Union Budget 2026: Key Demands from the Manufacturers 

Ahead of Budget 2026, manufacturing expectations are centred on a familiar formula of lower input friction + predictable policy + incentives. It can improve global competitiveness especially when there are trade headwinds and tariff uncertainties growing before budget coverage.  

The manufacturing sector looking for policy continuity and targeted support to accelerate India’s journey towards becoming a global manufacturing hub. Industry leaders are keen that the Budget balances fiscal prudence with incentives that boost exports, and technology adoption across sectors.​ 

‘Make in India’ competitiveness: customs and input costs 

A key manufacturing ask by industry is to reset customs and indirect tax architecture to reduce disputes, delays and transaction costs. According to media reports, CII asked for lower duties on raw materials/inputs, a dispute resolution mechanism, and tech-led clearance to reduce compliance friction for manufacturers and exporters.  

Manufacturers want calibrated customs duty reforms that lower duties on critical raw materials and capital goods while protecting value-added domestic production. Rationalising tariffs can help reduce input costs, improve export competitiveness, and encourage relocation of global supply chains to India without undermining domestic industry.​ 

Enhancement of the Production-Linked Incentive (PLI) Scheme 

Manufacturing-linked policy expectations also include widening the PLI umbrella towards emerging sectors. Manufacturing associations expect the Budget to refine and expand PLI schemes, especially for labour-intensive and export-oriented sectors.  

There is demand for better disbursement timelines, more predictable criteria, and extension of PLI-type incentives to newer areas like industrial automation hardware, robotics, and green-tech manufacturing.​ 

Support for EV Manufacturing & Global Investments 

Recent media reports suggest that the government is considering tweaks to its incentive scheme for electric car manufacturing to make it more attractive for large global automakers to invest in India.  

One of the key focal points for the auto manufacturing sector in Budget 2026 is the promotion of electric vehicle (EV) manufacturing. The Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI), which was introduced by the Centre in 2024. This scheme is expected to be revamped considering the proposed India-EU free trade agreement (FTA). 

Reports also highlight that the government is evaluating enhanced incentives and import duty cuts to attract global automakers, such as premium EV manufacturers, to set up local production bases.  

This could address concerns from global auto companies on investment thresholds and long-term feasibility under the current scheme. With growing demand for EVs, and India positioning itself as a manufacturing hub, policy clarity and incentives are expected to boost domestic EV production and foreign investment into India's auto sector. 

Export competitiveness and policy certainty 

Exporters’ expectations include relief or support amid tariff pressures and uncertainty around global trade, as well as measures that protect export competitiveness.  On export incentives, the government had extended RoDTEP (Remission of Duties and Taxes on Exported Products) benefits till March 31, 2026. Recent industry commentary is seeking clarity on what comes next.  

Reintroduction or Extension of Corporate Tax Concessions 

Manufacturers are urging the government to revisit concessional corporate tax regimes for new manufacturing units, either by extending earlier expiration dates or designing a fresh, time-bound low-rate window. The aim is to attract greenfield investments in priority sectors such as electronics, auto components, speciality chemicals, and capital goods, while retaining India’s tax competitiveness in the global landscape.​ 

Focus on Small and Medium Enterprises (MSMEs) 

MSMEs are seeking easier and cheaper credit, faster settlement of government and PSU dues, and simplified compliance for both direct tax and GST. Expectations include stronger credit guarantee schemes, targeted interest subvention, and digital invoicing platforms that enable MSMEs to get paid faster and integrate into formal supply chains.​ 

Need for a Strong Manufacturing Policy Push 

Industry voices are calling for a more integrated manufacturing policy framework that addresses infrastructure, logistics, labour, skilling, and technology adoption in a coordinated way. The long-term goal remains to raise manufacturing’s share in GDP, and Union Budget 2026 is seen as another opportunity to align incentives, regulatory reforms, and ease-of-doing-business measures around that objective.​ 

Research and Development (R&D) Incentives 

There is strong demand for more attractive R&D incentives, including restoration or enhancement of weighted deductions, direct grants, and outcome-based support for innovation. Industry is particularly keen on R&D sops for advanced materials, EV and battery tech, Industry 4.0 solutions, and green manufacturing technologies that can drive long-term productivity.​ 

Infrastructure and Logistics Support 

Manufacturers are looking for continued investment in industrial corridors, dedicated freight corridors, port connectivity, and warehousing to cut logistics costs as a share of GDP. Complementary reforms to speed up approvals for industrial parks and reduce compliance friction are also high on the wish list.​ 

For Union Budget 2026, manufacturers mainly asked for cluster around lower input costs and fewer disputes (customs), targeted incentives (PLI expansion), financing the green transition, and predictable export support. 

By combining calibrated tax incentives, stronger MSME support, PLI refinement, customs duty reforms, and a focussed push on R&D, logistics, and skills, Union Budget 2026 can provide manufacturers a supportive environment to scale and compete globally. Such measures would also help drive exports, job creation, and more resilient supply chains for the Indian economy.