The Indian home improvement sector has a renewed sense of hope because of the Union Budget 2025–26. In industries like ceramics, tiles, sanitaryware and home décor, the government has created a fantastic basis for growth through smart actions to boost manufacturing, update tax laws, and upgrade infrastructure, explains Abhishek Somany, managing director and CEO of Somany Ceramics Ltd.
Ensuring Everyone Gets A Home
The government’s focus on ‘Housing for All’ continues to be an important pillar of its policy framework. The Budget aims to make homeownership more accessible by substantially allocating funds to affordable housing projects and offering incentives to developers and buyers. This initiative is anticipated to drive demand for home improvement products as new homeowners seek to personalise and upgrade their residences.
Repo Rate Relief
The Reserve Bank of India’s decision to cut the repo rate by 25 basis points to 6.25 per cent marks the first reduction since May 2020. This move aims to stimulate the sluggish economy by making borrowing cheaper for individuals and businesses. For the Indian home improvement sector, this translates to more affordable loans for consumers looking to renovate or upgrade their homes. Additionally, enterprises can benefit from lower interest rates, facilitating expansion and investment in new technologies. However, concerns remain about inflationary pressures and the transmission of benefits to borrowers. Analysts predict that the RBI may implement further rate cuts in the near term to enhance liquidity and support economic growth.
No Income Tax Liability For Income up to 12 Lakh
A significant highlight of the Budget is the increase in disposable income for the middle class. The new income tax slabs under the revised tax regime introduce a progressive structure, starting with nil tax for incomes up to ₹4 lakh, followed by 5 per cent for ₹4-8 lakh, 10 per cent for ₹8-12 lakh, and 15 per cent for ₹12-16 lakh. Higher slabs include 20 per cent for ₹16-20 lakh, 25 per cent for ₹20-24 lakh, and 30 per cent for incomes above ₹24 lakh. This restructuring effectively means that individuals earning up to ₹12 lakh annually will have zero tax liability, thereby increasing their disposable income. This increase in disposable income is expected to boost consumer spending, particularly in home improvement sectors, as more individuals invest in enhancing their living spaces.
Big Win For MSMEs
To further support Micro, Small, and Medium-sized Enterprises (MSMEs), the government has redefined the criteria for their classification by increasing the expenditure and turnover requirements by 2.5 to 2 times. This move will enable MSMEs to expand their businesses and meet the growing demand in the home improvement sector by improving their access to capital and technology. Tax reforms are also playing a crucial role in boosting domestic production and consumption.
The Budget proposes full exemptions on Basic Customs Duty for critical minerals such as cobalt powder and lithium-ion battery waste. This measure ensures that essential materials are available in India for manufacturing, thereby promoting the production of advanced home improvement products.
In a significant move to support small businesses, the budget introduces a zero-tax liability for enterprises with a turnover of up to ₹2 crore. Under Section 44AD of the Income Tax Act, businesses with an annual turnover not exceeding ₹2 crore can opt for presumptive taxation, where income is computed at 8 per cent of the turnover (or 6 per cent for digital transactions). This simplification reduces the tax burden on small enterprises, allowing them to invest savings into their operations, upscale product offerings, and contribute to the overall growth of the Indian home improvement sector.
Infra Push
Infrastructure development constitutes the backbone of the Budget, with a record allocation of ₹11.21 trillion for the next financial year. This significant investment includes the construction of roads, railways, and urban development projects, which directly affect the circular economy by boosting consumption and home improvement and increasing accessibility to raw materials and finished products. Furthermore, an interest-free, 50-year loan scheme committed to capital expenditure of ₹1.5 lakh crore has been proposed. This initiative incentivises reform while providing incentives, accelerating the initiation of state-based infrastructure projects, enhancing regional progress, and generating greater opportunities for related home improvement schemes.
An Ode to Swachh Bharat & Make In India
In alignment with the ‘Swachh Bharat’ mission, the Budget has earmarked funds to improve sanitation facilities across the country. This focus promotes public health and stimulates demand for sanitaryware products. Manufacturers in the Indian home improvement sector are set to benefit from this increased emphasis on cleanliness and hygiene, leading to potential growth in the sanitaryware market.
Manufacturing serves as the backbone of home improvement growth. This is evident in the government’s National Manufacturing Mission under the ‘Make in India’ initiative. The mission aims to provide policy support across small, medium, and large industries by fostering innovation and enhancing initiatives. In turn, this vision promises to revitalise the production of ceramics, tiles, and sanitaryware, ensuring that consumers receive higher-quality products.
In addition, infrastructure expansion will facilitate the setting up of modern manufacturing facilities. This shall guarantee an efficient production process and the timely delivery of high-quality goods to the market. Under manufacturing excellence, the sanitaryware sector is set to produce advanced and eco-friendly products. With changes in tax reforms, manufacturers will have a higher capacity to invest in research and development. The development of infrastructure will also improve distribution networks, making these better products available to consumers in every region.
Outlook for Ceramics Industry
The ceramics and tiles segment is expected to gain in the long run. Improved manufacturing support and tax incentives will allow producers to innovate and offer a range of designs and finishes. This will enable them to meet the changing tastes of consumers looking for unique and personalised home décor solutions.
However, challenges remain. Natural gas represents one of the most significant input costs in tile manufacturing. This critical input remains outside the ambit of GST despite numerous discussions at various industry forums. The exclusion of natural gas from GST creates a serious cascading impact, severely affecting our competitiveness in the global market. Including natural gas under GST would considerably lower production costs, as the current cost increases by nearly 20 per cent due to sales tax, for which no input credit is available.
Overall, the Union Budget of 2025 sets out a solid framework for the Indian home improvement industry. Strategically focused investment in manufacturing, taxation reformation, and infrastructure building would ensure substantial expansion in this space – as a whole.