Union Budget 2026: What India Inc wants from Sitharaman & Co amid tariff and trade pressures

The upcoming Union Budget 2026 is poised as a pivotal moment for India, reflecting its ambitious goal to transform into a global manufacturing hub. This aspiration is not new but has gained significant momentum due to a confluence of domestic policy thrusts and global economic shifts. Understanding this context is crucial for any competitive exam aspirant.

**Background Context: India's Manufacturing Journey and Global Reset**

India's journey towards industrialization has been long and varied. Post-independence, the focus was on import substitution and public sector dominance, often termed the 'License Raj,' which stifled private enterprise and global integration. The economic reforms of 1991, ushering in Liberalization, Privatization, and Globalization (LPG), opened India to the world, leading to significant growth, particularly in the services sector. However, manufacturing's share in GDP remained relatively stagnant. Recognizing this imbalance, the 'Make in India' initiative was launched in 2014, aiming to boost domestic manufacturing, attract FDI, and create jobs. This policy framework laid the groundwork for the current push.

The global economic landscape has undergone a 'structural reset,' particularly exacerbated by the COVID-19 pandemic and subsequent geopolitical tensions. The pandemic exposed vulnerabilities in highly concentrated global supply chains, leading many countries and corporations to seek diversification and build resilience. This 'China Plus One' strategy, or broader de-risking of supply chains, presents a unique opportunity for India to position itself as a reliable and trusted manufacturing alternative. The government's 'Atmanirbhar Bharat Abhiyan' (Self-Reliant India Campaign), launched in 2020, further amplified the focus on domestic capabilities and reducing import dependence, aligning perfectly with the global shift.

**What's Happening: Budget 2026 and India Inc.'s Expectations**

The Union Budget 2026 is not merely an annual financial statement; it is a strategic document that will outline the government's fiscal and economic priorities for the coming year, directly influencing India's manufacturing trajectory. The article highlights 'record FDI inflows,' which signifies growing international investor confidence in India's economic stability and growth potential. This confidence is bolstered by 'India Inc.' demonstrating 'resilient profit margins' despite volatile global demand, indicating strong underlying corporate health and adaptability. The industry's demands from Finance Minister Nirmala Sitharaman and her team would likely revolve around further incentivizing domestic production, rationalizing tariffs, ensuring policy stability, and investing in critical infrastructure and skill development.

**Key Stakeholders Involved**

Multiple stakeholders are keenly observing and influencing the Budget 2026. The **Union Government**, particularly the Ministry of Finance, is the primary architect, responsible for balancing fiscal prudence with growth imperatives. **India Inc.**, representing various industrial sectors (e.g., automotive, electronics, textiles, pharmaceuticals), is a crucial stakeholder, articulating its needs through industry bodies like CII, FICCI, and ASSOCHAM. Their demands often include tax breaks, production-linked incentives (PLIs), infrastructure development, and ease of doing business reforms. **Foreign Investors** are also key, as their continued capital inflow is essential for funding large-scale manufacturing projects and technology transfer. Finally, **Indian citizens** are indirect stakeholders, benefiting from job creation, economic stability, and the availability of quality domestic products.

**Significance for India**

The successful realization of India's manufacturing ambition holds profound significance. Economically, it promises **sustained GDP growth**, moving beyond service-led expansion to a more balanced and robust economy. It will lead to massive **job creation** across various skill levels, addressing the challenge of unemployment and underemployment, especially for the youth. Socially, increased manufacturing activity can lead to **improved living standards** and **reduced regional disparities** as industries spread across different states. Strategically, becoming a 'trusted manufacturing partner' enhances India's **geopolitical standing**, reducing reliance on other nations and strengthening its position in global trade negotiations. The 'Atmanirbhar Bharat' vision underscores the importance of self-reliance for national security and economic sovereignty.

**Historical Context and Constitutional Provisions**

From an examination perspective, it's vital to link the budget to its constitutional basis. **Article 112** of the Indian Constitution mandates the presentation of the 'Annual Financial Statement' (Union Budget) to Parliament. **Article 265** states that no tax shall be levied or collected except by authority of law, emphasizing parliamentary control over taxation. The legislative powers related to industries, trade, and commerce are primarily with the Union Government (Union List, **Seventh Schedule**), enabling it to formulate national industrial policies and trade regulations. Policies like the Production Linked Incentive (PLI) schemes, introduced in 2020 across 14 key sectors, are concrete examples of the government's commitment to boosting domestic manufacturing by offering incentives to companies for incremental sales from products manufactured in India. These schemes are a direct policy tool to achieve the 'global manufacturing hub' goal.

**Future Implications**

The Budget 2026 is expected to reinforce policy continuity and introduce new measures to accelerate India's manufacturing ascent. Success would mean a more diversified export basket, higher integration into global value chains, and a stronger rupee. However, challenges remain, including navigating global protectionist tendencies, ensuring adequate skill development for the evolving industrial landscape, improving logistics and infrastructure efficiency, and maintaining a stable regulatory environment. The budget's proposals will be closely watched for their impact on these critical factors, determining whether India can truly capitalize on the current global structural reset and emerge as a dominant force in global manufacturing.