February 12, New Delhi: India's manufacturing sector is poised to drive the next phase of economic growth, with the Union Budget 2026-27 unveiling targeted measures to strengthen industrial output, innovation, and exports.
Recent data shows that India's manufacturing GVA grew by 7.72% in Q1 and 9.13% in Q2 of FY 2025-26, with medium- and high-technology industries contributing 46.3% of the total manufacturing value added. The sector's momentum is reflected in industrial production growth of 8.1% in December 2025, driven by electronics, motor vehicles, and transport equipment.
The Budget focuses on scaling up seven strategic and frontier sectors, including biopharma, semiconductors, chemicals, electronics, textiles, and high-tech tools, with major initiatives such as:
Biopharma SHAKTI: ₹10,000 crore for the manufacturing of biologics and biosimilars
Semiconductor Mission 2.0: Equipment, IP design, and research centers
Dedicated Chemical Parks & ECMS: Boosting domestic production and reducing imports
Container & Construction Equipment Schemes: ₹10,000 crore allocation for global competitiveness
Micro, Small and Medium Enterprises (MSMEs) remain central, contributing 35.4% of manufacturing output and 48.58% of exports. The 2026-27 Budget supports MSMEs with a ₹10,000 crore SME Growth Fund and a ₹2,000 crore top-up to the Self-Reliant India Fund.
In addition to sectoral measures, tax and customs reforms include exemptions on inputs for seafood, footwear, microwave ovens, and aircraft parts, along with duty deferrals for trusted manufacturers.
Investment momentum is strong, with private corporate investment reaching ₹14.6 lakh crore in H1 FY26 and government capital expenditure at ₹11.21 lakh crore. Innovation and R&D are supported through the Anusandhan National Research Foundation and a ₹1 lakh crore Research, Development, and Innovation Fund.
India's global manufacturing competitiveness is strengthening, reflected in rising export performance (USD 634.3 billion in April–Dec 2025) and improved rankings in the Competitive Industrial Performance Index and Global Innovation Index.
Infrastructure reforms through PM GatiShakti, the National Logistics Policy, and industrial corridors are further enabling industrial growth and connectivity.
With these measures, manufacturing is positioned as the engine of India's $35 trillion economy ambition by 2047, supporting job creation, export competitiveness, and long-term economic transformation.
Source: PIB
