Union Budget 2026-27 Charts Path for Self-Reliant Manufacturing Ecosystem
Finance Minister Nirmala Sitharaman presented the Union Budget for the fiscal year 2026-27 on Sunday, unveiling a strategic blueprint aimed at building a self-reliant, future-ready, and globally competitive manufacturing landscape in India. The budget reflects the government's unwavering resolve to transform the nation's industrial capabilities through targeted interventions across key sectors.
Scheme for Enhancement of Construction and Infrastructure Equipment
A significant highlight for the Ministry of Heavy Industries is the introduction of the Scheme for Enhancement of Construction and Infrastructure Equipment. This initiative is designed to promote domestic manufacturing of high-value and technologically advanced construction and infrastructure equipment. By encouraging original equipment manufacturers (OEMs) and component makers to invest in scaling up domestic capacities, the scheme aims to reduce import dependence and bolster India's industrial prowess in this critical sector.
The scheme offers incentives linked to minimum domestic investment, sales targets, and value-addition achievements. Its seven-year framework, which includes a gestation period and sustained incentive support, provides long-term stability and predictability for industry stakeholders. This structured approach is expected to attract substantial investments and foster a robust manufacturing ecosystem.
Strengthening Infrastructure Capabilities
The implementation of this scheme will significantly enhance India's infrastructure capabilities by ensuring domestic availability of essential equipment such as tunnel boring machines, cranes, concrete pavers, and earthmoving machinery. These tools are indispensable for executing mega projects in roads, railways, metros, urban development, mining, and energy sectors. Additionally, the initiative will promote the domestic production of high-value engines, hydraulic systems, and precision components, thereby reducing reliance on foreign manufacturers and strengthening the supply chain.
Fostering Innovation and Employment
By encouraging fresh investments, technology upgrades, and deeper collaboration between OEMs and suppliers—particularly involving small and medium businesses—this initiative will drive innovation, competitiveness, and large-scale manufacturing. It is projected to generate substantial skilled employment opportunities by 2030, strengthening the entire construction equipment value chain. The establishment of a world-class testing centre in India will further ensure quality, safety, and compliance with global standards, enhancing the sector's credibility and export potential.
Emphasis on Clean Mobility and Energy Storage
The budget also places strong emphasis on clean mobility and energy storage solutions. The expansion of customs duty exemptions on capital goods for manufacturing lithium-ion cells, coupled with tariff relief on components, will significantly strengthen India's electric vehicle (EV) and battery ecosystem. These measures are expected to reduce costs, encourage localization, and support large-scale investments in advanced battery technologies, positioning India as a leader in sustainable transportation.
Further demonstrating the government's commitment to promoting cleaner fuels and renewable energy, the budget includes exemptions on sodium antimonate for solar glass manufacturing and excludes biogas value from excise duty on biogas-blended CNG. These steps aim to accelerate the adoption of sustainable mobility and reduce the carbon footprint of the transportation sector.
Critical Minerals and Rare Earth Ecosystems
In a move to reduce import dependence in strategically important materials, the budget extends customs duty exemptions to capital goods for processing critical minerals. This will support domestic manufacturing in electric mobility, electronics, defence, and renewable energy sectors, enhancing India's self-sufficiency in key areas.
The announcement of dedicated rare-earth corridors in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu marks a significant step in strengthening India's rare-earth ecosystem. This initiative will promote mining, processing, research, and manufacturing of critical inputs for EV motors, renewable systems, aerospace, electronics, and defence applications, creating a comprehensive framework for industrial growth.
Creating a Comprehensive Industrial Framework
Together, these budget provisions create an integrated industrial framework that synergizes construction equipment manufacturing, clean mobility, energy storage, critical minerals, and advanced materials. They are designed to help Indian industry overcome cost disadvantages, improve export competitiveness, and position India as a global hub for high-value manufacturing.
Most importantly, these initiatives are expected to generate large-scale employment, strengthen research and development efforts, nurture a future-ready workforce, and promote inclusive growth across the nation.
Implementation and Future Outlook
The Ministry of Heavy Industries, under the leadership of Union Minister H.D. Kumaraswamy, will work closely with industry stakeholders, state governments, and other relevant parties to ensure the successful implementation of these measures. This budget lays a strong foundation for Atmanirbhar Bharat, paving the way for India's emergence as a global manufacturing powerhouse in the coming years.
