Altre

This year's Union Budget was unveiled against the twin backdrop of historic growth in India's office market and a tumultuous global geopolitical scenario. Set against this context, Budget FY26 has brought in several policy changes to bring in a transformative change to India's commercial real estate and services sector. The Union Budget presented by Nirmala Sitharaman has brought in an unprecedented focus on infrastructure, urban development, and technology-driven growth for the country.

We've broken down the key budget highlights across five major themes that we've identified in the Budget 2026-2027 document. These Union Budget 2026 measures collectively represent one of the most comprehensive packages for the commercial real estate industry in recent memory.

Theme One: Service Sector Demand Push

The budget highlights for business start with an ambitious vision for India's services sector. The government has announced a high-powered'Education to Employment and Enterprise'Standing Committee with an aggressive target: capturing 10% of the global services share by 2047, up from the current figure of around 4%. This aspiration is being backed by concrete policy changes that are looking to change India's competitiveness in a global landscape.

Five Regional Medical Hubs are planned to combine tourism, education, and research, while government support through a challenge route will enable the development of five University Townships. These initiatives alone will create substantial demand for specialized commercial real estate infrastructure.

The budget commercial real estate provisions get even more attractive with transfer pricing reforms. The safe harbor threshold has jumped from ₹300 crore to ₹2,000 crore turnover, with a unified 15.5% safe harbor margin for IT services spanning software, ITeS, KPO, and contract R&D. Companies can now opt for a 5-year safe harbor continuity option with automated approval and no officer examination, while a fast-track Unilateral APA process for IT services has been introduced (2 years, extendable by 6 months).

Perhaps most significantly for the data center boom, the budget introduces a 15% safe harbor for data center services to related foreign entities. These reforms position India as the global hub for services and data centers, ensuring sustained demand for tech office spaces and specialized infrastructure. Safe harbour sets government-approved profit margins for international transactions, protecting companies from tax audits and long transfer-pricing disputes.

Theme Two: Startup & Innovation Acceleration

The Union Budget highlights continue with a comprehensive support system for startups and MSMEs. A ₹10,000 crore SME Growth Fund will support “Champion MSMEs,” complemented by a ₹2,000 crore top-up to the Self-Reliant India Fund specifically for micro enterprises.

Structural reforms are equally important. Government companies must now pay MSMEs through the TReDS platform, which lets small businesses get their invoices paid early by banks. With government-backed guarantees, faster access to buyer information, and the ability to sell these invoices in the market, MSMEs get quicker cash flow instead of waiting months for payments.

The introduction of the “Corporate Mitras” program, para-professionals for MSME compliance support, rounds out a comprehensive support system that covers everything from equity to liquidity to compliance. This reduces barriers to company formation and scaling, directly translating to increased demand for flexible workspace and small-format office solutions.

Theme Three: Global Business Incentives

The budget 2026 provisions for attracting global businesses are nothing short of game-changing. The Minimum Alternate Tax (MAT) has been reduced to 14% from 15% as a final tax with no future credit accumulation. Tax deductions have been extended to 20 consecutive years out of 25 years for IFSC units and Offshore Banking Units (OBUs), with post-deduction income taxed at just 15%, a highly competitive rate by global standards.

Cloud service providers get special attention with a tax holiday until 2047 for foreign companies providing cloud services using Indian data centers (provided they serve global customers and route Indian sales through local resellers). Toll manufacturing in bonded zones receives a 5-year income tax exemption when capital goods, equipment, and tooling are provided by foreign companies.

All non-residents on presumptive taxation are now exempt from MAT, while foreign experts working in India under notified government schemes receive a 5-year global income exemption (with only Indian-sourced income taxed). These multi-year tax holidays, reduced tax rates, and talent-friendly policies are designed to attract cloud, manufacturing, and finance companies.

Theme Four: Urban Transformation Initiative

One of the most exciting budget highlights for real estate is the shift from metro-centric to distributed urban development. Each City Economic Region (CER) will receive ₹5,000 crore allocation over 5 years, with a focus on Tier-II and Tier-III cities based on specific growth drivers. This reform-cum-results based financing will operate through challenge mode, ensuring competitive selection of the most promising locations.

The development of seven High-Speed Rail corridors represents infrastructure investment at an unprecedented scale: Mumbai-Pune, Pune-Hyderabad, Hyderabad-Bengaluru, Hyderabad-Chennai, Chennai-Bengaluru, Delhi-Varanasi, and Varanasi-Siliguri. These corridors will fundamentally reshape India's commercial geography, creating new hotspots for commercial real estate development far beyond the traditional metro markets.

Theme Five: Infrastructure & Real Estate CapEx Catalysts

The Budget 2026 commercial real estate catalysts include a substantial increase in public capex to ₹12.2 lakh crore, up from ₹11.2 lakh crore in FY25-26. This sustained government investment will drive multiplier effects in commercial real estate demand, particularly in logistics, industrial parks, and mixed-use developments.

New mechanisms are being introduced to leverage private capital. An Infrastructure Risk Guarantee Fund for private developers will de-risk projects, while CPSE real estate monetization through dedicated REITs will unlock substantial value. ₹5,000 crore has been earmarked for the East Coast Industrial Corridor, and a new Dedicated Freight Corridor from Dankuni (East) to Surat (West) is in the works.

The push for waterways is equally ambitious: 20 new National Waterways over the next 5 years (starting with NW-5 in Odisha), supported by a Coastal Cargo Promotion Scheme aiming to increase inland waterways'share from 6% to 12% by 2047.

Short-Term Opportunities

For developers and investors, the Union Budget highlights create several immediate opportunities. The CER Land Banking Window presents a time-sensitive opportunity during the government's City Economic Region identification phase (expected over the next 12-18 months) for strategic land acquisition in potential Tier-II/III cities before formal announcements drive up prices.

Small-format developers and flexible workspace operators will see occupancy growth as startup-friendly policies translate to increased demand for flexible workspace expansion. The GIFT City IFSC opportunity is particularly compelling. The extended 20-year tax deduction window will trigger immediate relocation and expansion decisions by global financial services firms, creating ancillary demand for 2,000+ senior executive housing units, 1,000+ hospitality keys, and premium retail.

Global talent residential infrastructure will see a surge in demand for premium serviced apartments, international schools, healthcare facilities, and lifestyle retail as foreign experts and companies establish Indian operations.

Market Transformation Ahead

Budget 2026-27 envisions fundamentally restructuring India's commercial real estate from a metro-concentrated, IT-dependent model to a geographically distributed, sectorally diversified, institutionally backed market. Four converging forces are creating this transformational change:

Geographic Expansion: The CER framework, combined with high-speed rail, equals distributed growth across the country.

Sectoral Diversification: Services beyond IT, strengthened IT global competitiveness, and a diverse tenant base create resilience.

Infrastructure Investment: Sustained capex and private incentivizations deliver private capital multiplier effects.

Policy Certainty: Multi-decade tax visibility and ease of doing business for global companies boost investment confidence.

Looking Ahead

While we believe that this year's Union Budget has plenty to offer the Indian economy as a whole, especially CapEx investment that will see trickle-down benefits to the commercial real estate segment, the long-term benefits from the government's strategic outlook are just as important. The budget highlights for business extend far beyond immediate incentives.

For commercial real estate stakeholders, the message is clear: the opportunity set is expanding dramatically, but it's also becoming more complex and geographically dispersed. Success will require moving beyond traditional metro markets and embracing the distributed growth model that this budget envisions.