China Can No Longer Slow India Down! ₹23,000 Crore Boost for Domestic Manufacturing in Budget

New Delhi: Finance Minister Nirmala Sitharaman is set to present the Union Budget on February 1, 2026. A major highlight could be a ₹23,000 crore incentive package aimed at promoting domestic manufacturing of high-tech capital goods and reducing dependence on imports—especially from China.

Incentives to Strengthen Domestic Production

Officials say the government is finalizing plans to boost local production of high-tech construction and automotive equipment. For construction machinery, a ₹14,000–16,000 crore incentive program is nearing completion. Additionally, a ₹7,000 crore scheme is being prepared to strengthen India’s position in the global automotive value chain (GVC). Together, these initiatives aim to make India self-reliant in capital goods manufacturing.

Focus on Construction Equipment

The construction equipment package will emphasize high-end machinery such as tunnel boring machines and cranes, which are currently partly imported from China, Japan, South Korea, and Germany. China had earlier imposed export restrictions on tunnel boring machines, delaying several infrastructure projects in India. Following high-level diplomatic talks last year, these restrictions were lifted.

The package targets critical imported components, including hydraulic systems, undercarriages, electronic control units, sensors, and telematics, with the goal of reducing dependency on foreign imports. The new incentives will also build on existing schemes to further strengthen domestic manufacturing capabilities.

Benefits for the Automotive Sector

The GVC scheme will focus on local production of advanced automotive parts such as advanced driver-assistance systems (ADAS), 360-degree cameras, and sensors. Officials say domestic manufacturers achieving 50% local value addition will receive government support.

The package may also include subsidies for capital goods like molds and power tools used in auto parts manufacturing, along with support for prototyping centers to test products before mass production. The objective is to strengthen supply chains through industry collaboration while expanding export opportunities.