Union Budget FY 2026-27 & Manufacturing Sector
Context:
The Union Budget 2026-27 has positioned the manufacturing sector as the primary engine of growth for India's ambition to become a $35 trillion economy by 2047.
The budget emphasizes reforms, sectoral initiatives, and resilient supply chains to drive this vision
Sector Performance & Resilience:
India’s manufacturing Gross Value Added (GVA) demonstrated strong momentum, recording a growth of 7.72% in Q1 and 9.13% in Q2 of FY 2025-26.
While global manufacturing output expanded modestly by 0.7% in the third quarter of calendar year 2025, India recorded a superior growth of 1.3% during the same period, highlighting domestic resilience.
There is a structural shift towards value addition, with medium- and high-technology industries now contributing 46.3% of India’s manufacturing value added.
Key Budgetary Interventions:
The budget focuses on scaling up manufacturing across seven strategic and frontier sectors.
Customs Duty Rationalization:
To boost competitiveness, Basic Customs Duty (BCD) exemptions have been granted on inputs for diverse products, including seafood, microwave ovens, footwear, and aircraft manufacturing.
MSME & SME Support:
A major thrust is placed on creating "champion SMEs" to integrate them into global value chains:
Establishment of a ₹10,000 crore SME Growth Fund.
Provision of a ₹2,000 crore top-up to the Self-Reliant India Fund.
Initiatives Driving Manufacturing Growth:
The budget aims to transition India from mere digitization to high-value industrial production.
By focusing on competitiveness, technology adoption, and supply chain integration, the government intends to build a self-reliant and globally competitive economic powerhouse.