After labour codes rollout, Centre to double down on job-intensive sectors in FY27 budget

Subscribe to enjoy similar stories. NEW DELHI : The Centre is preparing to reinforce and expand its focus on labour-intensive industries in the FY27 Union budget, according to two persons familiar with ongoing discussions.

This continues the thrust that began with sharply higher allocations last year to labour-facing industries, and the recent rollout of the four labour codes. New scheme announcements and expansions of existing ones are likely for small and medium industries in general and for sectors like textiles, leather and footwear, gems and jewellery, and handicraft, among others, when finance minister Nirmala Sitharaman presents the budget on 1 February, the persons cited above said on condition of anonymity.

Policy makers feel that India must deliberately strengthen labour-absorbing sectors—alongside sustained investments in education and health—to fully realise its demographic dividend over the next 25 years. The strategy will also seek to address a key problem India is facing—capital-intensive industrial growth struggling to create adequate jobs for India’s youth.

Labour intensive sectors played a key role in the strong growth of countries like China and South Korea and, in more recent times, Vietnam. The idea is to help create a base of strong mid-sized enterprises to support the country’s large informal sector comprising 73 million unincorporated, non-agricultural enterprises and some large corporations.

“One of the structural issues to be addressed is the ‘missing middle’, so that we have more mid-sized businesses that can sustainably support economic growth and job creation," this first person cited above said. “Once India reaches middle-income level for the next 10-15 years, we have to grow fast to avoid