Budget 2026: New Scheme Boosts CE Manufacturing

Finance Minister Nirmala Sitharaman, while presenting the Union Budget 2026-27, announced the Scheme for Enhancement of Construction and Infrastructure Equipment (CIE). The new initiative, with a proposed allocation of Rs 200 crore for 2026-27, aims to strengthen domestic manufacturing of technologically advanced construction and infrastructure machinery. This move is a key step toward self-reliance in high-value industrial equipment, reducing dependence on costly imports for nation-building projects.

Focus on high-tech, advanced machinery

The CIE Scheme targets a broad range of construction and infrastructure equipment, from tunnel-boring machines for metro networks and high-altitude roads to elevators for multi-story apartments and fire-fighting equipment. By encouraging local production of these specialized machines, the government aims to capture value currently dominated by foreign OEMs and to support India’s expanding public infrastructure projects.

Hi-Tech Tool Rooms to drive innovation

As part of the scheme, Central Public Sector Enterprises (CPSEs) will establish Hi-Tech Tool Rooms at two strategic locations. These digitally enabled, automated workshops will serve as high-precision production hubs where components can be designed, tested, and manufactured locally at scale. The tool rooms are expected to provide high-tech support for precision machinery while reducing costs compared to international alternatives.

Reducing import dependence

Historically, high-value construction equipment—such as massive tunnel-boring machines—has been imported, creating significant reliance on international suppliers. With public capital expenditure rising to Rs 12.2 lakh crore for FY2026-27, domestic production under the CIE Scheme is expected to meet growing national demand, reduce import bills, and enhance India’s self-reliance in critical industrial segments.

Broader impact on manufacturing ecosystem

The CIE Scheme aligns with the government’s broader industrial strategy, including the Electronics Components Manufacturing Scheme and India Semiconductor Mission 2.0. By fostering local, high-tech production, the initiative creates a “force multiplier” effect: components manufactured for construction equipment can benefit other sectors, including automotive and precision engineering. The introduction of automated, digitally-enabled tool rooms also mirrors modern Just-in-Time manufacturing standards, raising quality and efficiency across the industrial ecosystem.

Industry response and future outlook

Experts say the CIE Scheme addresses long-standing gaps in India’s construction equipment industry. By incentivizing domestic production of high-value machinery, the government is expected to attract private investment, strengthen supply chains, and improve the competitiveness of Indian OEMs. The initiative complements ongoing infrastructure development and positions India as a global hub for advanced construction and industrial equipment in the coming years.

With the launch of the CIE Scheme, Budget 2026-27 reinforces India’s commitment to industrial self-reliance, technological advancement, and cost-efficient domestic production, marking a pivotal step for the construction and infrastructure equipment sector.