By Gurvinder Gandhi
Over the last ten years, India has developed an effective manufacturing base facilitated by scale, cost-effectiveness, and policy-driven capacity building. The nest stage provides the opportunity to deepen this base by moving continuously towards higher value creation. With global supply chains progressing and competitiveness increasingly contingent on the intensity of technological application, reliability, and precision, India has a good opportunity to participate in more technology-intensive manufacturing segments.
Manufacturing currently accounts for around 16-17 percent of India’s GDP, implying the potential to grow on the basis of capabilities. The progress towards global standards will rely on the extent to which technology, innovation, and skills are integrated throughout the manufacturing ecosystem. Against this backdrop, the budget 2026 becomes significant as a prospective policy window that can help strengthen the shift of India as a scale-based growing economy towards technology-based, high value production.
The adoption of technology as the value creation cornerstone
The concept of high-value manufacturing is strongly associated with the application of technology in production systems. The advancement of productivity, quality, and consistency in manufacturing in global networks is being molded by automation, artificial intelligence, robotics, digital twins, and smart factory systems. When used in an integrated way, their impact is most evident, and this allows for better control, less variability, and improved decision-making.
The National Manufacturing Mission and existing production-linked incentive frameworks represent the government efforts to put this in motion. Budget 2026 can strengthen this trajectory by extending targeted incentives for domestic manufacturing of factory automation products such as PLCs, cobots, industrial robots, and servo motors. It would promote digitisation by supporting local production of these technologies, as well as empowering domestic industry.
Further fiscal assistance by providing tax incentives and faster depreciation of advanced manufacturing equipment can promote rapid modernisation. For MSMEs, shared infrastructure, and specific financial support would assist in reducing the barriers of adoption. These combined efforts make technology a source of accuracy, scalability, and exportability.
Strengthening R&D and innovation ecosystems
Technology adoption must be supported by strong research and development capacity. High-value manufacturing depends on domestic R&D, product development, and ownership of intellectual property. Design and system architecture controls enable manufacturers to capture more of the value throughout the production lifecycle.
Strategic industry-academia partnerships can be supported by funding to enhance the applied research with clear commercial results. Targeted investment in the research of electronics, semiconductors, advanced materials, and automation can reduce the time between research and industrial applications, which contributes to long-term competitiveness.
Infrastructure aligned to advanced manufacturing requirements
As manufacturing becomes more technology-intensive, infrastructure demands also increase. High-tech production relies on the availability of power, effective logistics, stable digital connectivity, and closed industrial systems that minimise operational interruption.
Continued investment in industrial corridors, smart manufacturing clusters, and programs like PM MITRA Parks would assist in the development of environments that facilitate reliability and efficiency. Infrastructure aligned with high-tech manufacturing requirements enhances productivity and allows manufacturers to increase the scale and quality standards.
Workforce preparedness, localisation, and energy efficiency
The link between manufacturing performance, energy efficiency and sustainability is on the rise. The improved working conditions, less energy intensity, and better environmental outcomes can be supported with incentives for energy-efficient equipment, low-carbon technologies, and sophisticated air purification systems. Simultaneously, supply chain reliability can be enhanced by support of localisation of the critical components, as it decreases vulnerability to external disruptions.
An effective workforce is still at the centre of this shift. With the increased use of smart systems in factories, the skills demanded have shifted back to system integration, system diagnostics, and process optimisation. The use of public-private partnerships in vocational training and lifelong learning will be significant in developing this scale capacity.
Budget 2026 as a catalyst
Policy alignment of capital investment incentives, research support, development of infrastructures, energy efficiency, and skills programmes will determine the move towards high-value manufacturing in India. Budget 2026 can be an impetus to strengthen this alignment and enable the building of long-term capabilities. In this way it could assist India to move up the manufacturing value chain gradually and enable it to improve its position in global manufacturing nets.
(The author is CFO, Mitsubishi Electric India)
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