India’s vast manufacturing industry, which contributes around 17% of the nation’s GDP, is expecting the central government to make some important announcements to boost the renewable energy sector, micro, small and medium enterprises (MSMEs), semiconductor and electronics manufacturing industry, and towards the allocation of various production-linked incentive (PLI) schemes in the Union Budget 2025-26.

The Indian government has increased its bets in the country’s vast manufacturing industry in the recent past, which also aligns with the recent geopolitical shift towards the ‘China 1’ strategy.

During the Union Budget 2024-25 in July last year, finance minister Nirmala Sitharaman made hoards of announcements for the manufacturing industry, which included a credit guarantee scheme for MSMEs in the manufacturing sector, reduction in basic customs duty for certain raw materials used for manufacturing mobile phones, lithium-based batteries and others, increase in production linked incentive (PLI) scheme for automobile and auto components, and more.

Now, with Union Budget 2025-26 around the corner, key industry demands are around expanding the PLI scheme for manufacturing in deeptech — this includes green energy, advanced materials, and semiconductors.

But the manufacturing sector is also vital for the textile, automotive, and pharma industry — all of which have an impact on Indian startups.

Over the past few years, PLIs have proven to be a major catalyst in spurring manufacturing in electronics. Now experts want the same formula applied to emerging technology sectors to expedite growth in these areas.

Will Budget 2025 Fit The Deeptech Themes?

India has long been the breeding ground for research and development of technology in sectors like semiconductor chips and biotech, largely due to the presence of talent. However, due to lack of infrastructure and capital towards building hardware, the country could not step up in the manufacturing to bolster these ecosystems.

Today, with the deeptech theme growing stronger than ever, India is making significant strides towards strengthening the manufacturing in these sectors too.

Sachin Sharma, partner at Grant Thornton Bharat, said that to sustain growth in the manufacturing and supply chain sectors, the Budget 2025 must focus on expanding the PLI scheme to encompass high-demand sub-sectors like green energy and advanced materials.

The government approved the INR 19,744 Cr PLI budget for green hydrogen in 2023. However, even during the previous budget, the industry wanted the government to expand the scope of this PLI scheme, which did not happen.

For instance, cofounder and CEO of Newtrace, Prasanta Sarkar, had told Inc42 earlier that the current budgetary allocation for the production of green........

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