The Budget 2026 places manufacturing as a strategic and frontier sector for sustaining economic growth. (AI image)

By Neetu VinayekIndia’s effort to strengthen its manufacturing foundation has steadily progressed over the past decade through a series of significant policy measures. A major milestone was the launch of the Make in India initiative in 2014, designed to encourage investment, spur innovation, and improve ease of doing business. Labour reforms also moved forward with the rollout of the four Labour Codes on 21 November 2025, merging 29 Central labour laws to streamline compliance and create a modern, resilient workforce framework. Complementing these domestic reforms, India has simultaneously intensified its global trade engagement through a renewed focus on Free Trade Agreements (FTAs). Together, these reforms laid the foundation for the renewed manufacturing push outlined in Union Budget 2026.The Budget 2026 places manufacturing as a strategic and frontier sector for sustaining economic growth. The government framed the Budget as a continuation of structural reforms aimed at improving productivity, boosting competitiveness, and strengthening resilience against global disruptions.In light of the rapid progress under the Electronics Components Manufacturing Scheme, the Budget proposes expanding its allocation to ₹40,000 crore, reaffirming India’s ambition to enhance domestic value addition and secure its place in global electronics supply chains. To compliment this, income tax holiday is being provided for five years to non-residents providing capital goods, equipment, or tooling to contract manufacturer operating in customs-bonded zones. This will help reduce costs which were being incurred on specialised equipment. Safe harbour provisions have been extended to non-residents for component warehousing in a bonded warehouse at a profit margin of 2 percent of the invoice value with a resulting tax incidence of 0.7 percent. This will harness efficiency of just-in-time logistics for the sector.A key highlight is the India Semiconductor Mission (ISM) 2.0, to produce equipment and materials, design full-stack Indian IP, and fortify supply chains signalling the country’s ongoing commitment to building a robust domestic semiconductor ecosystem. There is tremendous potential for the aviation sector with rise in airports and regional connectivity under the UDAN schemes. To build sustainable ecosystem it is important to manufacture aircrafts and undertake MRO activities within the country. With this vision basic customs duty is exempted on parts and components imported for manufacture of aircraft. Further, basic customs duty on raw materials imported for manufacture of parts used in maintenance, repair or overhaul requirements in defence units is also exempted. The government has also proposed a seaplane VGF scheme to support operations and indigenise manufacturing of seaplanes.A Scheme for Rare Earth Permanent Magnets, launched in late 2025, is now complemented by proposed support for Rare Earth Corridors across mineral-rich states to promote mining, processing, research and manufacturing.The Budget also introduces Biopharma SHAKTI—a five-year, ₹10,000 crore programme to position India as a global hub for biopharma manufacturing by strengthening capabilities in biologics and biosimilars.To boost the chemicals sector, the government has launched a scheme supporting States in developing chemical parks to expand domestic production. The capital goods sector, often the silent driver of productivity, receives a comprehensive support package. This includes the establishment of Hi-Tech Tool Rooms by Central Public Sector Enterprises (CPSEs) as digital service hubs for precision components, a scheme for advanced construction and infrastructure equipment. ₹10,000 crore over five-years is also allocated to develop a competitive container manufacturing ecosystem. These interventions aim to reduce import dependence, shorten supply chains, and lower costs.Beyond advanced manufacturing, the Budget extends support to labour-intensive sectors such as textiles. It also introduces a dedicated thrust to develop India into a global centre for high-quality, affordable sports goods.A Scheme has been proposed to revive 200 legacy industrial clusters to improve their cost competitiveness and efficiency through infrastructure and technology upgradation.Impetus to the manufacturing sector is also provided through taxes. Basic customs duty exemptions have been extended across emerging sectors, including lithium-ion cell battery storage systems, critical mineral processing equipment, raw material for wind turbines and nuclear power plants. In essence, the Union Budget 2026 represents a holistic manufacturing-led growth strategy. It marries structural reforms with targeted fiscal incentives, embraces both advanced and traditional industries, and puts exports and global competitiveness at the centre of its vision. The new set of measures and focus on emerging sectors has the potential to deepen the country’s industrial capabilities and strengthen its position in global value chains. On ground execution and collaboration could mark a transformative chapter in India’s industrial journey.(Neetu Vinayek is Partner, Tax Infrastructure and Oil & Gas Leader, EY India . Manmay Chandawalla, Director-Tax, EY India also contributed to the article.)

Panaji: Churchill Brothers FC were left in a state of uncertainty after the All India Football Federation (AIFF) executive committee decided against admitting the Goan side in the Indian Super League (ISL), which kicks off on Saturday.“There is no provision for a second team from the I-League to be promoted,” a senior member who attended the meeting told TOI on Thursday. “There is no ambiguity with the (CAS) order. It’s clear that the I-League champions, Inter Kashi in this case, have to be promoted to the ISL.”Churchill Bros owner Churchill Alemao and CEO Valanka Alemao, also an executive committee member, met AIFF president Kalyan Chaubey in the Capital last week and told him that they deserved to play in the top-tier ISL after being crowned I-League champions at the end of the league campaign. That decision, however, was later overturned by the Switzerland-based Court of Arbitration for Sport (CAS) who ruled in favour of Inter Kashi.Churchill said the CAS decision came as “shock and surprise to the entire football fraternity.” The final order, the club said, is yet to be made available.Following a request from three members, the AIFF convened a second meeting on Thursday after the first one was adjourned due to lack of quorum.“You cannot discount Churchill’s contribution to Indian football. The club has been around for close to four decades and has major successes. But adding a team with just two days left for the league to kick off would make all of us a laughing stock,” said another official.According to sources, Churchill’s proposal officially found favour with only one of the 17 members who attended the executive committee meeting.An email with from LKK, Inter Kashi’s legal team, which maintained that the “CAS award is fully enforceable and there is no legal reason to provisionally include Churchill in ISL” was shared with the members. They were also apprised of the ISL clubs’ stand, who collectively said the addition of a new team was unacceptable.“The ISL season is already being organised under a defined competitive framework and regulatory structure. Any mid-cycle or ad-hoc inclusion of a club side of an established sporting pathway undermines competitive integrity and sets a precedent contrary to merit-based participation, thereby compromising the credibility of the competition,” all ISL clubs, except Mohammedan Sporting, had previously written to all executive committee members.The AIFF decision is a huge setback for Churchill who were firm on playing in the top-flight and had threatened to shut down the club if their request isn’t accepted.The former champions have not attended any meetings involving I-League clubs.Last week when AIFF convened a meeting of I-League clubs, it was put to the clubs to decide on Churchill’s participation, should they wish to make a late entry. The clubs, however, said the decision is best left to the federation.