Three stocks to watch as Budget 2026 may roll out ₹23,000 crore incentives for capital goods manufacturing

Subscribe to enjoy similar stories. The government may roll out incentive packages worth up to ₹23,000 crore in the Union Budget 2026 to boost domestic manufacturing of high-value capital goods and reduce dependence on imports, according to an Economic Times report. The schemes are currently under preparation and could be announced in the upcoming budget.

According to the report, the proposed incentives are likely to be split across two key segments: construction equipment and the automobile value chain, as part of efforts to strengthen the domestic capital goods ecosystem and reduce import reliance. • A ₹14,000-16,000 crore incentive programme is being planned for the construction equipment sector. • The focus will be on indigenizing high-end machinery such as tunnel boring machines and cranes, where import dependence remains high.

• At present, nearly 50% of the sector’s components by value are imported, mainly from China, Japan, South Korea, and Germany. • The government is now emphasising local production of critical components, including hydraulics, undercarriages, electronic control units, sensors, and telematics. • A separate ₹7,000 crore scheme is proposed to develop resilient global value chains for the automobile industry.

• The incentives will support local manufacturing of advanced driver assistance systems (ADAS), 360-degree cameras, and sensors. • The scheme is expected to encourage production with at least 50% domestic value addition, potentially creating export opportunities. • Subsidies for procuring capital goods such as moulds and power tools, which are critical for auto component manufacturing, are also likely to be included.