..... . VALI disclosures . .....: 01/02/26, Union Budget 2026: What Gets Cheaper, What Gets Costlier

Sunday, February 1, 2026

01/02/26, Union Budget 2026: What Gets Cheaper, What Gets Costlier

Finance Minister Nirmala Sitharaman presented the Union Budget 2026-27 with a sharp focus on bolstering domestic manufacturing and making essential healthcare more accessible.

By rationaliSing the custom duty structure, the government aims to weed out long-standing exemptions on items now manufactured in India while providing relief to sectors like electronics, marine, and pharmaceuticals.

What Gets Cheaper?

The following items are expected to see a price drop due to reductions in Basic Customs Duty (BCD) and other tax exemptions:

Essential Medicines: 17 life-saving drugs, particularly those for treating diabetes and cancer, will become more affordable due to new customs duty relief.
Mobile Phones: Prices are set to drop as the government provides relief on components and capital goods used in manufacturing.
EV Batteries: BCD on Lithium-ion (Li-ion) cells is exempt to drive the green energy transition.
Leather & Textiles: Raw materials like Wet Blue leather and specified inputs for textiles are seeing duty cuts, making finished leather products and apparel cheaper.
Marine Products: The duty-free import limit for inputs used in seafood processing (like shrimp feed) has been tripled from 1% to 3% of the FOB value.
Sports Equipment: The Finance Minister specifically noted that sports goods will be more affordable to encourage athletic participation.

What Gets Costlier?

To promote the "Make in India" initiative, certain items will become more expensive as the government removes exemptions to protect local manufacturers:

Items with Negligible Imports: Exemptions have been removed for goods where domestic production is now sufficient or where import volumes are too low to justify the tax break.
Specific Industrial Goods: Certain customs tariff rates for industrial goods were adjusted to simplify the structure, which may lead to price increases for specific machinery and parts.
Tobacco Products: Cigarettes, pan masala, and other tobacco products are set to become more expensive due to a hike in excise duty and health cess.

Key Export & Industry Boosts

Seafood & Textiles: By increasing the duty-free import limit to 3%, the government is lowering production costs for exporters, helping Indian seafood and textiles scale globally.

Leather Industry Flexibility: The time period allowed for the export of final products made from imported leather has been extended from 6 months to 1 year, providing significant operational relief to tanners and manufacturers.

Electronics: Beyond mobile phones, the focus remains on local value addition by keeping duties higher on finished goods while easing the burden on capital equipment for domestic production lines.

Union Budget 2026: What Gets Cheaper, What Gets Costlier

Category	Item	Impact	Budget Change	Why It Matters
Healthcare	Diabetes & cancer medicines (17 drugs)	Cheaper	Customs duty relief	Reduces treatment costs and improves access
Electronics	Mobile phones	Cheaper	Duty cut on components and capital goods	Lowers manufacturing cost, possible price drop
Electric Vehicles	EV batteries (Li-ion cells)	Cheaper	Basic customs duty exempted	Makes EVs more affordable, boosts green mobility
Aviation	Civilian aircraft parts	Cheaper	BCD exemption	Supports domestic aircraft manufacturing
Defence	Aircraft MRO raw materials	Cheaper	Customs duty exemption	Strengthens defence self-reliance
Personal Imports	Goods imported for personal use	Cheaper	Duty cut from 20% to 10%	Direct price relief for individuals
Leather & Textiles	Leather products and textile inputs	Cheaper	Duty cuts on raw materials	Reduces cost of footwear, apparel and exports
Marine Exports	Seafood processing inputs	Cheaper	Duty-free limit raised to 3% of FOB	Boosts export competitiveness
Sports	Sports equipment	Cheaper	Duty rationalisation	Makes sports goods more affordable
Imports	Items now manufactured in India	Costlier	Customs exemptions withdrawn	Protects domestic manufacturers
Industry	Select industrial machinery	Costlier	Tariff restructuring	May raise equipment costs
Tobacco	Cigarettes, pan masala	Costlier	Higher excise duty and health cess	Discourages consumption, boosts revenue

Report by Madhuri Adnal of Oneindia

Courtesy: Dailyhunt

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Trade Cycles

The four important features of Trade Cycle are (i) Recovery, (ii) Boom, (iii) Recession, and (iv) Depression!

The trades cycle or business cycle are cyclical fluctuations of an economy. A full trade cycle has got four phases: (i) Recovery, (ii) Boom, (iii) Recession, and (iv) depression. The upward phase of a trade cycle or prosperity is divided into two stages—recovery and boom, and the downward phase of a trade cycle is also divided into two stages—recession and depression.

Phases of Trade Cycle:

The phases of trade cycle are explained with a diagram:

(1) Recovery:

In the early period of recovery, entrepreneurs increase the level of investment which in turn increases employment and income. Employment increases purchasing power and this leads to an increase in demand for consumer goods.

As a result, demand for goods will press upon their supply and it shall, thereby, lead to a rise in prices. The demand for consumer’s goods shall encourage the demand for producer’s goods.

The rise in prices shall depend upon the gestation period of investment. The longer the period of investment, the higher shall be the price rise. The rise of prices shall bring about a change in the distribution of income. Rent, wages, interest do not rise in the same proportion as prices.

Consequently, the margin of profit improves. The wholesale prices rise more than retail prices. The prices of raw materials rise more than the prices of semi-finished goods and the prices of semi-finished goods use more than the prices of finished goods.

(2) Boom:

The rate of investment increases still further. Owing to the spread of a wave of optimism in business, the level of production increases and the boom gathers momentum. More investment is possible only through credit creation. During a period of boom, the economy surpasses the level of full employment and enters a stage of over full employment.

(3) Recession:

The orders for raw materials are reduced on the onset of a recession. The rate of investment in producers’ goods industries and housing construction declines. Liquidity preference rises in society and owing to a contraction of money supply, the prices falls. A wave of pessimism spreads in business and those markets which were sometime before sellers markets become buyer’s markets now.

(4) Depression:

The main feature of a depression is a general fall in economic activity. Production, employment and income decline. The prices fall and the main factor responsible for it is, a fall in the purchasing power.

The distribution of national income changes. As the costs are rigid in nature, the margin of profit declines. Machines are not used to their full capacity in factories, because effective demand is much less. The prices of finished goods fall less than the prices of raw materials.

✳Reality Tips to Traders

1)Trading in the stock market is a marathon. 2)Protecting your capital is key. (Learn to protect first) 3)Making 0 on the day is better than losing 50k 4)Losses happen; they are part of this business. 5)It’s not you vs. the market. It’s you VS you. 6)You are your biggest enemy; learn to be mentally disciplined. 7)Don’t follow the majority; follow the correct path. 8)Traders without a stop loss end up not being traders for long. 9)There is always another trade. 10)The big money is made waiting for the right set-ups. 11)Waiting for the right trade is the most powerful strategy. 12)It is better to cut a loss than to wait to be proven right. 13)Position sizing can make or break you. 14)Worry about the downside before you even think about the upside. 15)Don’t listen to headlines

..BANKING TERMINOLOGY

There are various types of Banks: PSU Banks, Private Banks, Co-operative/Regional Banks, Small Finance Banks and Foreign Banks. When you deposit money in a bank, let's say the bank gives you an interest rate of 4%. But when the bank lends out this money, they lend it out at say, 12%. The difference of 8% in the above scenario is effectively the profit of the bank! The loans that do not pay interest for 90 days are known as Non-performing Assets. Banks have to provide for such bad loans. Structure of a Bank Asset for a Bank: The asset portion of a bank's capital includes cash, government securities, and interest-earning loans (e.g., mortgages, letters of credit, and inter-bank loans). Liabilities for a Bank: The bank's main liabilities are its capital (including cash reserves and, often, subordinated debt) and deposits. The latter may be from domestic or foreign sources (corporations and firms, private individuals, other banks, and even governments). Banks are required to maintain Liquidity with the Reserve Bank of India: SLR (Statutory Liquidity Ratio): It is the money a bank needs to preserve in the form of cash, gold or government Bonds before providing credit customers. This limitation is added by RBI on banks to make funds available to customers on-demand at your earliest convenience. Banks are required to maintain SLR at 18%. CRR (Cash Reserve Ratio): Banks are required to hold a certain proportion of their deposits in the form of cash. Banks don’t hold these as cash with themselves, but deposit such amounts with RBI / currency chests. CRR rate is at 4.5% currently. Repo Rate: The rate at which the RBI lends short-term money to the banks. The RBI through its Monetary Policy committee changes the repo rate to balance growth and Inflation. Reverse Repo rate: The rate at which banks park their short-term excess liquidity with the RBI. Now let us understand various terminologies for Banks Net Interest Income (NII): This is the spread the bank makes on its lending. It is calculated as Interest Income – Interest Expended Net Interest Margin (NIM): This is the spread the bank makes on its lending. It is the earning which is left after deducting the cost paid to depositors from its yields on Loans. This is denoted in % terms. The formula is Yield on Loans – Cost of funds Capital Adequacy Ratio (CAR): The capital adequacy ratio (CAR) is a measure of a bank's available capital expressed as a percentage of a bank's risk-weighted credit exposures. Essentially, it is the Capital that is available to lend. Tier I Capital – In simple words this capital is freely available with the bank to lend out. Tier II Capital- This is the capital tied up somewhere and is less freely available to lend. In case of an adverse event, the bank can use this capital to lend. Under Basel III norms, a bank’s tier 1+tier 2 capital must be a minimum of 8% of its risk-weighted holdings. The minimum capital adequacy ratio, also including the capital conservation buffer, is 10.5%. Current Account Saving Account (CASA)- There is no interest paid on the Current Account and a small interest rate is paid on a savings account. The combination of both is called CASA which shows the liabilities of the bank on which it pays relatively less interest. Deposits: Bank deposits are a savings product that customers can use to hold an amount of money at a bank for a specified length of time. In return, the financial institution will pay the customer the relevant amount of interest, based on how much they choose to deposit and for how long. Now let us come to NPA. Gross NPA (GNPA): It is the total loans on which no payment has been paid for 90 days or more. GNPA % is usually shown in each Bank’s quarterly results. The percentage is basically the GNPA amount as a % of the total advances. Slippages: Slippages denote the fresh amount of loans that have turned bad in a year. The slippage ratio of a bank is calculated as Fresh accretion of NPAs during the year /Total standard assets at the beginning of the year multiplied by 100. Provisioning Coverage Ratio (PCR): This is the ratio of provisioning to GNPA and indicates the extent of funds a bank has kept aside to cover loan losses. For Instance, a company has GNPAs of Rs 100 and they have set aside 50 Rs, then the PCR is 50%. Net NPA (NNPA): The total figure left after deducting provisions made for bad loans from GNPA. (GNPA – Provisions+upgrades/writeoffs = NNPA) Special Mention Account (SMA) SMA-0 is a category in which stress with respect to the principal and interest has remained overdue for a period of 0 to 30 days. SMA-1 is a category in which stress with respect to the principal and interest has remained overdue for a period of 30-60 days. SMA-2 is a category in which stress with respect to the principal and interest has remained overdue for a period of 60-90 days

..... . VALI disclosures . .....

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Sunday, February 1, 2026

01/02/26, Union Budget 2026: What Gets Cheaper, What Gets Costlier

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