India’s Union Budget 2025-26 reaffirms the government’s strategic commitment to industrial development, with a strong emphasis on manufacturing. From enhanced Production Linked Incentive (PLI) allocations to the announcement of a National Manufacturing Mission, the budget offers a robust roadmap for strengthening the domestic manufacturing ecosystem—particularly relevant to the gear and allied industries, which lay the foundation of several critical sectors such as automotive, renewable energy, aerospace, and heavy machinery.

National Manufacturing Mission – A Holistic Industrial Framework

A key highlight of Budget 2025 is the launch of the National Manufacturing Mission, which aims to bolster the “Make in India” initiative by offering comprehensive policy support, implementation roadmaps, and structured monitoring mechanisms. The mission covers small, medium, and large-scale industries, offering a unified approach toward industrial excellence.

For gear manufacturers and allied sectors, this mission presents an opportunity to align with a national framework that prioritises the following:

1. Ease and cost of doing business – enabling smoother operations, lower compliance burdens, and improved logistics infrastructure.
2. Technology availability – supporting the adoption of advanced machining, automation, and Industry 4.0 technologies.
3. Quality product manufacturing – encouraging process standardization and certification that enhance global competitiveness.
4. MSME vibrancy – Empowering small and medium gear component makers with financial support and skill-building initiatives.
5. Future-ready workforce – Bridging the skill gap in high-precision machining, robotics, and digital manufacturing technologies.

Clean Tech Manufacturing – A New Avenue for Growth

The mission also embraces Clean Tech Manufacturing, focusing on building domestic capacity in next-generation technologies like:

• Electric vehicle motors and controllers
• High-efficiency transmission components
• Wind turbines and solar PV equipment
• Electrolyzers and grid-scale battery systems

These developments are poised to significantly impact gear manufacturing, as precision gear components are integral to many of these emerging technologies. The transition toward energy-efficient solutions will drive demand for lighter, high-strength, and high-performance gear systems and allied parts.

PLI Scheme Expansion – Stronger Incentives, Stronger Industry

Another cornerstone of Budget 2025 is the enhanced Production Linked Incentive (PLI) scheme, which received substantial budget increases across critical sectors:

• Electronics & IT Hardware: ₹9,000 crore
• Automobiles & Auto Components: ₹2,818.85 crore
• Specialty Steel: ₹305 crore
• Advanced Chemistry Cell (ACC) Battery Storage: ₹155.76 crore

For the gear industry, particularly those catering to automotive and capital goods sectors, this is a significant enabler. The increased outlays signal rising demand for locally manufactured gearboxes, gear-cutting tools, and high-precision components. The automotive sector alone—bolstered by incentives—will require advanced transmission systems and lightweight, high-durability gear assemblies to meet global standards.

Furthermore, the focus on specialty steel supports material availability for precision gear production, enabling better performance and longevity for components used in high-stress environments.

FDI Reforms – Fueling Industrial Investments

With the continued liberalization of Foreign Direct Investment (FDI) norms, manufacturing sectors now offer 100% FDI under the automatic route. Between 2014 and 2024, FDI equity inflow in manufacturing rose by 69%, highlighting growing investor confidence.

For gear and allied manufacturers, this translates to improved access to global technologies, capital, and joint venture opportunities—essential for scaling up operations and upgrading manufacturing capabilities.

Sectoral Impact and Emerging Opportunities

Budget 2025’s manufacturing focus aligns with evolving market dynamics:

• Automotive Electrification: Increased investment in EVs and components will spur demand for high-efficiency gear solutions for drivetrains, motors, and controllers.
• Renewable Energy: Gearboxes for wind turbines and support for solar infrastructure will expand application areas.
• Telecom and Electronics: Precision components used in telecom infrastructure and control systems open newer verticals for gear applications.
• Aerospace and Defence: Quality-focused initiatives enhance readiness for export-oriented precision gear production.

Conclusion: A Turning Point for Industrial Manufacturing

Budget 2025 offers a structured, incentive-driven approach to empower Indian manufacturing on a global scale. For the gear industry and its allied sectors, this is a pivotal moment to invest in technology upgrades, expand product portfolios, and align with the broader industrial vision.

With the confluence of the National Manufacturing Mission, expanded PLI schemes, clean tech initiatives, and investor-friendly reforms, the gear manufacturing ecosystem is well-positioned to play a transformative role in India’s next phase of industrial growth.

Reference
Ministry of Commerce & Industry

BUDGET 2025-2026

https://www.indiabudget.gov.in/doc/budget_speech.pdf