3 March 2025
Hindustan Times
Op-eds
There were heightened expectations from Union
Budget 2025-26 regarding building on the momentum of last year’s nine budget
priorities — and it has delivered. With India marching towards realising the
Viksit Bharat vision, this budget takes decisive steps for high-impact growth.
The Economic Survey's estimate of 6.4% real GDP growth and retail inflation
softening from 5.4% in FY24 to 4.9% in FY25 reinforces India’s position as the
world’s fastest-growing major economy. The budget for the coming fiscal has capitalised
on prudent fiscal management and strengthens the four key pillars of India’s
economic resilience — jobs, energy security, manufacturing, and innovation.
India needs to create 7.85 million non-agricultural
jobs annually until 2030 — and this budget steps up. It has enhanced workforce
capabilities f through the launch of five National Centres of Excellence for
Skilling and aims to align training with “Make for India, Make for the World”
manufacturing needs. Additionally, an expansion of capacity in the IITs will
accommodate 6,500 more students, ensuring a steady pipeline of technical
talent. It also recognises the role of micro and small enterprises (MSMEs) in
generating employment. The enhancement of credit guarantees for micro and small
enterprises from 25 crore to 210 crore, unlocks an additional 21.5 lakh crore
in loans over five years. This, coupled with customised credit cards for micro
enterprises with a 25 lakh limit, will improve capital access for small
businesses. While these measures are commendable, the scaling of
industry-academia collaboration as well as fast-tracking vocational training
will be key to ensuring sustained job creation.
India remains highly dependent on Chinese imports
for solar modules, electric vehicle (EV) batteries, and key electronic
components, exposing the sector to geopolitical risks and trade barriers. This
budget takes this challenge head-on. It allocates 381,174 crore to the energy
sector, a significant increase from the 263,403 crore in the current fiscal,
signalling a major push toward strengthening supply chains and reducing import
dependence. The exemptions for 35 additional capital goods required for EV
battery manufacturing adds to this. The reduction of import duty on solar cells
from 25% to 20% and solar modules from 40% to 20% eases costs for developers
while India scales Sinha up domestic production capacity. The allocation to the
ministry of new and renewable energy (MNRE) has increased 53% to 226,549 crore,
with the PM Surya Ghar Muft Bijli Yojana seeing an 80% jump to 220,000 crore .
These measures provide the decisive push, but to truly achieve our climate
goals, we must also accelerate investments in battery recycling, critical
mineral extraction, and strategic supply chain integration.
With capital expenditure estimated at 4.3% of GDP,
the highest it has been for the past 10 years, this budget lays the foundation
for India’s manufacturing resurgence. Initiatives such as the National
Manufacturing Mission will provide enabling policy support for small, medium,
and large industries and will further solidify the Make-in-India vision by
strengthening domestic value " chains. Infrastructure remains a =
bottleneck for manufacturers. The budget addresses this with massive
investments in logistics to reduce supply chain costs, which currently stand at
13-14% of GDP, significantly higher than that of most of the developed nations
(~8%). A cornerstone of the Mission is clean tech manufacturing. There are
promising measures throughout the value chain. The budget introduces customs
duty exemptions on lithium-ion battery scrap, cobalt, and 12 other critical
minerals, securing the supply of essential materials and strengthening India’s
position in global clean-tech value chains.
Despite India’s thriving tech ecosystem, research
and development (R&D) investments remain below 1% of GDP, compared to 2.4%
in China and 3.5% in the US. Future jobs will require Industry 4.0
capabilities, and India must prepare now. This budget tackles the gap. A good
start is the government allocating 20,000 crore to a private-sector-driven
Research, Development, and Innovation (RDI) initiative. The budget recognises
the transformative potential of artificial intelligence (Al) by introducing the
PM Research Fellowship, which will provide 10,000 fellowships for technological
research in IITs and IISc with enhanced financial support. This, along with a
Centre of Excellence for Al and 50,000 Atal Tinkering Labs in government
schools, are optimistic steps toward a knowledge-driven economy.
Sumant Sinha is founder, chairman, and CEO
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