Leading economists on Monday suggested that a comprehensive manufacturing policy be implemented as the cornerstone for self-reliant growth. In a pre-budget interaction with Finance Minister Nirmala Sitharaman, they also recommended a revamp of the production-linked incentive scheme to include MSMEs and creation of separate ministry for Artificial Intelligence (AI).
In the inaugural pre-budget consultation for 2026-27 with the minister, some economists also suggested introducing a vacant land tax to incentivise property owners to repurpose idle plots for industrial infrastructure, promoting a “plug-and-play” model for micro and small enterprises and scaling up of sewage reuse and recycling initiatives.
The economists applauded fiscal consolidation, noting India’s “rare balance” of robust growth, controlled inflation, and disciplined deficits amid global turmoil. They suggested the momentum should continue.
The meeting was attended by leading economists, including Chief India Economist at JP Morgan Sajjid Chinoy, Crisil Chief Economist Dharmakirti Joshi, Morgan Stanley Managing Director and Chief India Equity Strategist Ridham Desai, Nomura’s Sonal Varma, senior economist Indira Rajaraman, Axis Bank chief economist Neelkanth Mishra and Swadeshi Jagran Manch co–co-convenor Ashwani Mahajan.
The government should urgently push a manufacturing policy aimed at addressing employment, technology upgradation, and reduced import dependence for a self-reliant India, an economist who attended the meeting said.
With global supply chains shifting and geopolitical tensions rising, economists stressed that India must pivot from assembly-line imports to high-value-added domestic production.
Rejigging the Production-Linked Incentive (PLI) scheme emerged as a recurring theme. Economists urged making it MSME-friendly, with a sharp shift from mere production incentives to rewards for value addition and import substitution. PLI should prioritise local component manufacturing over import-dependent assembly, they said.
On emerging technologies, a standalone ministry for AI was proposed to formulate, implement, and monitor AI policies.
Deregulation, combined with the increased adoption of AI and a trade policy focused on greater market access, could be transformative for India in achieving a higher economic growth trajectory for an extended period, the World Bank said recently.
In the meeting with Sitharaman, a key highlight was the concerns expressed over untapped potential of vast tracts of vacant land across the country. Economists proposed introducing a vacant land tax to incentivize property owners to repurpose idle plots for industrial infrastructure. This measure would unlock land for factories, logistics hubs, and innovation parks, directly fueling job creation in manufacturing clusters. Complementing this, they advocated a “plug-and-play” model for micro and small enterprises. Imagine ready-to-use factory sheds equipped with tool rooms, essential utilities like power and water, and shared facilities—eliminating setup delays and barriers for entrepreneurs. This will help democratise industrial access, especially in tier-2 and tier-3 cities, boosting MSME contributions to GDP.
Street vendors, a vital employment sector with profound social significance, also featured prominently, with calls for dedicated land allotments and supportive provisions under urban planning frameworks.
Water scarcity amid rapid urbanisation prompted calls for scaled-up sewage reuse and recycling initiatives. By mandating treated wastewater for industrial and non-potable uses, the government could ease pressure on freshwater resources, supporting sustainable manufacturing expansion.
Building on the success of the One District One Product (ODOP) scheme, suggestions included extending it to “One District One Heritage.” Districts could anchor development around a key monument, festival, or cultural event—think curated Kumbh Melas or local fairs transformed into economic engines. Careful identification, maintenance, and branding would spur tourism, handicrafts, and ancillary services, creating jobs and preserving heritage while driving inclusive growth, they said.