India's 2026 Budget Aims to Redefine Its Role in Global Trade and Manufacturing
India's Union Budget 2026-27 has set ambitious goals to transform the country's role in global globle trade and manufacturing. Announced in early 2026, the budget focuses on reducing import reliance, boosting high-value production, and deepening integration into global entry value chains. Key measures include new trade agreements, major funding for small businesses, and strategic investments in semiconductors and critical minerals.
A major step in the budget is the removal of the ₹10 lakh cap on e-commerce courier exports, simplifying trade for small exporters. Alongside this, a ₹10,000 crore SME Growth Fund will help micro, small and medium enterprises (MSMEs) expand and meet international quality standards. Another ₹10,000 crore has been allocated to build a globally competitive container manufacturing ecosystem, strengthening India's tradingview export logistics.
India's push into high-tech manufacturing includes the launch of India Semiconductor Mission (ISM) 2.0, which targets equipment, materials, and full-stack Indian IP design. The outlay for the Electronics Components Manufacturing Scheme (ECMS) has also been raised to ₹40,000 crore, prioritising upstream segments like components production, R&D, and design.
To secure critical mineral supplies, the government is developing Rare Earth Corridors in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu. The budget also introduces digitally enabled Hi-Tech Tool Rooms and the Scheme for Enhancement of Construction and Infrastructure Equipment (CIE) to bolster the capital goods sector.
On the trade front, India finalised a Free Trade Agreement (FTA) with the EU on January 27, 2026. The deal reduces tariffs on 96.6% of EU exports to India, covering sectors like autos and machinery. The agreement aims to double EU exports to India by 2032 while giving Indian businesses better access to 1.45 billion consumers.
The broader strategy seeks to shift India from a low-cost assembly hub to a high-value anchor in global value chains. This includes locally designing and manufacturing precision components to cut import dependencies amid rising geopolitical tensions.
With over 350 trade agreements worldwide, India's latest policies signal a strong push for economic resilience and global entry competitiveness.
The 2026-27 budget lays the groundwork for India's deeper integration into global supply chains. By easing export limits, funding SME growth, and investing in semiconductors and critical minerals, the government aims to reduce reliance on imports while strengthening high-tech manufacturing. The EU trade deal and new industrial corridors further position India as a key player in global trade by the end of the decade.
