A tailored manufacturing strategy of incentives, research support and investment targeting the country’s 50 most imported products will help India strengthen its manufacturing sector and add more jobs, Rajiv Memani, president of the Confederation of Indian Industry (CII) and chairman of consultancy EY India, said in an interview.
Citing an internal study by the lobby group, Memani said these intermediates imported into India include electronics, components, power transition equipment and semiconductors.
Funding will be key to the success of the plan, Memani said, pointing to the sale of government stakes in public sector units as an option. If the Union Government extends its disinvestment program to say: ₹2-3 trillion over the next two years, it will help fund investments in infrastructure projects like high-speed rail and others that will help improve India’s competitive edge, he said.
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The proposals from the industry body come as the central government has just wrapped up the winter session of Parliament, which was marked by key legislation aimed at more investment in nuclear power and insurance – apart from setting the context for the Union Budget for FY27.
India’s economy grew 8.2% in the second quarter and is expected to grow 7% or faster for the full year. Since 2011, India has been trying to increase the share of manufacturing in its economic output to 25%, but it is failing. In FY25, the sector’s share of gross value added remained at 14%.
The government’s efforts to reduce investment have not kept up with the targets recently. In FY25, the center increased ₹33,000 crore, fell short of its disinvestment target ₹50,000 million crowns. In the current financial year, the target is ₹47,000 million crowns. So far, it has been mobilized just enough ₹8,768 crores. As tax revenue growth is likely to be affected by rate cuts and nominal GDP growth is likely to remain subdued, disinvestment is gaining importance as a source of revenue.
Work, work, more work… How?
In order to add jobs, the scale of economic activity needs to increase, particularly in labor-intensive sectors such as manufacturing and tourism, Memani stressed.
“It is also critical to address the skills gap and implement initiatives to ensure the workforce is ready for work that goes beyond academic qualifications. Significant emphasis must be placed on manufacturing, developing a clear, product-oriented strategy for goods that are currently imported or under-produced domestically, including sectors such as electronics, components, energy transition, electric vehicles (EVs) and semiconductors,” said Memani.
The aim, he said, is to increase domestic value creation and facilitate integration into global supply chains and actively support labour-intensive industries through central-state partnerships and targeted schemes such as Production Linked Incentives (PLI) schemes, Memani said.
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Although India has had mixed success with its PLI programs, it has performed well in electronics. In fiscal 2025, Apple amassed $22 billion worth of iPhones in India — up 60% from the previous year — and according to a Bloomberg report, India’s share of global iPhone production rose to 20%. Apple’s pivot coincided with a push by the Indian government to expand local manufacturing of the PLI electronics system. After initial success in electronics, the system received higher budget funds: ₹9,000 crore in FY26 ₹5,777 crore in actual expenditure in the previous year.
Required pressure at cabinet level
Memani also suggested that such a strategy could be addressed by an interdepartmental group.
The CII study identified 50 top-level imports concentrated in eight to 10 HSN codes. HSN codes are used worldwide to identify goods in trade and taxation. Memani said these products often involve cutting-edge technology, face challenges of global overcapacity or insufficient domestic demand, and require political support and long-term demand planning.
The CII president also said that while India’s services growth is strong, the manufacturing sector faces some concerns; for example, there is still a need to streamline approvals, permits, environmental reviews and inspections. “The government is working on this through decriminalization laws, new labor codes and reforms to building permits and zoning regulations, but it’s an ongoing process,” Memani said.
Economic efficiency and production costs also need to be addressed to increase competitiveness, Memani said, citing the need for reforms in power distribution and strengthening of transmission infrastructure. “Similarly, logistics costs can be reduced by increasing port and airport capacity and expanding rail networks, including high-speed rail. Here too, mining reforms are essential,” he said.
“The global manufacturing environment sees high concentration in one part of the world, often supported by significant government subsidies and strategic policies. To compete, India needs to foster technology partnerships, proactively support new companies and identify demand,” Memani said.
The Union Budget for FY 2027 should prioritize fiscal prudence while vigorously driving economic growth, he said.
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Despite strong real GDP growth thanks to low inflation, leading to lower tax growth expected, Memani said. “Therefore, a much greater and more coordinated effort on disinvestment and privatization is needed, with bolder declarations to deliver economic growth and generate revenue.”
Increased activity on PPP, short for public-private partnership, queue and use of the national monetization channel are also key, Memani said. The list shows the assets that concessionaires can lease for a period of time under a PPP, with ownership remaining with the government.
Memani added that businesses expect the government to maintain significant capital expenditure of approx ₹13-14 trillion in FY 27. India’s economic growth in the last few years has been fueled by government spending far more than private consumption or investment and exports.
This should focus on logistics infrastructure such as high-speed rail, multimodal parks and coastal economic zones to boost manufacturing and reduce the cost of production factors, he said.
