The budget lays the foundation to strengthen Indian manufacturing

Union budget 2026-27, presented by finance minister Nirmala Sitharaman on Sunday, reflects the government’s resolve to build a self-reliant, future-ready and globally-competitive manufacturing ecosystem. It lays out a comprehensive plan covering construction equipment, clean mobility, advanced manufacturing, critical minerals and rare earth ecosystems.

A highlight for the ministry of heavy industries is the Scheme for Enhancement of Construction and Infrastructure Equipment to promote domestic manufacturing of high-value and technologically advanced construction and infrastructure equipment. This domestic value addition would in turn reduce import dependence and strengthen India’s industrial capabilities in this critical sector.

Through this initiative, the government is inviting original equipment manufacturers (OEMs) and those making components to invest in scaling up domestic manufacturing capacities. The scheme will provide incentives linked to minimum domestic investment, sales and value-addition targets accomplished. Its seven-year structure, including a gestation period and sustained incentive support, offers long-term stability and predictability to industry.

The scheme will significantly strengthen India’s infrastructure capabilities by ensuring domestic availability of tunnel boring machines, cranes, concrete pavers and earthmoving machinery—equipment that are essential for mega projects in roads, railways, metros, urban development, mining and energy sectors. It will also promote domestic manufacturing of high-value engines, hydraulic systems and precision components, thereby reducing dependence on foreign manufacturers.

The budget has also placed strong emphasis on clean mobility and energy storage. The expansion of customs duty exemptions on capital goods for manufacturing lithium-ion cells, along with tariff relief on components, will significantly strengthen India’s electric vehicle (EV) and battery ecosystem. This will reduce costs, encourage localisation and support large-scale investments in advanced battery technologies.

The exemption on sodium antimonate for solar glass manufacturing and the exclusion of biogas value from excise duty on biogas-blended CNG further demonstrate the government’s commitment to promoting cleaner fuels, renewable energy and sustainable mobility.

Importantly, the budget has extended customs duty exemptions to capital goods for processing critical minerals, reinforcing the government’s objective of reducing import dependence in strategically important materials. This will support domestic manufacturing in electric mobility, electronics, defence and renewable energy sectors.

Together, these budget provisions create a comprehensive industrial framework that integrates 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 will generate large-scale employment, strengthen research and development, nurture a future-ready workforce and promote inclusive growth.

The ministry of heavy industries will work closely with industry, states and stakeholders to ensure the successful implementation of these measures. This budget lays a strong foundation for Atmanirbhar Bharat and for India’s emergence as a global manufacturing powerhouse.

H.D. Kumaraswamy is Union minister for heavy industries and steel.