.52 billion to the Inland Water Transport Authority of India (IWAI) and Rs 800 million to the development of minor projects. Meanwhile, funds worth Rs 8.66 billion have been earmarked for the Sagarmala programme.
The Union Budget has proposed to set up a Maritime Development Fund with a corpus of Rs 250 billion for long-term financing with up to 49 per cent contribution by the government.
Urban Rail
The Union Government allocated funds worth Rs 312.39 billion (budget estimate) for various metro rail and mass rapid transit system (MRTS) projects under Union Budget FY 2025-26. The allocation is 46.41 per cent higher than the budget estimate of Rs 213.36 billion and 26.52 per cent higher than the revised estimate of Rs 246.91 billion for FY 2024.25. Additionally, a sum of Rs 6.5 billion has been sanctioned as grants for metro rail projects in the country.
Also, Rs 29.18 billion has been sanctioned as grants to National Capital Region Transport Corporation for implementation of Regional Rapid Transit System (RRTS) projects in national capital region areas.
Water
The Ministry of Housing and Urban Affairs has received an allocation of Rs 967.77 billion. The allocation is around 52 per cent higher than the revised estimate of Rs 636.70 billion for 2024-25. Of the total allocation, the outlay for Swachh Bharat Mission (SBM)-Urban is Rs 50 billion while an allocation of Rs 100 billion has been earmarked for the Atal Mission for Rejuvenation and Urban Transformation (AMRUT).
The Ministry of Jal Shakti (MoJS) has received an allocation of Rs 995.03 billion. The total allocation is 92.99 per cent higher than the revised estimate of Rs 515.58 billion for 2024-25. The Department of Water Resources, River Development and Ganga Rejvenation has been allocated Rs 252.77 billion and the Department of Drinking Water and Sanitation (DDWS) has been allocated Rs 742.26 billion. Under the DDWS, an outlay of Rs 670 billion has been made for the Jal Jeevan Mission (JJM) while Rs 71.92 billion has been earmarked under SBM-Grameen. Under the Department of Water Resources, River Development and Ganga Rejuvenation, an outlay of Rs 34 billion has been made for the Namami Gange Mission II.
The Union Budget 2025-26 has also highlighted the extension of JJM till 2028 with a focus on the quality of infrastructure and operation and maintenance (O&M) of rural piped water supply schemes through ‘Jan Bhagidhari’.
Oil and Gas
The Union Government has allocated funds worth Rs 193.27 billion to the Ministry of Petroleum and Natural Gas under the Union Budget FY 2025-26. The allocation is 21.32 per cent higher than the budget estimate of Rs 159.3 billion and 11.28 per cent higher than the revised estimate of Rs 173.68 billion for FY 2024-25.
Of the total allocation, funds worth Rs 0.66 billion have been earmarked under establishment expenditure of the centre, Rs 58.76 billion under strategic oil reserves, Rs 1.17 billion under refinery and conservation, Rs 121 billion under liquified petroleum gas (LPG) subsidy, Rs 7 billion under programme component of Indradhanush Gas Grid Limited and Rs 0.25 billion under Numaligarh refinery expansion.
Power and Renewable Energy
The net budgetary allocation for the Ministry of Power has been pegged at Rs 218.47 billion for 2025-26, (as against Rs 205.02 billion budgeted in 2024-25). The net budgetary allocation for the Ministry of New and Renewable Energy has been pegged at Rs 265.49 billion for 2025-26 (as against Rs 191 billion budgeted in 2024-25). The finance minister announced following key measures in the power sector:
- Improving the financial and operational stability of electricity distribution companies, coupled with incentives for enhancing intra-state transmission capacity. Additional borrowing of 0.5 per cent of gross state domestic product will be allowed to states, contingent on these reforms.
- Launch of the Nuclear Energy Mission to develop at least 100 GW of nuclear power by 2047 with Rs 200 billion allocation for research and development in small modular reactors (SMR). At least 5 indigenously developed SMRs will be operationalised by 2033. For an active partnership with the private sector towards this goal, amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act will be taken up.
- Full exemption from basic customs duty (BCD) on 25 critical minerals not available domestically. Exemptions for cobalt powder, lithium-ion battery scrap, lead, zinc, and others to support domestic manufacturing.
- Adding 35 capital goods for electric vehicles (EV) battery manufacturing and 28 capital goods for mobile battery production.
- A manufacturing mission focusing on increasing production of solar photo voltaic cells, EV batteries, motors, controllers, electrolysers, wind turbines, and high-voltage transmission equipment.
- Reduction on the customs duty on solar cells from 25 per cent to 20 per cent. Duties on smart meters are also decreased from 25 per cent to 20 per cent.
Telecom
A budget of Rs 952.98 billion has been proposed for the information technology and telecommunications sectors. The Union Budget 202`5-26 paves the way for building next-gen digital services, robust infrastructure and self-reliance within India’s telecom ecosystem, with a notable investment of Rs 220 billion in the BharatNet Project aimed at improving broadband connectivity in Gram Panchayats and rural areas.
To support domestic manufacturing, the allocation for the Domestic Industry Incentivisation Scheme, including the Production-Linked Incentive (PLI) scheme, has been increased to promote value addition.
Additionally, Rs 200 billion has been earmarked for a private sector-led research, development, and innovation initiative, while Rs 20 billion is designated for the artificial intelligence (AI) Mission to establish a robust AI ecosystem through strategic programs and partnerships. Furthermore, India has allocated Rs 5 billion to create three Centres of Excellence (CoE) for AI in prominent educational institutions to enhance AI research and its application in the education sector. The budget also raises the investment and turnover thresholds for MSME classification to 2.5 and 2 times, respectively, promoting growth and competitiveness in the sector.
In presenting the Union Budget for 2025-26, Sitharaman proposed reducing the basic customs duty on carrier-grade ethernet switches from 20 per cent to 10 per cent, aligning it with non-carrier-grade ethernet switches. The allocation for Bharat Sanchar Nigam Limited (BSNL), a state-owned telecom corporation, is approximately Rs 342.57 billion for FY26, which is a 53 per cent decrease from the revised allocation of Rs 725.28 billion for FY25.
Further, the Department of Space has been allocated Rs 134.16 billion, an increase from the previous allocation of Rs 117 billion. Additionally, NewSpace India Limited (NSIL) has received Rs 10 billion to strengthen its operations.