Union Budget 2026: Manufacturing, MSMEs and infra emerge as top priorities for industry — ASSOCHAM survey

Ahead of Budget 2026–27, industry is asking the government to focus on execution. With global uncertainty and a slowdown in domestic growth, businesses want results on manufacturing, infrastructure and MSME support rather than fresh promises. This sentiment comes through clearly in a pre-Budget survey released on January 15 by the Associated Chambers of Commerce and Industry of India (ASSOCHAM). Scaling up manufacturing, improving ease of doing business and faster implementation of reforms top the industry’s expectations from Budget 2026.

Manufacturing emerges as top priority

Boosting domestic manufacturing has clearly emerged as the foremost demand from industry ahead of the Union Budget, reflecting growing consensus that India’s next phase of economic growth will be driven on factory floors rather than balance sheets alone. There is also a strong push for policy continuity. Industry leaders cautioned that frequent changes in rules and incentives create uncertainty and delay investment decisions. Instead, they want the Budget to reinforce existing manufacturing initiatives, strengthen last-mile delivery and ensure that incentives translate into capacity creation, productivity gains and sustained employment growth.

Industry leaders are asking for a balance between policy stability and targeted support. Their suggestions range from easier access to long-term funding at affordable rates and tax incentives for technology upgrades and automation, to faster approvals at industrial parks, special economic zones and manufacturing clusters. Rationalising customs duties on key raw materials also features high on the wish list, as companies look to improve cost competitiveness at home and abroad.

Business sentiment: confidence with caveats

The survey shows that 55 per cent of respondents are optimistic about business prospects over the next 12 months, pointing to faith in India’s domestic demand and medium-term growth trajectory. At the same time, 32 per cent of respondents struck a neutral note, while 13 per cent were pessimistic, pointing to global uncertainty, geopolitical risks and an uneven recovery in demand.

MSMEs highlight liquidity stress

Micro, small and medium enterprises - which accounted for 55 per cent of survey participants - flagged liquidity pressures as a persistent concern. Respondents said that encouraging prompt payments across supply chains could go a long way in easing MSME stress without placing a heavy burden on the exchequer.

Infrastructure, logistics and skills remain in focus

Infrastructure and logistics continue to rank high on industry’s priority list. Skills and employment also featured prominently in industry feedback. Business leaders called for closer alignment between skilling programmes and real industry needs, especially in advanced manufacturing, digital technologies and artificial intelligence. About 35 per cent of respondents said these measures have delivered limited benefits so far, while 39 per cent described the impact as moderate.

Digital and AI adoption moves up the agenda

Alongside manufacturing, faster digitalisation and the adoption of artificial intelligence have moved sharply up the industry’s priority list ahead of the Union Budget. Businesses across sectors see technology not as a future ambition but as an immediate necessity to improve productivity, cut costs and remain competitive in an increasingly data-driven global economy.