By Neetu VinayekIndia’s effort to strengthen its manufacturing foundation has steadily progressed over the past decade through a series of significant policy measures. A major milestone was the launch of the Make in India initiative in 2014, designed to encourage investment, spur innovation, and improve ease of doing business. Labour reforms also moved forward with the rollout of the four Labour Codes on 21 November 2025, merging 29 Central labour laws to streamline compliance and create a modern, resilient workforce framework. Complementing these domestic reforms, India has simultaneously intensified its global trade engagement through a renewed focus on Free Trade Agreements (FTAs). Together, these reforms laid the foundation for the renewed manufacturing push outlined in Union Budget 2026.The Budget 2026 places manufacturing as a strategic and frontier sector for sustaining economic growth. The government framed the Budget as a continuation of structural reforms aimed at improving productivity, boosting competitiveness, and strengthening resilience against global disruptions.

In light of the rapid progress under the Electronics Components Manufacturing Scheme, the Budget proposes expanding its allocation to ₹40,000 crore, reaffirming India’s ambition to enhance domestic value addition and secure its place in global electronics supply chains. To compliment this, income tax holiday is being provided for five years to non-residents providing capital goods, equipment, or tooling to contract manufacturer operating in customs-bonded zones. This will help reduce costs which were being incurred on specialised equipment. Safe harbour provisions have been extended to non-residents for component warehousing in a bonded warehouse at a profit margin of 2 percent of the invoice value with a resulting tax incidence of 0.7 percent. This will harness efficiency of just-in-time logistics for the sector.A key highlight is the India Semiconductor Mission (ISM) 2.0, to produce equipment and materials, design full-stack Indian IP, and fortify supply chains signalling the country’s ongoing commitment to building a robust domestic semiconductor ecosystem. There is tremendous potential for the aviation sector with rise in airports and regional connectivity under the UDAN schemes. To build sustainable ecosystem it is important to manufacture aircrafts and undertake MRO activities within the country. With this vision basic customs duty is exempted on parts and components imported for manufacture of aircraft. Further, basic customs duty on raw materials imported for manufacture of parts used in maintenance, repair or overhaul requirements in defence units is also exempted. The government has also proposed a seaplane VGF scheme to support operations and indigenise manufacturing of seaplanes.A Scheme for Rare Earth Permanent Magnets, launched in late 2025, is now complemented by proposed support for Rare Earth Corridors across mineral-rich states to promote mining, processing, research and manufacturing.The Budget also introduces Biopharma SHAKTI—a five-year, ₹10,000 crore programme to position India as a global hub for biopharma manufacturing by strengthening capabilities in biologics and biosimilars.To boost the chemicals sector, the government has launched a scheme supporting States in developing chemical parks to expand domestic production. The capital goods sector, often the silent driver of productivity, receives a comprehensive support package. This includes the establishment of Hi-Tech Tool Rooms by Central Public Sector Enterprises (CPSEs) as digital service hubs for precision components, a scheme for advanced construction and infrastructure equipment. ₹10,000 crore over five-years is also allocated to develop a competitive container manufacturing ecosystem. These interventions aim to reduce import dependence, shorten supply chains, and lower costs.Beyond advanced manufacturing, the Budget extends support to labour-intensive sectors such as textiles. It also introduces a dedicated thrust to develop India into a global centre for high-quality, affordable sports goods.A Scheme has been proposed to revive 200 legacy industrial clusters to improve their cost competitiveness and efficiency through infrastructure and technology upgradation.Impetus to the manufacturing sector is also provided through taxes. Basic customs duty exemptions have been extended across emerging sectors, including lithium-ion cell battery storage systems, critical mineral processing equipment, raw material for wind turbines and nuclear power plants. In essence, the Union Budget 2026 represents a holistic manufacturing-led growth strategy. It marries structural reforms with targeted fiscal incentives, embraces both advanced and traditional industries, and puts exports and global competitiveness at the centre of its vision. The new set of measures and focus on emerging sectors has the potential to deepen the country’s industrial capabilities and strengthen its position in global value chains. On ground execution and collaboration could mark a transformative chapter in India’s industrial journey.(Neetu Vinayek is Partner, Tax Infrastructure and Oil & Gas Leader, EY India . Manmay Chandawalla, Director-Tax, EY India also contributed to the article.)

Last Updated:February 13, 2026, 10:52 IST

Jane Street operates trading subsidiaries in India and also manages offshore funds in Hong Kong and Singapore that are registered as FPIs

Jane Street Case

New York-based trading firm Jane Street has moved the Supreme Court of India amid a dispute with Indian tax authorities over the scope of legal privilege for certain internal communications, according to an Economic Times report on Friday.

The private quantitative trading firm, currently under scrutiny from both the Income Tax Department and capital markets regulator SEBI, has filed a review petition seeking judicial clarity on what constitutes “legal privilege.”

The case could have wider implications for Jane Street’s operations in India as well as for other corporate entities navigating the boundaries of privileged legal communications.

The Economic Times noted that the plea has reignited debate over whether confidential legal advice—including guidance from in-house legal teams acting in a legal advisory capacity—is protected under the Bharatiya Sakshya Adhiniyam, 2023, which replaced provisions of the Indian Evidence Act, 1872.

The filing is reportedly linked to enquiries by the Income Tax Department, which sought access to certain internal emails of Jane Street’s overseas operations as part of its investigation.

Jane Street operates trading subsidiaries in India and manages offshore funds in Hong Kong and Singapore, which are registered as foreign portfolio investors (FPIs) with SEBI.

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Last Updated:February 13, 2026, 10:28 IST

The Nifty IT index plunges nearly 5% in early trade on February 13, with heavyweights such as Infosys, Tata Consultancy Services, Wipro and HCLTech leading the fall.

Know Why IT Are Stocks Falling.

Why Are IT Stocks Falling? Indian IT stocks extended their sharp decline for a second straight session on Friday, tracking global weakness in technology shares and mounting concerns that rapid advances in artificial intelligence could disrupt the traditional business models of software exporters.

The Nifty IT index plunged nearly 5% in early trade on February 13, with heavyweights such as Infosys, Tata Consultancy Services, Wipro and HCLTech leading the fall. The sell-off mirrored weakness in US technology stocks overnight, where Apple dropped nearly 5%, Meta fell 2.82%, Nvidia declined 1.61% and Tesla slipped 2.69%. American Depository Receipts of Indian IT firms, including Infosys and Wipro, also slid as much as 9%, signalling negative sentiment ahead of domestic trading.

On the day, Infosys tumbled 6.2%, TCS fell 4.84% to a fresh 52-week low of ₹2,620, HCLTech declined 4.85% and Wipro lost 3.7%. Mid-cap names also saw broad-based selling: Persistent Systems dropped 3%, Coforge fell 5.32%, KPIT Technologies slumped nearly 8%, and Tech Mahindra declined 3.55%.

Why Are IT Stocks Falling?

Market participants say the sector is facing a rare combination of structural disruption and macroeconomic headwinds.

Agentic AI fears: The launch of advanced artificial intelligence systems capable of executing entire workflows — not just assisting coders — has intensified concerns about “seat compression”, or reduced staffing needs. Since Indian IT firms traditionally earn revenue based on billing hours and manpower, automation threatens the very foundation of their pricing model. Recently, Anthropic’s Claud Cowork sent shockwaves to the global IT industry. A new tool from AI company Algorhythm Holdings has also made trucking companies the latest victim of the market’s AI jitters.

Billing model transition: According to analysts, clients might move from time-and-material contracts to outcome-based pricing. While this could improve efficiency in the long term, markets worry that the transition phase may temporarily dent revenues as tech companies recalibrate pricing structures.

Valuation correction: After a strong rally in late 2025 driven by AI optimism, many IT stocks were trading at elevated valuations. The current risk-off environment is triggering profit-booking, especially in companies lacking a clear near-term AI monetisation roadmap.

Global tech layoffs: More than 80,000 tech employees were reportedly laid off globally in the first 40 days of 2026, including at large firms such as Amazon and Salesforce. Investors see this not as routine cost-cutting but as a structural shift toward automation and AI-driven efficiency.

What Analysts Are Saying

Strategists at JPMorgan said in a recent note that the sharp correction in software stocks may be excessive and driven more by fear than by actual deterioration in business fundamentals. According to the brokerage, markets appear to be pricing in AI-led disruption at unrealistic levels, which could create room for a rebound.

Vinod Nair, Head of Research at Geojit Investments, said AI is triggering a structural transformation in Indian IT services by compressing timelines and automating routine tasks. “Layoffs are likely in routine-heavy areas as fewer people will be needed to deliver the same outcomes. Clients are shifting toward outcome-based pricing, and in the coming quarters AI adoption could create headwinds for deal wins, potentially impacting topline. Monitoring deal flow will be critical,” he said.

Kenneth Andrade, CIO at Old Bridge Mutual Fund, noted that sector-wide profit surges are unlikely going forward. Growth is becoming company-specific as market share shifts and structural challenges reshape valuations. “It’s no longer a broad play — only a select company or two truly makes sense in this climate,” he said.

What Should Investors Do Now?

Market strategists say selectivity is key. JPMorgan’s strategy team believes the risk-reward balance is gradually tilting toward recovery, given bearish positioning and still-solid fundamentals. They recommend increasing exposure to high-quality software companies that are better positioned to adapt to AI-driven changes.

For investors, the message is clear: the sector is undergoing a structural transition rather than a cyclical slowdown. Near-term volatility may persist, but long-term winners are likely to be firms that successfully pivot from manpower-driven outsourcing to AI-enabled, outcome-focused technology services.

Not the First Time the Tech Sector Has Faced Disruption Fears

The IT industry has historically gone through phases of panic during technological transitions.

Y2K era (late 1990s): Fears that computer systems would crash at the turn of the millennium triggered massive global spending to fix legacy code. While markets were volatile, the demand surge ultimately helped Indian IT firms scale globally and build their reputation.

Outsourcing wave (mid-2000s): Western economies feared job losses to low-cost destinations such as India and the Philippines. Although it caused short-term disruptions and wage pressure, outsourcing ended up expanding the global tech ecosystem and creating new categories of jobs.

Both episodes show that technological shifts often cause short-term market pain but can expand the industry’s long-term opportunity set.

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