The Union Budget 2026–27 has outlined a policy framework that places manufacturing scale-up, infrastructure expansion and supply-chain resilience at the core of India’s medium- to long-term economic strategy. Announcements spanning electronics, semiconductors, electric mobility, footwear, textiles, power transmission and urban infrastructure drew measured responses from industry leaders, who highlighted both opportunities and execution challenges.
A key theme running through the Budget is the focus on critical minerals and domestic manufacturing of strategic inputs. The government announced dedicated rare earth magnet corridors in Odisha, Kerala, Andhra Pradesh and Tamil Nadu, building on earlier policy initiatives aimed at reducing import dependence for electronics, clean energy and electric vehicles.
Rajesh Gupta, Managing Director and Founder of Evergreen Recyclekaro India Ltd, said the move reflects a shift towards building end-to-end capabilities across mining, processing, research and manufacturing. He noted that continued emphasis on rare earth permanent magnets and the creation of cluster-based chemical parks strengthens the foundation for India’s EV, electronics and clean energy ecosystems, while parallel measures such as Semiconductor Mission 2.0 and higher allocations for electronics components manufacturing improve long-term supply resilience.
The electronics and semiconductor sector featured prominently, with the launch of India Semiconductor Mission (ISM) 2.0 and an enhanced outlay of around ₹40,000 crore for the Electronics Components Manufacturing Scheme (ECMS). Sujay Shetty, Managing Director (ESDM & Semiconductor) at PwC India, said ISM 2.0 prioritises domestic equipment and materials manufacturing, full-stack design capabilities, Indian intellectual property development, and workforce skilling, which could strengthen India’s role in the global semiconductor value chain.
Manu Iyer, General Partner and Co-founder at Bluehill.VC, described ISM 2.0 as a significant expansion of support across the semiconductor ecosystem, from design to supply chains. He added that the combined push on semiconductors and rare earth corridors could enhance supply-chain resilience for high-technology sectors including electronics, defence and clean energy.
From a consumer electronics perspective, Naveen Malpani, Partner and Consumer and Retail Industry Leader at Grant Thornton Bharat, said increased support for ECMS could help localise key components, improve domestic value addition and strengthen India’s position within global electronics value chains, beyond assembly-led manufacturing.
Manufacturing-linked infrastructure and urban development were another major focus area. The Budget proposed an infrastructure outlay of ₹12.2 lakh crore, a 9% increase over the previous year, along with funding support of ₹5,000 crore per city for urban economic regions in cities with populations above five lakh, and seven new high-speed connectivity corridors.
Mohammad Athar Saif, Partner and Leader for CP&I and Industrial Development at PwC India, said the integration of infrastructure and manufacturing addresses both immediate and long-term job creation. He pointed to the emphasis on urban mobility, industrial clusters, critical minerals and semiconductors as measures that could support India’s transition into a competitive manufacturing destination aligned with the vision of Viksit Bharat@2047.
In the power and infrastructure segment, Rajesh Kumar Singh, CEO of Jyoti Structures Ltd, said continued public capital expenditure, new Dedicated Freight Corridors, city economic regions and targeted energy security investments are expected to support expansion and modernisation of the power transmission network. He also highlighted measures such as the proposed Infrastructure Risk Guarantee Fund and asset monetisation through REITs as potential enablers for project financing and execution.
Sector-specific measures were also noted by consumer-facing industries. Gunjan Shah, MD and CEO of Bata India, said customs duty simplification, duty-free imports of specified inputs for shoe uppers and extended export timelines for leather, textile and footwear products could improve cost efficiency and ease compliance for the footwear sector. He added that the Budget’s emphasis on skill development, technology and inclusive growth aligns with industry efforts to expand manufacturing and market reach.
Textiles featured through measures aimed at modernising the value chain. Malpani said the announced interventions link raw material security, sustainability, skilling and advanced manufacturing, which, if executed in an integrated manner, could support a shift towards higher-value and technology-driven production.
Electric mobility stakeholders also responded to the focus on domestic supply chains. Aravind Mani, CEO and Co-founder of River Mobility, said rare earth corridors and cluster-based chemical parks are relevant for building a self-reliant EV ecosystem by supporting batteries, components and advanced materials manufacturing.
On taxation and capital formation, Somen Bajpai, Director and CEO of Aay Bee Engineers, said the Budget’s approach to capital gains taxation and fiscal discipline signals an intent to encourage long-term investment, which could help MSMEs invest in capacity expansion, energy-efficient technologies and infrastructure modernisation.
From a broader macro perspective, Mohan Ramaswamy, Founder and CEO of Rubix Data Sciences, said the manufacturing thrust aligns with constraints identified in the Economic Survey, including India’s limited share in global manufacturing value added and exports. He pointed to tariff rationalisation, logistics corridors, manufacturing clusters and MSME support as measures that could reduce structural frictions and support deeper integration into global value chains.
As the Budget moves towards implementation, industry responses indicate cautious optimism around its manufacturing-led growth strategy, with outcomes likely to depend on execution, coordination with states and sustained policy continuity.
