When Finance Minister Nirmala Sitharaman rose to present Union Budget 2026 on a Sunday — yes, the markets opened specially for the occasion — she delivered a budget that tried to do two things at once: build India's future and discipline its present. The result? A document that thrilled manufacturers, rattled traders, and left everyone else parsing the fine print.

The STT Earthquake

Let's start with what shook the market hardest. Securities Transaction Tax on futures was hiked from 0.02% to 0.05% — a 150% increase. Options premium STT went from 0.10% to 0.15%. The changes kick in from April 1, 2026.

The market's verdict was immediate and brutal. The Sensex plunged 1,547 points on budget day itself. Traders fear thinner F&O volumes, wider bid-ask spreads, and a structural shift toward cash markets. "This is a behavioural nudge with a sledgehammer," said one derivatives strategist. "They want retail out of F&O, and this will do it."

Semiconductor Mission 2.0

The headline-grabber for tech India was ISM 2.0 — the upgraded semiconductor mission. The scope now extends beyond chip fabrication to include semiconductor equipment manufacturing, materials production, and building Indian intellectual property in the chip stack. The government wants India to move from assembling the world's electronics to designing and fabricating the components that go inside them.

To power this ambition, the Electronics Components Manufacturing Scheme — launched in April 2025 with a Rs 22,919-crore outlay — has been expanded to Rs 40,000 crore after attracting investment commitments at double the original target.

The Talent Play

In a move designed to lure global chip engineers to India, the budget offers a five-year tax exemption on foreign income for non-resident professionals working in approved semiconductor and electronics schemes. Industry-driven research and training centers will be established to develop a skilled workforce in chip design, fabrication, and testing.

The Bottom Line

Budget 2026 is a bet on long-term industrial self-reliance funded partly by squeezing speculative trading revenue. Whether the math works depends on execution — something India's semiconductor ambitions have struggled with. But the intent is unmistakable: build chips, not just apps.