India Inc needs the upcoming Budget to continue to prioritise improving infrastructure to reduce logistic costs, incentivise value addition in manufacturing, accelerate green transition, and enhance credit access to micro, small and medium enterprises (MSMEs).
The budget’s focus of these four is because sustaining growth in the current environment is less about short-term stimulus measures and more about strengthening fundamentals that anchor confidence among corporates amid uneven global growth, volatile trade conditions and issues with regard to competitiveness that are more structural than cyclical.
Also Read: Budget 2026 may put India’s manufacturing comeback to the ultimate test
The imposition of tariffs by the US, continuing geopolitical issues and supply chain shifts have raised the premium on cost efficiency, policy stability and project execution reliability, thereby reshaping investment and trade decision-making.
But while globally there are several issues for companies to navigate, domestically, the economy is better positioned than during past budgets, supported by the government’s continuing thrust on public investment and tax reforms, as well as healthier corporate balance sheets.
The challenge now is to convert these into a durable, investment-led expansion, while also deepening manufacturing capabilities and strengthening export resilience.
Let’s elaborate on the reasons the budget proposals need to incorporate the four:
Also Read: Budget 2026- As the world fractures, India must look seaward
Given that the railways are one of the most cost-efficient modes to transport goods, the government should continue to make consistent investments, with focus on upgrading capacity, especially to augment carriage for the private sector. The budget should also maintain capital expenditure on roads while also inviting more participation from private players through the build-operate-transfer model.
Herein, the budget should focus on direct incentives or tax benefits for research and development as well as technical upskilling in sectors that bring value addition over a defined period, such as electronics, energy storage, electric vehicle, data centres and solar photovoltaic. The goal is to significantly augment the benefits that some of these sectors have already seen.
The budget is, therefore, an important signalling mechanism to align policy certainty, financing frameworks and technology priorities, enabling companies to commit capital with confidence.
Key expectations include financing frameworks for green investments to improve the bankability and accelerate deployment of clean energy and transition projects. At the same time, focus on integrated clean energy industrial clusters with reliable access to clean power and infrastructure can support low-carbon manufacturing processes.
Other key expectations include revising loan ceilings under the Pradhan Mantri MUDRA Yojana to account for the significant increase in project costs since its launch.
Furthermore, the budget should include measures to accelerate the development of plug and play industrial and manufacturing parks for MSMEs. Such parks, with ready to use infrastructure, common utilities, testing facilities, and regulatory clearances, can lower upfront capital costs and shorten project gestation periods.
The Author is Senior Director, Crisil Intelligence.
The budget’s focus of these four is because sustaining growth in the current environment is less about short-term stimulus measures and more about strengthening fundamentals that anchor confidence among corporates amid uneven global growth, volatile trade conditions and issues with regard to competitiveness that are more structural than cyclical.
Also Read: Budget 2026 may put India’s manufacturing comeback to the ultimate test
The imposition of tariffs by the US, continuing geopolitical issues and supply chain shifts have raised the premium on cost efficiency, policy stability and project execution reliability, thereby reshaping investment and trade decision-making.
But while globally there are several issues for companies to navigate, domestically, the economy is better positioned than during past budgets, supported by the government’s continuing thrust on public investment and tax reforms, as well as healthier corporate balance sheets.
The challenge now is to convert these into a durable, investment-led expansion, while also deepening manufacturing capabilities and strengthening export resilience.
Let’s elaborate on the reasons the budget proposals need to incorporate the four:
Infrastructure thrust should continue to further improve logistics efficiency
The government’s consistent push and support over the last decade towards infrastructure development has been critical in strengthening logistics efficiency and improving connectivity. To note, overall budgetary support towards infrastructure has grown by 12% compounded annual growth rate between fiscal 2018 and fiscal 2026. One of the biggest impetus to this improvement is the thrust from the government on roads and railways. This has improved logistics costs, which currently stand at 7.97% as per the latest published report.Also Read: Budget 2026- As the world fractures, India must look seaward
Given that the railways are one of the most cost-efficient modes to transport goods, the government should continue to make consistent investments, with focus on upgrading capacity, especially to augment carriage for the private sector. The budget should also maintain capital expenditure on roads while also inviting more participation from private players through the build-operate-transfer model.
Domestic value addition should be incentivised to enhance competitiveness
The budget also needs to further incentivise manufacturing if it is to increase its contributing to 25% of GDP over the medium term from the current only ~17%. Although the Production-Linked Incentive framework, covering 14 sectors with an outlay of ~Rs 1.9 lakh crore, has catalysed capacity creation, localisation and execution challenges along with structural cost disadvantages persist.Herein, the budget should focus on direct incentives or tax benefits for research and development as well as technical upskilling in sectors that bring value addition over a defined period, such as electronics, energy storage, electric vehicle, data centres and solar photovoltaic. The goal is to significantly augment the benefits that some of these sectors have already seen.
Green energy transition needs to be accelerated
India’s clean energy transition is now a structural policy reality, anchored by commitments to reduce the emission intensity of GDP by 45% by 2030, scale up non-fossil power capacity to 500 GW and progress towards net-zero emission by 2070. For corporate India, the issue is no longer one of just intent or ambition, but one with clarity on transition pathways and the availability of long-term capital to execute those. A large part of the industrial and transport economy will need to adopt a mix of cleaner power, transition fuels and emerging decarbonisation solutions over the next decade.The budget is, therefore, an important signalling mechanism to align policy certainty, financing frameworks and technology priorities, enabling companies to commit capital with confidence.
Key expectations include financing frameworks for green investments to improve the bankability and accelerate deployment of clean energy and transition projects. At the same time, focus on integrated clean energy industrial clusters with reliable access to clean power and infrastructure can support low-carbon manufacturing processes.
Credit access to MSMEs should be enhanced
MSMEs, which account for ~30% of GDP and 45% of exports, face higher borrowing costs and delayed payments, which constrains their scale. The budget needs to introduce measures designed to ensure cheaper and faster credit for MSMEs, focusing on enhancing the overall credit availability and reducing the turnaround time for loans.Other key expectations include revising loan ceilings under the Pradhan Mantri MUDRA Yojana to account for the significant increase in project costs since its launch.
Furthermore, the budget should include measures to accelerate the development of plug and play industrial and manufacturing parks for MSMEs. Such parks, with ready to use infrastructure, common utilities, testing facilities, and regulatory clearances, can lower upfront capital costs and shorten project gestation periods.
The Author is Senior Director, Crisil Intelligence.
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
