Budget may reset industrial policy

Simpler and predictable rules, faster approvals on the cards

- Gireesh Chandra Prasad, Subhash Narayan & Dhirendra Kumar

India’s next budget may mark a reset in the government's philosophy towards supporting manufacturing—from offering incentives and protection to fixing the everyday frictions that stop firms from growing, innovating and competing globally, according to two people familiar with the matter.

Instead of focusing on subsidies or tariff support, the budget may emphasise simpler rules, faster approvals and a more predictable regulatory environment.

According to the first person cited above, who requested anonymity, the government believes manufacturing must do more of the heavy lifting in India’s long-term growth, as the services sector has limitations in transforming the industrial ecosystem.

“The plan is to help the manufacturing sector move up in the value chain and help improve India’s share in global merchandise trade,” this person said.

Recommendations from two high level committees that examined reform proposals will be part of the budget, said the second person, who also requested anonymity.

Experts said the shift could see announcements to address the ‘regulatory cholesterol’ flagged in the Survey, and steps to build competitiveness, efficiency and technology as key elements of a new-look industrial policy.