Industry Demands Budget 2026 Boost for Make in India, Cuts Red Tape

The Budget for 2026-27 will be presented on February 1, as is the convention.

The survey, conducted among professionals across manufacturing, services, infrastructure, IT/ITeS, start-ups and allied sectors, found that 55 per cent of respondents remain optimistic about the business outlook over the next 12 months, while 32 per cent maintain a neutral stance and only 13 per cent expressed a pessimistic outlook.

Boosting domestic manufacturing emerged as the single most important Budget priority to advance the vision of an Aatmanirbhar and Viksit Bharat, followed by strengthening MSMEs and simplifying tax and compliance systems.

Infrastructure and logistics development, skills and job creation, and accelerated digital and AI-led growth also featured prominently among industry expectations from the Budget.

While government initiatives such as infrastructure capital expenditure, GST 2.0 reforms and Production Linked Incentive (PLI) schemes are seen as directionally positive, their on-ground impact remains muted.

Around 35 per cent of respondents said these measures have delivered limited benefits so far, while 39 per cent felt the impact has been only moderate, underscoring the need for improved design, wider accessibility and stronger last-mile execution.

On the key hurdles to manufacturing expansion, compliance and regulatory burden was cited as the biggest constraint, followed by global demand and market access, availability of skilled manpower, high logistics and energy costs, and technology and automation gaps. Respondents also flagged challenges related to quality standards and certification requirements.

To accelerate manufacturing growth, industry participants said the Budget should focus on providing cheaper long-term capital, enhancing credit availability and offering targeted tax incentives for technology upgradation, automation and artificial intelligence adoption.

Expansion of PLI schemes to more sectors, tax incentives linked to Industry 4.0, rationalisation of customs duties on critical raw materials, and faster clearances at industrial parks, SEZs and industrial clusters were also highlighted.

The survey further underscored the close link between manufacturing growth and MSME health, with 55 per cent of respondents being MSMEs themselves. Delayed payments and working capital shortages were identified as the most critical pain points for MSMEs, reinforcing the demand for cash-flow-based lending, green-channel credit linked to GST and e-invoice data, and incentives for timely payments.

On the taxation front, respondents pointed to persistent compliance challenges, with a majority agreeing that complex TDS and TCS provisions create a significant cash-flow and administrative burden. More than half of the respondents felt that the new Income Tax Act, 2025, would only partially meet its stated objectives of simplification and certainty.

Overall, the findings suggest that the Union Budget 2026-27 should prioritise execution-oriented reforms, rationalise compliance frameworks and deploy targeted fiscal incentives to unlock private investment, strengthen MSMEs and enable manufacturing scale-up, the report said.

- ANI