FICCI Wants Customs, Tax Reforms To Boost Manufacturing In Budget 2026
The Federation of Indian Chambers of Commerce and Industry (FICCI) has released its recommendations for the Union Budget 2026, focusing on customs and tax reforms to invigorate India's manufacturing sector. With the global economic landscape facing challenges like slowing growth and increasing geo-economic fragmentation, FICCI emphasizes the need for strategic budget allocations that foster long-term competitiveness and shield India's growth from external shocks.
Boosting Manufacturing and Exports
FICCI's proposals aim to strengthen self-reliance ('Atmanirbharta') in key sectors like defense, electronics, and critical minerals. This includes advocating for increased allocations for the defense sector, providing support for drone technology, and pushing for enhanced exports. The industry body also suggests incentivizing large investments from global manufacturing companies by extending the concessional tax regime for manufacturing operations for at least five years. Recognizing the success of Production Linked Incentive (PLI) schemes, FICCI recommends their continuation to maintain investor confidence and stability. To reduce import dependency, FICCI proposes developing a roadmap for local manufacturing of components to strengthen India's electronics manufacturing ecosystem.
Tax and Customs Reforms
To ease compliance and build taxpayer confidence, FICCI recommends rationalizing the multiple TDS/TCS rates into a simpler, tiered structure and eliminating TDS/TCS on GST-related transactions. It also proposes introducing an independent dispute resolution forum for tax matters to reduce litigation and expedite resolution processes. FICCI's recommendations include measures to promote green transitions, aligning with India's commitment to achieving net-zero emissions by 2070. To promote a comprehensive aviation leasing landscape in India, extending tax exemptions to aviation training simulation devices and aircraft ground support equipment has been suggested.
Promoting Investment and Innovation
FICCI is urging the government to consider increasing capital expenditure (capex) by 15% in FY26 to maintain growth momentum amidst global uncertainties. Investment in physical, social, and digital infrastructure is considered essential for driving economic progress and ensuring balanced growth. Recognizing innovation as a key driver for economic growth, FICCI recommends enhancing the existing patent box regime, making it more inclusive and encouraging "Make in India" by extending benefits to the sale of patented products manufactured in India. The industry body has also proposed extending the concessional tax rate to new Research and Development (R&D) companies setting up substantial facilities within the next five years. Reinstating R&D incentives is also seen as crucial to encourage innovation within the chemical industry.
Enhancing Ease of Doing Business
FICCI emphasizes reforms in land, labor, and power sectors as critical for long-term growth. It proposes creating inter-state institutional platforms similar to the GST Council to facilitate consensus-building and advance reforms in these areas. Further recommendations include revising the qualifying criterion for mandatory registration on the TReDS (Trade Receivables Discounting System) platform to expand its reach to more companies and leveraging the Account Aggregator framework for MSME lending to address legal and compliance issues. FICCI has also suggested changes in Non-Performing Asset (NPA) classification norms for MSMEs to extend the limit for classifying overdue payments from 90 to 180 days.
