The DPIIT plans to push for local production of 100 import-heavy items in the upcoming Budget FY2027-28. The government wants to reduce dependence on foreign goods like machinery and pharma. A source said, "A final call on incentives to promote production of the identified 100 items domestically is to be taken."
Final call on incentives to promote domestic production, reduce import dependence to be taken by Finance Ministry
The government is weighing the option of providing targeted support measures in the upcoming Budget (FY2027-28) to scale up domestic production and check imports of about 100 critical products, including capital goods and intermediate components across key industries like chemicals, auto parts, defence and aerospace, electronics and construction equipment.
"The Department for Promotion of Industry and Internal Trade (DPIIT) has completed a joint exercise with line ministries and industry stakeholders on identifying high-import items where local manufacturing does not happen or is insufficient. It is likely to submit the final proposal to the Finance Ministry shortly," a source tracking the matter said.
The support could take the form of a combination of fiscal and non-fiscal measures such as capital-linked incentives, temporary tariff protections, targeted R&D funding, help in testing and certification and enhanced supply-chain credit, the source added.
"A final call on incentives to promote production of the identified 100 items domestically is to be taken by the Finance Ministry," the source said.
Six working groups
The government had constituted six sector-specific working groups to identify as many as 100 products for promoting their domestic manufacturing and reducing import dependence.
The groups were on pharmaceuticals, biotech and medical devices; chemicals and petrochemicals, textiles and footwear; capital goods, automotive and electric vehicles, advanced capital goods; energy; construction equipment and infrastructure; and defence and aerospace (only for items with civilian applicability) and electronics.
Self-reliance
The idea is to bring down import dependence and position India as a global supplier for the identified items. "India wants to lower its dependence on other countries, including China, for critical goods. Manufacturing some of these locally will help save precious foreign exchange and not allow any country to manipulate it," the source said.
For instance, Beijing has recently announced a restriction on exports of tunnel boring machines to "sensitive countries", including India, which will be implemented from this month. Reacting to the restrictions, Commerce & Industry Minister Piyush Goyal said that India would not buckle under pressure and if needed will work on manufacturing these machines domestically.
Tunnel boring machines are used in India to excavate underground tunnels for major infrastructure projects, including metro rail systems, high-speed rail and bullet train networks, urban road links, and high-altitude rail lines.
India's imports were up 7.5 per cent to $775 billion in 2025-26 with high imports of crude oil, machinery, transport equipment, vegetable oil, fertiliser, ores and minerals, chemicals, plastic materials and electronics.