Source: The Union Budget 2026–27, places manufacturing at the core of India’s growth strategy amid global trade disruptions, tariff wars and geopolitical uncertainties. Anchored in Make in India and Atmanirbhar Bharat, the Budget seeks to strengthen domestic manufacturing in strategic and frontier sectors while maintaining fiscal discipline through a calibrated glide path.
Introduction
A key pillar of the Budget is its emphasis on scaling up manufacturing in seven strategic and high-value sectors– semiconductors, biopharma, electronics components, rare earths, chemicals, capital goods and textiles. This sectoral prioritisation is designed to reduce import dependence, deepen domestic value chains, enhance technological capabilities and improve India’s global manufacturing competitiveness.
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Key Features of Budget’s Manufacturing Thrust
Source: PIB
- India Semiconductor Mission (ISM) 2.0 to develop equipment, materials, indigenous IP and resilient supply chains.
- Biopharma SHAKTI (₹10,000 crore) to position India as a global hub for biologics and biosimilars through regulatory and institutional strengthening.
Source: PIB
- Electronics manufacturing boost with outlay doubled to ₹40,000 crore, leveraging success in mobile and iPhone production.
- Rare Earth Corridors in mineral-rich states to secure critical inputs for clean energy, electronics and defence.
- Chemical Parks and capital goods schemes, including container manufacturing, to enhance industrial depth and productivity.
- Integrated textile programme, mega textile parks and support to khadi, handloom and handicrafts for employment and exports.
- Dedicated sports goods initiative to promote design, material sciences and export competitiveness.
- ₹10,000-crore SME Growth Fund and customs duty rationalisation to improve MSME participation and cost competitiveness.
Challenges related to Manufacturing sector in India
- Stagnant manufacturing share in GDP despite a decade of Make in India.
- Uneven outcomes of PLI schemes, with limited domestic value addition in some sectors.
- Technology and skill gaps in frontier sectors like semiconductors and biopharma.
- Weak MSME integration into global and domestic value chains.
- Implementation bottlenecks in cluster-based and Centre–State coordinated schemes.
- Global trade uncertainties and rising protectionism affecting export-led manufacturing.
Way Forward
- Shift from incentive-led to innovation-led manufacturing, with greater focus on R&D and design capabilities.
- Deepen MSME linkages through credit access, technology transfer and supply-chain integration.
- Align skilling programmes with advanced manufacturing needs and industry demand.
- Promote state-specific industrial strategies via competitive federalism and challenge-based funding.
- Encourage sustainable and green manufacturing to meet global ESG standards.
- Ensure policy stability and timely execution to boost investor confidence.
Conclusion
The Union Budget 2026–27 presents a strategic yet fiscally prudent manufacturing roadmap, aligning industrial ambition with macroeconomic stability. Effective implementation and ecosystem development will be crucial to converting sectoral thrust into durable industrial transformation.
Question for practice
Source: BusinessLine
