The Indian budget 2026-27 is a strategically ambitious national industrial transformation project. In fact, it closely resembles the Chinese strategy of 20 years ago.

For Spanish companies, there is a window of opportunity of 3 to 5 years to sell advanced technology. After that, India could be a competitor in several sectors. The relationship should be strategic, not only commercial: joint ventures, technology transfer with return, or establishment of local production capacity.

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A systemic industrial strategy: “Make in India 2.0”.

What is most remarkable about the budget is not a specific sector, but the coherence and scale of the drive for domestic manufacturing. These are not isolated initiatives, but a systemic strategy that encompasses:

• Import substitution in strategic sectors
• Creation of “national champions” with strong state support
• Integration into global value chains with greater local value added

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The challenge of execution: reality vs. aspiration

An analysis of the revised 2025-26 figures reveals a significant structural problem: massive under-execution in key programs. Actual figures are much lower than budgeted, with implementation rates between 15% and 59% in some critical programs.

The under-execution is due to several structural factors:

• Limited absorptive capacity at the state level: many states simply do not have the administrative or technical structure to implement projects of the magnitude planned.
• Excessively slow bidding processes, with multiple bureaucratic layers that slow down the awarding and start of works.
• Poor coordination between the central government and the states exacerbates the problem, with frequent disagreements over responsibilities, deadlines and execution criteria.

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Infrastructure: building the manufacturing hardware

Public spending on infrastructure represents 22.8% of total spending. This is a historically high proportion that reflects the strategic priority of physical connectivity.

Main items

Transportation:

• Roads
• Railroads
• 7 new high-speed rail corridors
• 20 new national waterways (5-year plan)
• Dankuni-Surat Freight Corridor

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Urban development:

• City Economic Regions (CERs): Planned metropolitan economic zones that integrate urban infrastructure, industrial clusters and logistics connectivity. Each will receive about 550 million euros over 5 years to become an engine of regional economic growth.
• Urban Challenge Fund: Competitive fund where cities compete by presenting innovative urban projects (mobility, waste, digitalization). The best proposals receive funding, encouraging innovation and municipal efficiency.

This massive investment in physical connectivity is no accident: India is building the hardware needed for a competitive manufacturing country, reducing logistics costs and facilitating the integration of value chains.

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Selective opening to foreign capital

India wants foreign capital and technology, but very selectively:

• YES in service sectors (cloud, IT, digital services, offshore banking)
• NOT in traditional manufacturing (where they seek to develop local capacity)

This is the classic “Asian ladder” strategy: attract capital in sectors where they are already competitive, develop manufacturing with temporary protection, and eventually liberalize when they become globally competitive.

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Implications for exporting companies

Opportunities (window 2-4 years)

• Advanced technology that India does not yet possess
• Joint ventures in manufacturing (before they develop full in-house capacity)
• Technical textiles, specialized machinery, high-value equipment, etc.

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Risks (horizon 3-7 years)

• Increasing protectionism as local capacity develops
• Heavily subsidized local competitors
• Arbitrary regulation (India is not easy to do business with)
• Economic nationalism may increase