Industry backs Budget 2026’s focus on capex, manufacturing and MSMEs

Presenting the Union Budget 2026-27 on February 1, Finance Minister Nirmala Sitharaman outlined a sector-led growth strategy anchored in infrastructure, manufacturing and services, backed by higher capital expenditure and customs duty cuts to boost exports. 

She identified six priority areas, including scaling up manufacturing in strategic and frontier sectors, reviving legacy industries, creating “champion MSMEs”, strengthening infrastructure, ensuring long-term energy security and developing City Economic Regions. 

As part of this push, Sitharaman announced a ₹10,000 crore investment in the biopharma sector over the next five years, alongside interventions in advanced manufacturing, healthcare and emerging technologies. The Budget also unveiled India Semiconductor Mission 2.0 to strengthen domestic capabilities in semiconductor equipment, materials and full-stack Indian IP, with a parallel increase in the outlay for the Electronics Components Manufacturing Scheme to ₹40,000 crore. 

MSMEs were positioned as a key growth driver, with a ₹10,000 crore SME Growth Fund to support high-potential firms and revive stressed clusters, and a ₹2,000 crore top-up to the Self-Reliant India Fund to maintain access to risk capital for micro enterprises. Labour-intensive sectors featured prominently, with an integrated programme for textiles, plans for mega textile parks and initiatives for khadi and handicrafts, alongside a dedicated push to position India as a global hub for sports goods manufacturing.

Industry welcomes continuity as Budget 2026 reinforces growth confidence

Reacting to the Budget announcements, industry leaders said the emphasis on continuity, manufacturing and infrastructure provides greater policy visibility and confidence for long-term investment.

Sudhir Sitapati, Managing Director & Chief Executive Officer, Godrej Consumer Products Ltd said, “We particularly welcome the MAT credit set-off being allowed up to 25% of the tax liability under the new tax regime. This move improves cash flows and makes the new tax regime smoother for companies with accumulated credits, freeing up capital for reinvestment into growth and consumption-led categories.”

From a manufacturing and infrastructure-linked perspective, Sudhanshu Vats, MD, Pidilite Industries Limited, said the Union Budget 2026–27 reinforces confidence in India’s growth outlook, driven by manufacturing, infrastructure and consumption. He noted that the sustained push for domestic manufacturing across chemicals, electronics and capital goods will strengthen supply chains, while the ₹12.2 lakh crore public capital expenditure is expected to support robust demand across housing, construction and infrastructure-linked sectors, benefiting the building materials and adhesives industry.

“The emphasis on digital infrastructure, Automation & AI-led Customs reforms and trade facilitation will enhance ease of doing business and global integration. Overall, the Budget provides the confidence to invest, innovate and scale alongside India’s long-term economic vision. Onwards to a Viksit Bharat 2047,” Vats added. 

Highlighting the Budget’s macro stability and consumption implications, Mohit Malhotra, CEO, Dabur, said the Union Budget 2026–27 reflects continuity and quiet strength rather than short-term populism, reinforcing confidence in India’s medium-term growth trajectory through sustained focus on infrastructure, farmer income, institution-building and fiscal discipline. 

He noted that the nearly 9% rise in public capital expenditure to ₹12.2 lakh crore, along with a sharper focus on Tier-2 and Tier-3 cities and Global Capability Centres, will help expand economic activity beyond metros and support deeper penetration of branded consumer products. Malhotra also welcomed the Budget’s push to strengthen the traditional medicine ecosystem, saying initiatives to scale Ayurveda and AYUSH infrastructure align well with Dabur’s long-standing engagement with Ayurveda and rural livelihoods.

Malhotra added, “At the macro level, the commitment to fiscal discipline, with the fiscal deficit pegged at 4.3% of GDP, provides reassurance on policy credibility and economic stability. While the absence of stronger near-term consumption stimulus and the increase in STT on futures and options remain areas of concern, the Budget’s balanced approach strengthens the foundation for sustainable growth in an uncertain global environment.”

Echoing similar views on policy continuity, Harsha Vardhan Agarwal, Vice Chairman & MD, Emami Limited, said the Budget comes at a time when India continues to stand out as a resilient growth engine amid global uncertainty. He noted that the continuity-driven and pragmatic approach, with sustained focus on infrastructure, manufacturing and services, reinforces the government’s commitment to job creation, income growth and consumption-led demand. 

“The emphasis on MSMEs and a resilient banking sector reinforces the manufacturing ecosystem. Importantly, the renewed focus on healthcare and the AYUSH ecosystem aligns with rising consumer preference for preventive, wellness-led solutions, creating meaningful opportunities for the FMCG and healthcare sectors. Overall, the budget signals stability, policy consistency, and a clear path toward inclusive and sustainable growth,” he said. 

Manufacturing, consumer durables and infrastructure-linked sectors in focus  

Beyond headline announcements, the Budget reinforced the government’s preference for steady, investment-led growth rather than short-term stimulus. With public capital expenditure pegged at ₹12.2 lakh crore for 2026–27 and the fiscal deficit targeted at 4.3% of GDP, the focus remained on strengthening balance sheets, improving supply-side efficiencies and crowding in private investment.

Several of the measures announced, including customs duty rationalisation, compliance simplification, and digitalisation across trade, taxation and procurement systems, are aimed at easing operational frictions for businesses. The emphasis on manufacturing-led growth, MSME formalisation, logistics infrastructure and urban expansion is expected to support consumption over time by improving income visibility and market access, a theme echoed across industry responses.

On the consumer durables and urban infrastructure front, Mukundan Menon, MD, Voltas Ltd., said the Union Budget 2026–27 reflects a confident, future-ready macroeconomic vision aligned with India’s Viksit Bharat goals.

He noted that the strong push on manufacturing and technology, including India Semiconductor Mission 2.0 and the enhanced ₹40,000 crore outlay for electronics components, will deepen domestic value addition and strengthen India’s position in global value chains. Menon also highlighted the continued focus on urban infrastructure and ease of compliance measures, saying these reforms are likely to boost household confidence, purchasing power and discretionary consumption, benefiting the consumer durables sector.

Menon said, “Overall, this Budget strengthens a constructive growth cycle, enhanced investments will translate into more robust incomes, which in turn will drive demand for Make in India, energy-efficient, and smart consumer technologies. It sets the stage for sustained momentum in domestic manufacturing and positions India strongly for the next phase of transformation.”

From an FMCG and distribution lens, Rajiv Kumar, Vice Chairman, DS Group, said the Union Budget strikes a balance between fiscal stability and growth. He noted that for the FMCG sector, the Viksit Bharat agenda aligns demand and supply-side enablers, with targeted interventions in agriculture, including cocoa, fisheries and animal husbandry, expected to lift rural incomes. Kumar added that the expansion of TReDS and improved credit access would ease working capital pressures across the FMCG value chain, while higher spending on freight corridors, inland waterways and Tier-II and Tier-III infrastructure is likely to reduce logistics costs and support deeper regional penetration. He also highlighted compliance simplification, customs duty rationalisation and GST digitalisation as measures that would improve ease of doing business, supply-chain predictability and export competitiveness.

Kumar added, “Finally, the budget covers the basic pillars of productivity by connecting tourism and wellness, with mass-scale skill development. This comprehensive strategy promotes a productive population and a seamless business environment thereby cementing India’s long-term growth trajectory and ensuring a sustainable consumption story for the future years.”

Tourism and hospitality leaders also welcomed the sectoral focus in the Budget. Manoj Bhat, Managing Director & CEO of Mahindra Holidays & Resorts India Ltd, said the Union Budget 2026 positions tourism and hospitality as drivers of balanced economic growth.

He noted that the focus on destination development beyond metros, improved connectivity, and a stronger push on spiritual and heritage circuits reflects the government’s intent to distribute tourism growth more evenly and anchor it in local economies. 

“Equally important is the emphasis on skilling and workforce development. As the sector expands into tier two and three markets, the availability of trained talent will determine not just service quality but the sustainability of growth itself,” he said, and added that by linking infrastructure creation with human capital development, the Budget moves the conversation from short-term demand creation to building a resilient, employment-generating tourism ecosystem.

Commenting on MSME-focused measures, Dinesh Gulati, COO (Chief Operating Officer), IndiaMART InterMESH Limited further said, “The proposed intervention in the third focus area - championing MSMEs are well thought and versed with the sector’s needs and aspirations.   India’s legacy sectors hold an immense value for us and their revival and support is equally important as it is to support newer/emerging businesses.” 

He explained that the proposal to revive 200 legacy industry clusters hit by credit stress and outdated technology is a timely move that could help rebuild jobs and restore manufacturing hubs. He noted that measures such as corporate mitras and tighter integration of GeM and TReDS would improve payment visibility for MSMEs, enable receivables-backed financing and unlock fresh liquidity. 

Gulati also highlighted the additional ₹2,000 crore allocation to the Self-Reliant India initiative and the ₹10,000 crore SME Growth Fund as critical relief for credit-constrained enterprises, while pointing to the focus on skill-based businesses, khadi, handloom and handicrafts under the Mahatma Gandhi Gram Swaraj Initiative as a step towards strengthening rural livelihoods and global positioning. He added that the Khelo India Mission would help build a stronger sports ecosystem through structured coaching, sports science and competitive leagues.

Overall, the Union Budget 2026–27 signals a calibrated push towards long-term growth, combining public investment, manufacturing-led expansion and structural reforms. Industry responses suggest the emphasis on continuity, infrastructure and MSMEs has reinforced confidence in India’s growth trajectory despite global uncertainty.