Summary

The CII Champions’ Game-Changing Reforms for Budget 2026-27 represent a comprehensive set of proposals put forward by the Confederation of Indian Industry (CII) to significantly enhance India’s capital expenditure framework and sustain the country’s rapid economic growth trajectory. Centered on increasing public capital investment by 12 percent at the central level and 10 percent for states, these reforms emphasize infrastructure development in sectors with high economic multipliers such as transport, energy, logistics, and the green transition. The proposals aim to build on the substantial rise in government-led capital expenditure since 2014, which has played a crucial role in India’s post-pandemic recovery by catalyzing infrastructure expansion and attracting private capital.
A key feature of CII’s recommendations is the institutionalization of a Capital Expenditure Efficiency Framework (CEEF), designed to prioritize high-impact projects, monitor progress rigorously, and evaluate outcomes based on productivity and regional spillovers, thereby improving transparency and execution efficiency. Complementing this, CII advocates launching a Rs 150 lakh crore National Infrastructure Pipeline (NIP) 2.0 for 2026–2032, creating fiscal incentives such as incremental tax credits and accelerated depreciation benefits to stimulate private sector and MSME investments, and establishing an NRI Investment Promotion Fund to mobilize foreign and diaspora capital for strategic sectors like infrastructure and artificial intelligence.
The reforms also propose adopting a more flexible, economic-cycle-based public debt framework to strengthen fiscal sustainability and investor confidence by allowing counter-cyclical fiscal responses without compromising medium-term debt targets. To accelerate foreign direct investment (FDI), CII recommends a single-window clearance mechanism supported by facilitation cells at central and state levels, aiming to reduce administrative delays and improve the investment climate. The establishment of platforms such as the India Global Economic Forum is intended to deepen global investor engagement and align investment flows with national priorities.
While the reforms have been broadly welcomed as vital for sustaining India’s infrastructure-led growth and economic transformation, challenges remain regarding effective implementation, bureaucratic bottlenecks, and ensuring fiscal prudence alongside ambitious capital outlays. Nonetheless, the CII’s proposals set a strategic roadmap for Budget 2026-27, positioning enhanced capital expenditure and investment facilitation as critical levers to propel India’s long-term development and global competitiveness.

Background

The Confederation of Indian Industry (CII) has emphasized the critical role of public capital expenditure in driving India’s post-pandemic economic recovery and sustaining its position as one of the fastest-growing major economies. According to CII Director General Chandrajit Banerjee, continued and enhanced public spending is essential to maintain steady growth, with a focus on sectors that generate high economic multipliers such as transport, energy, logistics, and the green transition.
In recent years, government-led capital expenditure has surged significantly, increasing five-fold since 2014, with major investments directed toward infrastructure development including national highways, railways, and air connectivity. This expansion in public investment has catalyzed infrastructure growth and helped crowd in private capital, underscoring the importance of capital outlays for economic momentum.
Ahead of the Union Budget 2026-27, CII has proposed a comprehensive investment strategy anchored in fiscal prudence, capital efficiency, and investor confidence to sustain and boost investment growth across public, private, and foreign sectors. A key component of this strategy includes increasing central government capital expenditure by 12 percent and enhancing capital expenditure support to states by 10 percent for the fiscal year 2026-27, with targeted spending in high-impact sectors to maximize economic and regional benefits.
To ensure efficient use of these investments, CII also recommends institutionalizing a Capital Expenditure Efficiency Framework (CEEF) that would prioritize high-impact projects, monitor physical and financial progress, and evaluate outcomes based on productivity and regional spillovers. Additionally, the chamber advocates launching a Rs 150 lakh crore National Infrastructure Pipeline (NIP) 2.0 for 2026-32, introducing incremental tax incentives for firms making significant investments, and establishing an NRI Investment Promotion Fund to further mobilize resources.
This strategic emphasis on capital expenditure reflects a broader fiscal context where, post-pandemic, the government has been able to raise capital spending without severely constraining revenue expenditure, thus balancing fiscal consolidation with growth imperatives. The upcoming budget is therefore seen as a vital opportunity to reinforce public investment as a stabilizer and growth enabler for the coming decades.

Overview of CII Champions’ Game-Changing Reforms for Budget 2026-27

The Confederation of Indian Industry (CII) has proposed a comprehensive set of reforms aimed at driving sustained investment growth across public, private, and foreign sectors in the Union Budget 2026-27. Central to their recommendations is the emphasis on significantly increasing capital expenditure to maintain India’s momentum as one of the fastest-growing major economies globally.
CII has suggested raising central capital expenditure by 12 per cent and providing a 10 per cent increase in capex support to states for the fiscal year 2026-27. Additionally, the industry body has called for the launch of a Rs 150 lakh crore National Infrastructure Pipeline (NIP) 2.0 spanning 2026-2032 to further enhance infrastructure development nationwide.
A key component of the reforms includes the institutionalisation of a Capital Expenditure Efficiency Framework (CEEF), which aims to improve project selection, monitor physical and financial progress, and evaluate outcomes based on productivity and regional spillovers. This framework is designed to prioritise high-impact projects and enhance execution efficiency, thereby maximising the benefits of public investment.
The recommendations underscore the importance of public capital expenditure as the backbone of infrastructure-led growth, which has been pivotal in India’s post-pandemic recovery by catalysing infrastructure expansion and attracting private capital. Alongside strengthening public investment, CII proposes targeted incentives, institutional reforms, and enhanced global engagement to unlock private and foreign investments.
Furthermore, the reforms advocate for long-term fiscal prudence, capital efficiency, and investor confidence, with measures such as offering incremental tax credits or compliance relaxations for firms achieving significant new investment, production, or tax contribution milestones. The establishment of an NRI Investment Promotion Fund is also part of the strategy to broaden investment sources and deepen global investor participation.

Detailed Proposals and Reform Measures

The Confederation of Indian Industry (CII) has outlined a comprehensive set of proposals aimed at fostering sustained investment growth through the forthcoming Union Budget 2026–27. These reforms target public, private, and foreign investment channels to maintain India’s trajectory as one of the fastest-growing major economies globally.
Central to CII’s recommendations is a significant increase in capital expenditure, with a proposed 12 percent rise in central government spending and a 10 percent boost in capital outlay for states in FY27. These funds are to be primarily directed towards high-impact sectors such as transport, energy, logistics, and the green transition to maximize multiplier effects and economic growth. The industry body emphasizes that bolstering public investment remains essential, highlighting its pivotal role in India’s post-pandemic recovery by catalysing infrastructure expansion and crowding in private capital.
To strengthen project selection and execution, CII advocates institutionalising a Capital Expenditure Efficiency Framework (CEEF). This framework is designed to prioritise projects with the highest impact, closely track both physical and financial progress, and evaluate outcomes based on productivity and regional spillovers. Such a system aims to enhance transparency and effectiveness in capital deployment.
Foreign investment facilitation is another major pillar of the proposed reforms. CII recommends establishing a single-window clearance mechanism for large foreign direct investment (FDI) proposals, supported by dedicated facilitation cells at both the central and state levels. This mechanism would provide deemed approvals within 60 to 90 days, reducing administrative delays and accelerating big-ticket investments. Complementing this, the simplification of external commercial borrowings (ECB) procedures, coupled with higher borrowing limits, extended tenures, and partial risk cover, would improve access to global capital while maintaining external sustainability.
To deepen engagement with global investors, CII proposes the creation of an India Global Economic Forum. This government-led platform would convene multinational corporations, sovereign wealth funds, pension funds, private equity, and other institutional investors for structured dialogue with senior government officials on emerging investment opportunities across various sectors.
CII also suggests instituting an NRI Investment Promotion Fund, envisioned as a government–private holding company with up to 49 percent government stake. This fund would channel investments from Non-Resident Indians (NRIs), foreign portfolio investors (FPIs), and institutional investors into strategic sectors such as infrastructure and artificial intelligence. The fund aims to raise capital through long-term convertible bonds benchmarked to foreign currency non-resident (FCNR) rates, offering secure returns with equity upside and including specialized India Global Diaspora Bonds.
Fiscal incentives form a critical component of the reform agenda. CII urges reinstating accelerated depreciation benefits to incentivize fresh capital expenditure and technology upgrades, particularly targeting MSMEs and manufacturing sectors. The proposal emphasizes that these measures should be structured to stimulate modernization without triggering Minimum Alternate Tax (MAT) obligations. Additionally, incremental tax credits or compliance relaxations for firms achieving significant new investment, production, or tax contribution milestones are proposed to encourage reinvestment of profits into productive assets and capacity scaling in high-growth sectors such as clean energy, electronics, semiconductors, and logistics.
Further, CII calls for strengthening the National Investment and Infrastructure Fund (NIIF) by establishing a Sovereign Investment Strategy Council (SIFC). The council would align investments more closely with national priorities and medium-term fiscal sustainability, enhancing investor confidence and project credibility.
Finally, CII recommends launching a Rs 150 lakh crore National Infrastructure Pipeline (NIP) 2.0 for 2026–32, with a clear list of shovel-ready projects, including public-private partnership (PPP) initiatives. This pipeline aims to provide multi-year certainty to investors, developers, and states, reinforcing the infrastructure sector’s role as a cornerstone for economic growth.
Together, these detailed proposals underscore a strategic, investment-driven growth model for India, anchored in fiscal credibility, institutional reforms, and enhanced capital expenditure to secure long-term sustainable development.

Sectoral Focus and Expected Beneficiaries

The Confederation of Indian Industry (CII) has emphasized several key sectors as central to the proposed reforms in the Union Budget 2026–27, highlighting their critical roles in driving India’s economic growth and transformation. Infrastructure development remains a top priority, given its foundational importance in supporting manufacturing, exports, and overall economic expansion. The national master plan, Gati Shakti, valued at US$1.3 trillion, has already initiated systemic reforms in the infrastructure sector, improving the efficiency of goods movement and freight delivery, which in turn benefits allied industries such as cement, real estate, and construction projects.
A renewed focus on capital expenditure, particularly through public investment, is intended to set the groundwork for private sector and foreign capital inflows, which are expected to be the primary accelerators of growth in the coming fiscal years. The CII stresses that while government spending is crucial, private investments—especially in MSMEs and manufacturing—must be galvanized to sustain momentum. To this end, accelerated depreciation benefits are recommended to incentivize fresh capital expenditure and technology upgrades, structured carefully to avoid triggering Minimum Alternate Tax (MAT) liabilities.
The Indian shipping industry, a vital component of the country’s maritime economy, is also highlighted as a key beneficiary. With approximately 95% of India’s trade by volume and 70% by value transported via maritime routes, the sector has seen cargo handling capacity nearly double from 800.5 million tonnes per annum in 2014 to 1,630 million tonnes per annum in 2024, underscoring its strategic importance for trade facilitation and economic growth.
Additionally, CII proposes strengthening institutional mechanisms such as the National Investment and Infrastructure Fund (NIIF) by establishing a Sovereign Investment Strategy Council (SIFC) to better align investments with national priorities. The introduction of a Capital Expenditure Efficiency Framework is also advocated to improve project selection, monitoring, and outcome measurement, ensuring that infrastructure spending translates into sustainable growth and fiscal prudence.
Collectively, these sectoral focuses and strategic reforms are aimed at catalyzing an upward spiral of increased investment, economic expansion, and employment generation across multiple industries, with MSMEs, manufacturing, infrastructure, and maritime trade identified as the principal beneficiaries of the forthcoming budgetary measures.

Addressing Fiscal Deficit and Debt Sustainability

The Confederation of Indian Industry (CII) has emphasized the need to reinforce fiscal stability by adopting an economic-cycle-based public debt framework instead of relying on inflexible annual deficit rules. This approach would enhance fiscal resilience by allowing counter-cyclical flexibility during global economic shocks and help avoid repeated breaches of yearly deficit targets. By aligning fiscal policy with medium-term debt sustainability, such a framework would also strengthen the government’s credibility in managing public finances.
CII advocates for a shift from rigid annual deficit targets to a more adaptive debt-based framework that adjusts according to economic cycles. This would enable the government to respond more effectively to economic downturns and shocks while maintaining fiscal discipline over the long term. The proposed framework aims to balance the need for flexibility in expenditure management with the imperative of ensuring debt sustainability.
For the fiscal year 2024–25, fiscal consolidation efforts are primarily planned through reductions in revenue expenditure. The government has taken advantage of the post-pandemic period’s higher deficits to increase capital expenditure without significantly constraining revenue spending. Specifically, an allocation of Rs 1,50,000 crore has been earmarked as special loans to states to boost capital expenditure, reflecting a strategic focus on investment-led growth while managing the fiscal deficit.

Incentivizing Private and Foreign Investment

The Confederation of Indian Industry (CII) has emphasized the critical role of private and foreign investment as the primary accelerators of India’s economic transformation, complementing foundational public investment. To sustain and enhance growth momentum, especially in the 2026-27 fiscal year, the CII has called for targeted fiscal and policy measures that incentivize reinvestment and capacity scaling in high-growth sectors such as clean energy, electronics, semiconductors, logistics, infrastructure, and artificial intelligence (AI).
One of the key recommendations includes introducing incremental tax credits or simplifying compliance requirements for firms that achieve significant new investment, production, or tax contribution milestones. Such measures aim to encourage companies to reinvest profits into productive assets, thereby expanding capacity and modernizing operations. The industry body also advocates reinstating accelerated depreciation benefits, particularly for micro, small, and medium enterprises (MSMEs) and manufacturing industries, to incentivize fresh capital expenditure and technology upgrades without triggering Minimum Alternate Tax (MAT) obligations.
In addition, the CII proposed the creation of a National Reinvestment Initiative (NRI) Investment Promotion Fund structured as a government-private holding company with up to 49% government stake. This fund would channel investments from Non-Resident Indians (NRI), foreign portfolio investors (FPI), and institutional investors into priority sectors like infrastructure and AI. Capital for the fund could be raised through long-term convertible bonds benchmarked to Foreign Currency Non-Resident (FCNR) rates, providing secure returns with equity upside and potentially including special India Global Diaspora Bonds to attract diaspora capital.
To further align investments with national priorities and improve effectiveness, CII has urged strengthening the National Investment and Infrastructure Fund (NIIF) by establishing a Sovereign Investment Strategy Council (SIFC). This council would oversee a sovereign investment strategy that enhances coordination between public and private capital deployment.
Alongside these measures, the CII recommended increasing central capital expenditure by 12% and boosting financial support to states by 10% for FY27, directing resources toward sectors with high developmental impact such as transport infrastructure, energy, logistics, and the green transition. To ensure optimal utilization of funds, a Capital Expenditure Efficiency Framework has also been suggested to improve project selection, monitoring, and outcome measurement.

Challenges and Bottlenecks in Current Capital Expenditure Framework

The current capital expenditure framework in India faces several challenges that impede optimal project execution and investment outcomes. One of the primary issues is the lack of a robust system for project selection and outcome measurement, which affects the prioritization of high-impact projects

Government and Policymaker Responses

The government has demonstrated a clear strategic pivot towards increased spending, particularly in capital expenditures, as reflected in recent fiscal trends. Notably, the central government’s cash surplus has declined significantly from Rs 2,671 billion in the first half of FY25 to Rs 283 billion by late November 2024. This reduction, along with the reliance on ways and means advances, indicates a planned surge in government expenditure focused on large-scale capital projects. Over the past decade, fiscal policies have seen dramatic shifts including sharp reductions in corporate tax rates and the introduction of expansive welfare schemes such as the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) and the Jal Jeevan Mission, reflecting a balancing act between welfare and capital spending.
In response to these developments, policymakers and key stakeholders like the Confederation of Indian Industry (CII) have emphasized the need for a more efficient and credible fiscal framework. The CII advocates aligning fiscal policy with medium-term debt sustainability to strengthen credibility and investor confidence. A Capital Expenditure Efficiency Framework has been proposed to improve project selection, monitoring, and outcome measurement, thereby enhancing the overall effectiveness of public investments.
Private and foreign investment have been highlighted as crucial accelerators of India’s economic transformation. While public investment is recognized as foundational, the government has introduced demand-side incentives such as income tax reliefs and reforms under GST 2.0 to stimulate private sector investment. The next fiscal year is expected to prioritize these investments to sustain economic growth momentum.
Ahead of the Union Budget 2026–27, CII Director General Chandrajit Banerjee underscored the dual role the budget must play—as both a stabilizer and a growth enabler. Promoting investments, particularly through enhanced capital expenditure, is identified as one of the most critical components of this approach. CII has proposed a comprehensive investment strategy anchored in fiscal prudence, capital efficiency, and investor confidence, structured around six pillars to provide a foundation for growth in the coming decades.

Impact Analysis

The proposed reforms by the Confederation of Indian Industry (CII), particularly the institutionalisation of the Capital Expenditure Efficiency Framework (CEEF), are poised to significantly enhance the effectiveness of project selection and execution. By prioritising high-impact projects and enabling meticulous tracking of physical and financial progress, CEEF aims to improve productivity and generate positive regional spillovers, thereby fostering balanced and sustainable growth. This framework is expected to bring greater accountability and transparency to capital expenditure, ultimately increasing the returns on public investments.
Furthermore, the shift towards an economic-cycle-based public debt framework, as advocated by CII, would strengthen fiscal stability by allowing counter-cyclical flexibility during global shocks and avoiding the recurrent breaches of annual deficit targets. This approach enhances policy credibility by aligning fiscal discipline with medium-term debt sustainability, which is essential for maintaining investor confidence and macroeconomic resilience.
Incentivising private sector participation through incremental tax credits and compliance relaxations for firms that achieve significant new investment, production, or tax milestones will encourage reinvestment into productive assets. This strategy is particularly targeted at scaling capacity in high-growth sectors such as clean energy, electronics, semiconductors, and logistics, which are critical for India’s future economic competitiveness. The proposed establishment of an NRI Investment Promotion Fund—a government-private holding company with up to 49% government stake—further aims to mobilise foreign portfolio and institutional investments into strategic sectors like infrastructure and artificial intelligence. This fund could raise capital via innovative instruments like long-term convertible bonds and India Global Diaspora Bonds, providing secure returns with potential equity upside.
India’s ongoing infrastructure transformation, exemplified by the US$1.3 trillion Gati Shakti national master plan, underlines the critical role infrastructure plays as a growth driver. Enhanced infrastructure development will not only improve the efficiency and cost-effectiveness of goods movement and freight delivery but also catalyse expansion in allied sectors such as cement, real estate, and construction, creating a virtuous cycle of investment, economic growth, and employment generation. The reforms championed by CII align with and support these broader government initiatives, promising a comprehensive boost to India’s economic trajectory.

Case Studies and Historical Perspectives

Over the past decade, India has experienced a marked shift in fiscal policy, particularly characterized by a substantial increase in capital expenditure aimed at infrastructure development. Since 2014, government-led capital investment has grown five-fold, with significant allocations directed towards enhancing national highways, railways, and air connectivity, reflecting a strategic prioritization of infrastructure as a driver of economic growth. This trend aligns with the broader structural reforms initiated during the 12th Five-Year Plan (2012–17), where the government committed approximately US$1 trillion to infrastructure development, with 40% of the funding expected from private sector participation.
This period also witnessed a rise in intergovernmental transfers, notably from the union government to subnational governments, alongside major corporate tax rate reductions and the introduction of expansive welfare schemes such as the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) and the Jal Jeevan Mission. These measures collectively illustrate a complex balancing act between revenue expenditure on welfare and increased capital outlays aimed at long-term growth.
The Union Budget for 2023–24 exemplifies this fiscal approach, with total expenditure proposed at Rs 45,03,097 crore. Capital expenditure was projected to increase by 37.4% from the previous year’s revised estimates, primarily driven by enhanced outlays for transport infrastructure and capital loans to states. In contrast, revenue expenditure was set to grow modestly by 1.2%, underscoring the government’s focus on augmenting productive investment while managing current spending. The revenue deficit target of 2.9% of GDP for 2023–24 further indicates a commitment to fiscal consolidation alongside investment expansion.
More recently, the central government has provided special loans amounting to Rs 1,50,000 crore to states explicitly for capital expenditure, reinforcing the collaborative fiscal framework aimed at boosting infrastructure development across the country. Industry voices, including the Confederation of Indian Industry (CII), have emphasized the critical role of public capital expenditure in sustaining India’s post-pandemic recovery by catalyzing infrastructure expansion and attracting private investment.
Together, these historical trends and case studies illustrate the evolving fiscal landscape in India, highlighting the increasing prioritization of capital expenditure as a cornerstone for economic growth and the ongoing challenges of expenditure management and fiscal consolidation.

Implementation Strategies and Roadmap

The Confederation of Indian Industry (CII) has outlined a comprehensive roadmap to accelerate infrastructure development and economic growth through strategic implementation measures for Budget 2026-27. Central to this approach is the introduction of a Capital Expenditure Efficiency Framework aimed at improving project selection, monitoring, and outcome measurement, thereby enhancing the effectiveness of public investment.
A key element of the roadmap is the proposal to launch a fresh National Infrastructure Pipeline (NIP) worth Rs 150 lakh crore for the 2026–32 period. This initiative is designed to provide clear visibility on upcoming infrastructure projects for both state governments and private sector participants, ensuring long-term certainty to investors. Alongside this, CII advocates adopting a debt-based fiscal framework that flexibly adjusts to economic cycles rather than adhering to rigid annual deficit targets. Such fiscal flexibility would enable the government to better respond to economic shocks while maintaining medium-term debt sustainability and fiscal discipline.
To complement public investment, the roadmap emphasizes the critical role of private and foreign capital as accelerators of India’s transformation. CII highlights recent government measures such as income tax relief and the introduction of GST 2.0 as important demand-side stimuli that must be supplemented by enhanced private sector participation to sustain growth momentum. To this end, a single-window clearance mechanism for large foreign direct investment (FDI) proposals is recommended, backed by dedicated facilitation cells at both the Centre and state levels. This mechanism aims to deliver predictability, reduce administrative delays, and expedite approvals within 60 to 90 days.
Further fostering global investor confidence, CII proposes the establishment of the India Global Economic Forum—a government-led platform that facilitates structured dialogue between multinational corporations, sovereign wealth funds, pension funds, private equity investors, and senior government leadership. This forum is intended to deepen global investor engagement and spotlight emerging investment opportunities across sectors. Additionally, simpler external borrowing rules and streamlined procedures for large foreign investments are suggested to reduce delays and enhance certainty for international capital inflows.
To mobilize diverse funding sources, CII envisions the creation of a government–private holding company with up to 49% government stake to channel Non-Resident Indian (NRI), Foreign Portfolio Investor (FPI), and institutional investments into priority sectors such as infrastructure and artificial intelligence. This fund could raise capital through long-term convertible bonds benchmarked to Foreign Currency Non-Resident (FCNR) rates, offering secure returns with equity upside, including special India Global Diaspora Bonds.
Together, these implementation strategies and institutional reforms form a cohesive roadmap designed to ensure an investment-driven growth strategy anchored in fiscal credibility and robust governance frameworks. By facilitating stronger private sector participation and enhancing transparency and efficiency in infrastructure development, CII aims to enable India’s next phase of economic development and global competitiveness.