What Gets Cheaper, What Gets Costlier?
I watched the Union Budget 2026–27 unfold with that familiar mixed feeling—optimism about the long arc of public investment, and curiosity about the immediate, pocket-level impacts. In this piece I want to do two simple things: list what is likely to get noticeably cheaper for households and businesses, and point out what is likely to feel costlier in the months ahead. I’ll ground each point in the Budget’s headline measures and translate them into everyday effects.
Quick summary (my take)
- Things likely to get cheaper: certain medical inputs and drugs, selected electronics and components, some cloud and digital services (via policy incentives), working-capital costs for MSMEs (structural push), and selective capital goods for green and EV manufacturing.
- Things likely to get costlier: some imported inputs where exemptions were removed or duties rationalised, certain financial-market transaction costs (STT/TCS/TDS changes), and areas where consolidation of fiscal needs nudges indirect costs up.
What will become cheaper — and why
1) Life‑saving drugs, medical inputs and public health costs
- The Budget continues to prioritise affordable health: several life‑saving drugs and key medical inputs were moved to concessional or duty‑free treatment, reducing import duty burden and distributor margins. That should lower procurement costs for hospitals and public schemes and, over time, reduce retail prices for critical medicines (Budget document highlights).
2) Selected electronics / components and EV inputs
- The tariff framework was simplified and customs duties on specific EV components, battery inputs (like lithium-related inputs) and certain electronics components were rationalised to support domestic manufacturing. Where duties are lowered or capital‑goods exemptions applied, the cost of making components domestically falls—so consumer prices for some electronics and EV parts can ease over time (Moneycontrol summary).
3) Cloud and data‑centre driven services (price pressure through competition)
- A long‑term move: tax holidays and incentives for cloud services and data centres that serve global customers from India (to attract investment and scale local supply) should increase capacity, competition and downward price pressure for hosted/cloud offerings originating from India (NDTV / Budget live updates).
4) Working capital costs for MSMEs (structural improvement)
- Mandatory use of formal invoice‑discounting platforms (TReDS linkage for central procurement) and a dedicated SME growth fund reduce liquidity stress and borrowing costs for many small suppliers—practical relief that makes running a small enterprise cheaper in terms of finance cost and days‑sales‑outstanding (Moneycontrol coverage).
5) Cheaper capital goods for targeted sectors
- Capital‑goods exemptions and deferred duty windows for trusted manufacturers (especially in electronics, EV, semiconductors and textiles) lower the effective cost of investment—leading to cheaper new capacity and, over time, possible price relief for goods produced by that capacity (Budget document highlights).
What will become costlier — and why
1) Some imports and inputs (tariff rationalisation)
- The Budget’s tariff rationalisation removes long‑standing exemptions for certain inputs and redefines tariff lines to address dumping, inversion and domestic protection. That means specific imported intermediates (e.g., some petrochemicals, niche industrial inputs) will see higher landed costs, which can pass through to final goods (Moneycontrol live updates).
2) Certain fertiliser / chemical inputs
- Removal of duty exemptions on items like naphtha (used in some fertiliser and chemical chains) will raise costs for those intermediates; downstream consumers (farm inputs, chemicals) could see upward price pressure (Moneycontrol reporting).
3) Market / trading transaction costs (STT, options/futures levies)
- The Budget increases securities transaction tax (STT) on futures and raises rates on option premiums and exercise. That is a direct and immediate increase in trading costs for active investors and market‑making firms; for high‑frequency or derivatives traders this change is meaningful and makes certain strategies costlier (Budget document summary).
4) Targeted higher levies (policy trade‑offs)
- To preserve fiscal discipline while expanding capital expenditure, some indirect taxes and custom lines were tightened or rationalised—this is a broad way of saying the Budget shifts some of the fiscal balance onto indirect and trade channels which can show up as higher retail prices for affected categories.
5) Corporate event costs (buybacks & MAT changes)
- The tax treatment of buybacks and the move to make MAT (or similar final taxes) clearer changes the effective cost of certain corporate actions. Some buyback structures now attract a specific treatment that can be costlier for promoters or alter capital‑return economics—this has implications for corporate financing costs and valuations (Key features document).
Practical takeaways for different readers
- Households: expect relief in some healthcare costs and (gradually) selected electronics. But watch grocery and fuel‑adjacent prices if upstream chemicals/imports see pass‑through.
- Investors / traders: factor in higher STT and options/futures levies—short‑term trading strategies will feel the impact. Reassess turnover projections for derivatives-focused books.
- MSMEs and manufacturers: the budget is overall supportive—look closely at TReDS, procurement rules and specific capital‑goods exemptions that could lower finance and investment costs. Plan CAPEX timelines to take advantage of duty windows and incentives.
- Tech & cloud buyers: increased local capacity and incentives may bring competitive offers; consider multi‑region sourcing strategies that now include India as a serious price/latency option.
Why this matters to me (and why I keep writing about budgets)
Budgets are not just fiscal statements; they are living policy tools that nudge behaviour, shape investment, and change how we price risk. I’ve written about the theatrical secrecy and predictable rhythms of budget season before—ironically, the form stays familiar even as the instruments evolve “A Laughing Matter”. What I look for now is less theatrics and more clarity on implementation: how quickly will tariff changes be notified, will TReDS integration be enforced, and how will states and industry respond? Those answers determine whether a promise translates into cheaper goods or merely shuffled ledger entries.
If you want a practical next step: map the three most important inputs to your household or business, then check whether those inputs were mentioned in the tariff, duty or incentive lists in the Budget papers cited above. That simple inventory will tell you whether you should expect relief, a cost bump, or uncertainty.
Regards,
Hemen Parekh
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