The Confederation of Indian Industry (CII) has submitted recommendations for the Union Budget 2026-27, advocating for a faster and more predictable approach to the privatization of Public Sector Enterprises (PSEs). To achieve this, the CII has proposed a four-pronged strategy designed to expedite disinvestment and unlock resources for national development.
A key element of CII's proposal is a shift towards a demand-driven approach in selecting PSEs for privatization. Instead of the government identifying specific enterprises for sale and then inviting investor interest, the CII suggests first gauging investor interest across a broader set of enterprises and then prioritizing those that attract stronger interest and meet valuation expectations. The CII believes this will lead to smoother execution and better price discovery. Structured feedback from potential investors could also help identify and address procedural or regulatory bottlenecks early in the process.
The CII has also called for the announcement of a rolling three-year privatization pipeline. This would provide investors with greater visibility and planning certainty, encouraging deeper engagement and more realistic valuation and price discovery, which would contribute towards expediting the privatization process.
Acknowledging that full privatization can be complex and time-consuming, the CII suggests a calibrated disinvestment route as an interim measure. The government could initially reduce its stake in listed PSEs to 51%, retaining management control, and later bring it down further to between 33% and 26%. The CII estimates that lowering government ownership to 51% in 78 listed PSEs could unlock nearly ₹10 lakh crore. In the first two years, disinvestment in 55 PSEs could raise about ₹4.6 lakh crore, followed by ₹5.4 lakh crore from 23 additional enterprises. Chandrajit Banerjee, Director General of CII, stated that a calibrated reduction of government stake balances strategic control with value creation. He added that the proceeds could fund healthcare, education, green infrastructure, and fiscal consolidation while maintaining control in strategic sectors.
Finally, the CII proposes setting up a dedicated institutional mechanism to oversee privatization. This would include a ministerial board for strategic direction, an advisory panel of industry and legal experts, and a professional execution team to handle due diligence, market engagement, and regulatory coordination. The CII believes such a framework would strengthen oversight, accountability, and investor confidence, making privatization predictable and professionally managed.
The CII argues that a calibrated privatization approach would help sustain capital expenditure and fund development priorities, particularly in sectors where private participation can improve efficiency, technology adoption, and competitiveness. The industry body emphasizes the role of private enterprise in India's growth. The Union Budget for 2026–27 will be presented on February 1.
