CMA ALOKESH DUTTAThe Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman, introduces several initiatives aimed at bolstering India’s manufacturing sector. To effectively harness these opportunities, businesses should consider the following strategies:
1. Capitalize on the National Manufacturing Mission
The government has launched a National Manufacturing Mission to enhance domestic production capabilities. This mission focuses on sectors such as solar photovoltaic cells, electric vehicle (EV) batteries, wind turbines, and high-voltage transmission equipment. By aligning with this mission, companies can benefit from incentives and support aimed at reducing import dependence and strengthening the domestic value chain.
2. Leverage Customs Duty Exemptions on Critical Minerals
The budget has removed customs duties on waste and scrap of critical minerals, including antimony, cobalt, tungsten, copper, lithium-ion batteries, lead, zinc, and cobalt powder. This move aims to secure the availability of essential materials for manufacturing. Manufacturers should explore sourcing these materials domestically to reduce costs and ensure a stable supply chain.
3. Engage with the Maritime Development Fund
A 250-billion-rupee ($2.9 billion) maritime development fund has been established to support the shipbuilding and repair industry. The government will contribute 49% of the fund, with the remainder coming from ports and the private sector. Companies in the maritime manufacturing sector should consider participating in this initiative to access funding and support for expansion and modernization projects.
4. Explore Opportunities in Clean Tech Manufacturing
The budget emphasizes support for “Clean Tech Manufacturing” to improve domestic value addition and job creation. This includes building ecosystems for solar PV cells, EV batteries, motors and controllers, electrolyzers, wind turbines, very high voltage transmission equipment, and grid-scale batteries. Manufacturers in these sectors should explore government incentives and support to enhance their production capabilities.
5. Utilize Tax Reforms to Enhance Competitiveness
The budget introduces significant income tax cuts to boost consumer spending, which can increase demand for manufactured goods. Additionally, the reduction in the fiscal deficit to 4.4% of GDP reflects the government’s commitment to fiscal discipline, potentially leading to a more stable economic environment. Manufacturers should assess how these tax reforms can improve their competitiveness and profitability.
6. Invest in Skill Development and Workforce Efficiency
The budget highlights the importance of skill development, with provisions for term loans up to ₹2 crore for women and SC-ST first-time entrepreneurs. Manufacturers should invest in upskilling their workforce to adopt advanced manufacturing techniques and improve productivity.
By implementing these strategies, manufacturing businesses can effectively leverage the provisions of the Union Budget 2025-26 to drive growth, enhance efficiency, and strengthen their position in the domestic and global markets.
