Budget may reset industrial policy to lift India’s manufacturing game

Subscribe to enjoy similar stories. NEW DELHI : India’s next budget is expected to mark a reset in the government’s philosophy towards supporting manufacturing—from offering incentives and protection to fixing the everyday frictions that stop firms from growing, innovating and competing globally, according to two people familiar with the discussions in the government.

Instead of focusing mainly on subsidies or tariff support, the budget is likely to emphasise simpler rules, faster approvals and a more predictable regulatory environment, aimed at helping manufacturers move up the value chain and sell higher-value products in global markets. According to the first person cited above, who requested anonymity, the government believes manufacturing must do more of the heavy lifting in India’s long-term growth, as the services sector, while performing well, has limitations in transforming the industrial ecosystem.

“The plan is to help the manufacturing sector move up in the value chain and help improve India’s share in global merchandise trade," this person said. Recommendations from two high level committees that examined reform proposals will be part of the budget, said the second person, who also spoke on condition of not being named.

Experts said the shift could see announcements to address the ‘regulatory cholesterol’ flagged in the Survey, and steps to build competitiveness, efficiency and technology as key elements of a new-look industrial policy. The budget may also have announcements around semiconductors, critical minerals and supply chain resilience, treating trade from both economic and security perspectives, experts said.