Industry lobby Confederation of Indian Industry (CII) on Saturday (14 December 2025) proposed a comprehensive set of reforms for the upcoming Union Budget 2026-2027 to ensure sustainable investment growth across public, private and foreign investment and sustain India’s momentum as one of the world’s fastest growing major economies.
CII proposed to increase central capital expenditure by 12 per cent and investment support to states by 10 per cent in FY27; launch of the ₹150 crore National Infrastructure Pipeline (NIP) 2.0 project for 2026–32; offer incremental tax credits or compliance relief for firms that achieve significant new investment, production or tax contribution milestones; and the establishment of a Fund to Promote NRI Investments.
He also called for the restoration of accelerated depreciation benefits to further stimulate new capital expenditure and technology upgrades, particularly for SMEs and manufacturing industries, provided the measure is structured to stimulate modernization without triggering Minimum Alternative Tax (MAT) obligations.
In addition, the CII urged strengthening the National Investment and Infrastructure Fund (NIIF) by creating a Sovereign Investment Strategy Council (SIFC) to align investments with national priorities.
The Union Budget for the fiscal year 2026–27 is expected to be presented on 1 February 2026.
According to the CII, strengthening fiscal stability through a cycle-based public debt framework instead of inflexible annual deficit rules would increase resilience by allowing counter-cyclical flexibility during global shocks and preventing repeated breaches of annual targets.
Such a framework would strengthen credibility by aligning fiscal policy with medium-term debt sustainability.
“The upcoming Union Budget 2026-27 has to serve a dual role of stabilizer and growth stimulator and investment promotion will be one of the most critical components in this regard,” CII Director General Chandrajit Banerjee said.
To this end, CII has designed a comprehensive investment strategy anchored in fiscal prudence, capital efficiency and investor confidence.
The recommendations emphasize strengthening public capital spending as the backbone of infrastructure-led growth while unlocking private and foreign investment through targeted incentives, institutional reforms and increased global engagement.
Strengthening public investment remains essential, the CII said, noting that public capital spending has been a key driver of India’s post-pandemic recovery, catalyzing infrastructure expansion and private capital accumulation.
To strengthen project selection and execution, CII proposed institutionalizing a Capital Expenditure Effectiveness Framework (CEEF) that would prioritize high-impact projects, track physical and financial progress, and evaluate outcomes based on productivity and regional spillovers.
Second, facilitating private investment will be another top priority.
While public investment lays the groundwork, private and foreign capital will be the real accelerators of India’s transformation.
“The Indian government has provided a big push to demand through income tax relief in last year’s Union Budget and more recently through GST 2.0. Investment, especially private sector investment, will be the next big driver of economic growth to focus on in the next fiscal to sustain growth,” Banerjee added.
In this context, incremental tax breaks or compliance relief for firms that achieve significant new investment, production or tax contribution milestones would encourage reinvestment of profits in productive assets and capacity additions in high-growth sectors such as clean energy, electronics, semiconductors and logistics, the CII said.
It proposed the creation of an NRI Investment Promotion Fund, structured as a government-private holding company with up to 49 percent government stake, to channelize NRI, FPI and institutional investment in sectors such as infrastructure and artificial intelligence.
The fund could raise capital through long-term convertible bonds with benchmark FCNR rates that offer safe returns with equity appreciation, including special India Global Diaspora Bonds, the industry body said.
The CII also called for the simplification of external commercial borrowing processes and the provision of higher borrowing limits, longer tenures and partial risk coverage for infrastructure and manufacturing projects to improve access to global capital while maintaining external sustainability.
A single-window approval mechanism for major FDI proposals, supported by dedicated facilitation cells at the Center and in the states, with an expected approval within 60 to 90 days, would bring predictability, reduce administrative delays and expedite major investments.
To deepen global investor engagement, the CII recommended the establishment of the India Global Economic Forum as a government-led platform bringing together multinational corporations, sovereign wealth funds, pension funds, private equity firms and other institutional investors for a structured dialogue with senior government officials on emerging investment opportunities across sectors.
“An investment-led growth strategy, anchored in fiscal credibility and institutional reforms, will define India’s next phase of development,” Banerjee added.
Published – 14 Dec 2025 19:16 IST
