Union Budget FY 2026-27 & Manufacturing Sector

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.