The Confederation of Indian Industry (CII) has proposed several key recommendations to Finance Minister Nirmala Sitharaman in anticipation of the Union Budget 2025-26, aiming to stimulate economic growth and create employment.
The apex business chamber has called for a reduction in personal income tax for individuals earning up to Rs 20 lakh per annum, alongside the introduction of a three-tier customs duty structure.
CII’s suggestion for a three-tier customs tariff includes rates of 0–2.5 per cent for inputs, 2.5–5.0 per cent for intermediates, and 7.5 per cent for finished goods.
These recommendations are intended to simplify the structure and promote domestic manufacturing while protecting key sectors with specific exceptions.
To drive growth further, CII has emphasised targeted interventions in labour-intensive industries such as garments, footwear, furniture, tourism, and real estate. It believes that focused efforts in these sectors could lead to large-scale job creation.
To support this, the chamber has urged for expedited free trade agreements with the European Union and the United Kingdom, as well as reduced duties on imports of raw materials like cotton.
CII has also advocated for the implementation of next-generation reforms, particularly in labour laws, to unlock the potential of labour-intensive industries.
Additionally, the chamber highlighted the importance of enhancing government capital expenditure by 25 per cent over the allocated Rs 11.1 lakh crore for FY25. A focus on rural infrastructure, according to CII, could have a multiplier effect on the economy, boosting consumption and growth.
Another significant recommendation by the chamber involves developing an integrated foreign trade, investment, and industrial policy. It has proposed the formation of an expert group under the Finance Minister’s leadership to draft such a policy, ensuring industry participation.
In terms of fiscal discipline, CII has suggested maintaining a fiscal deficit of 4.5 per cent for FY26 to avoid a sharp contraction that could hinder demand.
It also recommends a long-term glide path to reduce the Central government’s debt to below 50 per cent of GDP by 2030-31. This, it believes, would improve India’s sovereign credit rating and reduce borrowing costs.
To boost consumption, the chamber has proposed measures such as reducing excise duty on fuel to curb inflation and increase disposable incomes. Lowering marginal tax rates for incomes up to Rs 20 lakh per annum is expected to create a virtuous cycle of higher consumption, growth, and tax revenue.
CII has also suggested divesting government stakes in select public sector enterprises to unlock Rs 10 lakh crore. These funds could be utilised for public capital expenditure, retiring government debt, and setting up a Sovereign Wealth Fund for acquiring critical technologies and minerals abroad.
Despite challenges like global economic uncertainties, food inflation, and climate-related concerns, CII remains optimistic about India’s economic fundamentals.
While some softening of domestic demand was observed in the first half of the fiscal year, the chamber expects a progressive recovery. With sound economic policies in place, CII is confident that India is well-positioned to navigate the challenges and sustain growth.
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