Budget 2026 Builds Domestic Capacities for Long-term Growth

As global economic volatility persists and investment flows hinge increasingly on policy certainty and long-term credibility, the Union Budget 2026–27 articulates a confident and future-oriented roadmap for India’s growth. In an interaction with The Interview World, Rajiv Memani, President of the Confederation of Indian Industry (CII), delivers a clear-eyed evaluation of how the Budget strengthens India’s global competitiveness without compromising fiscal discipline. He underscores its deliberate emphasis on manufacturing, technology, MSMEs, and services, supported by structural reforms that enhance ease of doing business and accelerate capital formation. Crucially, Memani maps how targeted measures across semiconductors, biopharma, digital services, tourism, and financial sector reforms can unlock private investment, build resilient domestic capabilities, and consolidate investor confidence in India’s long-term growth trajectory.

Q: From an industry perspective, how do you view the Union Budget 2026–27?

A: The Union Budget 2026–27 lays out a credible and results-driven roadmap to sharpen India’s competitiveness. It blends fiscal discipline with structural reforms and targeted interventions to crowd in private investment. More importantly, it restores confidence in India’s growth trajectory amid global economic uncertainty by delivering policy clarity and long-term predictability.

Q: What are the key positives of the Budget for the manufacturing and technology sectors?

A: We strongly welcome the Budget’s decisive focus on deepening manufacturing capabilities and accelerating technological advancement. In particular, its emphasis on biopharma, semiconductors, electronics, critical minerals, and advanced manufacturing signals a deliberate strategy to build domestic capacities essential for global competitiveness. Moreover, initiatives such as Biopharma SHAKTI, the next phase of the India Semiconductor Mission, and the revitalisation of industrial clusters promise to strengthen value chains, raise productivity, and reinforce export-led growth.

Q: In what ways does the Budget respond to the key challenges faced by MSMEs?

A: The Budget places MSMEs firmly at the centre of employment generation and innovation. It backs this intent with concrete measures, including the creation of an SME Growth Fund, the expansion of TReDS-based financing, and deeper integration of MSMEs with government procurement platforms. Together, these steps will widen access to credit and markets, accelerate formalisation, and enable small enterprises to scale sustainably.

Q: What initiatives in the Budget are aimed at supporting the services sector?

A: From a services-sector perspective, the Budget advances a distinctly forward-looking agenda. It proposes University Townships near major industrial and logistics hubs to close skill gaps and reinforce the industry’s talent pipeline. At the same time, a targeted push on tourism, anchored in skill development, destination creation, and the promotion of eco-tourism, will generate employment while strengthening local economies.

Q: How does the Budget support India’s ambition to scale its technology and digital services footprint globally?

A: We particularly welcome the measures that strengthen tax certainty, expedite dispute resolution, and foster a more enabling regulatory environment for the IT and services sector. As a result, these reforms will sustain the expansion of Global Capability Centres and accelerate high-value service exports. Notably, the tax holiday for foreign companies offering cloud services through India-based data centres marks a decisive step, poised to catalyse investment in data centres, digital infrastructure, and the broader cloud ecosystem.

Q: How do you assess the Budget’s support for forward-looking and strategic sectors?

A: The Budget delivers a decisive push to future-facing sectors, notably critical minerals, nuclear power, and semiconductors. It reinforces this intent by exempting basic customs duty on capital goods required for critical mineral processing, thereby strengthening domestic supply chains. At the same time, Semiconductor Mission 2.0 is set to accelerate indigenous chip manufacturing, while the renewed thrust on nuclear power further underscores the government’s long-term energy and technology strategy.

Equally important, the Budget sends clear and positive signals through its sustained emphasis on regulatory simplification and ease of doing business. The proposed review of the FEMA (Non-Debt Instruments) Rules, the extension of customs advance rulings, and the rationalisation of compliance frameworks will enhance predictability, lower transaction costs, and create a more stable operating environment for businesses.

Q: What measures in the Budget are aimed at boosting capital formation and accelerating infrastructure development?

A: By prioritising financial sector reforms, the Budget strengthens corporate and municipal bond markets while bolstering long-term financing mechanisms. Together, these measures will accelerate capital formation and enable the development of urban infrastructure at scale.