Budget 2026: MSMEs, AI Startups, Infra and Co-working Sector Spell Out Policy Wishlist

As the government prepares the Union Budget 2026, agri-focused MSMEs are seeking targeted policy support to accelerate farm mechanisation and strengthen rural manufacturing. Despite steady progress, mechanisation levels in India remain at about 40–45%, leaving significant headroom for productivity gains across Tier-2 and Tier-3 regions.

Rohit Bajaj, Co-Founder, Balwaan Krishi, says the Budget is an opportunity to back MSMEs operating at the intersection of agriculture and manufacturing.

“Targeted support through easier institutional credit, interest subvention, R&D incentives, expanded PLI for rural manufacturing, and faster approvals for agri-tech innovations is essential,” he notes. He adds that the right policy push could reduce labour dependency, strengthen rural supply chains, and position India as a global hub for agri-machinery under the Make in India vision.

AI & Digital Health Startups

India’s AI ecosystem is welcoming the government’s proposed ₹750-crore allocation for AI Centres of Excellence. However, experts believe that research funding alone is not enough to build globally competitive AI companies.

Harshit Jain, MD, Founder and CEO, Doceree, says India has the talent, democratic values, and cost advantage to become a trusted global AI provider, but lacks patient capital to scale.

“We need a parallel stream specifically supporting AI startups building for export markets,” Jain says. He suggests incentives such as computer subsidies, export credit guarantees, and co-investment with sovereign wealth funds to support “Made in India AI”.

According to him, this is not about matching the US’s massive AI spending, but about leveraging India’s strengths, multilingual AI, frugal innovation, and democratic governance. This will help tap into a global AI services market projected to cross $1 trillion by 2030.

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Startups & Consulting

Across sectors, startups continue to flag compliance complexity as a major hurdle in growth. Ankit Chadha, Managing Director, TRC Consulting, says early-stage companies face an exhausting regulatory maze.

“From GST and labour laws to data privacy rules, there’s a complex web of paperwork, while startups have limited resources,” he says.

He adds that heavy compliance also slows investor due diligence, delaying funding cycles. The industry is hoping Budget 2026 will simplify processes and improve access to credit, particularly through alternative credit scoring models for startups with strong technology but limited assets or credit history.

Infrastructure & Built Environment

Infrastructure and construction players are looking for continuity in capital expenditure and calibrated reforms to unlock the next phase of growth. Ajay Gupta, Founder and Principal Consultant, Perceptive Ideas Consulting Engineers, says the government’s emphasis on transport corridors and urban transformation has already created positive momentum.

“A stable, reform-oriented Budget that incentivises advanced materials, green building standards, seismic safety norms, and digital tools like BIM can significantly improve the safety and longevity of structures,” Gupta says. Faster project clearances, skills development, and innovation in construction technologies are also placed high on the sector’s wishlist.

Flexible Workspaces & Real Estate

With India’s startup and GCC ecosystem expanding, flexible and co-working spaces are emerging as a major player in urban work culture. Ritesh Malik, Founder, Innov8, says the sector is seeking formal recognition as a distinct real estate category.

“This would bring consistency in utilities, taxation, and regulatory treatment,” Malik says. The industry is also looking for policy incentives for energy-efficient fit-outs, digital infrastructure, and smart building integrations. Alongside, they also expect faster approvals and single-window clearances. Inclusion of co-working spaces under Smart City and urban development programmes could further ease operational problems.

Also read: Budget 2026: Taxation Done, Manufacturing Boost Next? Experts Weigh In