Urban development in the Union Budget 2026–27 reflects a strategic shift towards Tier-II and Tier-III cities as future engines of economic growth, with policy measures aimed at decentralising development and easing pressure on major metropolitan regions.
A key initiative is the introduction of City Economic Regions (CERs), supported by an allocation of Rs 5,000 crore per region over five years. The CER framework is designed to align urban planning with economic drivers such as industry, logistics and services, enabling cities to scale infrastructure in tandem with employment and investment opportunities.
The Budget has also proposed the development of university townships near industrial and logistics corridors, expansion of infrastructure in cities with populations above five lakh, and enhanced urban transport connectivity. Together, these measures are intended to promote balanced regional development, strengthen urban-rural linkages, and create sustainable urban ecosystems.
Commenting on the Budget’s urban infrastructure thrust, Sebi Joseph, President, Otis India, said, “The Honourable Finance Minister Nirmala Sitharaman has presented a growth-oriented budget delivering a powerful push to infrastructure, manufacturing, and technology, boosting job creation.” He added that “development of city economic regions, establishment of seven high-speed rail corridors, new schemes for construction and infrastructure equipment manufacturing, proposal of infrastructural risk guarantee fund… are commendable,” noting that “the vertical transportation industry would benefit from the acceleration of the momentum of construction and real estate growth.”
Joseph further stated, “At Otis, we welcome the Budget’s forward-looking vision and remain committed to supporting India’s infrastructure ambitions,” highlighting the role of “continuous innovation and digital integration” in enabling safe and efficient urban mobility.
Echoing the emphasis on decentralised urbanisation, Amit Gossain, Chairman and Managing Director, KONE Elevators India & South Asia, said, “The emphasis on urban development, particularly across tier-2 and tier-3 cities, will play an important role in advancing smart urbanisation and modern vertical construction.” He added that “this creates meaningful opportunities for companies like KONE India to support the next phase of India’s city-building journey.”
Gossain also pointed to the broader investment signal, stating that “the proposed capital expenditure of ₹12.2 lakh crore for FY27… sends a strong signal towards innovation, efficiency, and long-term competitiveness,” adding that these measures will “contribute to more sustainable and future-ready cities.”
With a clear focus on city-centric planning, urban mobility, vertical infrastructure and decentralised growth, Budget 2026–27 is expected to accelerate the transformation of India’s emerging cities into productive, connected and sustainable urban centres.