India’s Union Budget 2026-27 has placed manufacturing at the heart of the nation’s economic strategy, signaling a decisive shift toward building a robust industrial base. With record capital expenditure of Rs. 12.2 lakh crore and targeted interventions across strategic sectors, the budget lays out a comprehensive roadmap for transforming India into a global manufacturing powerhouse.
A Manufacturing-First Approach
Finance Minister Nirmala Sitharaman’s budget presentation emphasized India’s commitment to “Atmanirbharta” , highlighting how domestic manufacturing capacity has strengthened energy security and reduced critical import dependencies. This focus has already delivered growth rates of around seven percent while making substantial progress in poverty reduction.
The budget introduced several manufacturing-focused schemes with fresh allocations. Three dedicated Chemical Parks received Rs. 600 crore in their first-ever budgetary allocation. The Bio-pharma SHAKTI initiative, designed to develop India as a global biopharma hub with a total planned outlay of Rs. 10,000 crore over five years.
The India Semiconductor Mission 2.0 received Rs. 1,000 crore, while the Electronics Components Manufacturing Scheme saw a significant boost with outlay increasing to 40,000 Cr.. The Production-Linked Incentive Scheme for White Goods jumped from Rs. 304 crore to Rs. 1,004 crore, reflecting the government’s commitment to scaling up domestic production.
MSME Empowerment
Small and medium enterprises form the backbone of Indian manufacturing, and the budget addresses their needs comprehensively. A dedicated Rs. 10,000 crore SME Growth Fund will incentivize enterprises based on select criteria. The Self-Reliant India Fund received an additional Rs. 2,000 crore to support microenterprises and maintain their access to risk capital.
Professional institutions like ICAI, ICSI, and ICMAI will design short-term modular courses to develop a cadre of “Corporate Mitras” (Corporate Helpers), especially in tier-2 and tier-3 towns. This initiative addresses the critical skill gap that often holds back smaller manufacturers.
Industry Response
Industry leaders have welcomed the budget’s long-term orientation.
Commerce and Industry Minister Piyush Goyal described the budget as a blueprint to strengthen India’s presence in global value chains. He emphasized how the budget addresses specific areas that will help the economy grow faster and achieve the goal of Viksit Bharat (Developed India) by 2047.
Global Context
The budget’s manufacturing push comes at a crucial time. With India already weathering the impact of global trade tensions, including tariffs imposed by the United States ( now revised), the government is positioning domestic manufacturing as both an economic driver and a strategic imperative.
The budget aims to maintain the fiscal deficit target of 4.3 percent of GDP. This fiscal discipline, combined with aggressive manufacturing support, demonstrates the government’s ability to balance growth ambitions with economic prudence.
As global supply chains continue to evolve, India’s comprehensive manufacturing strategy positions the country as an attractive alternative for companies looking to diversify beyond traditional manufacturing hubs. The budget provides the policy certainty and financial support needed to make this transition a reality.
