UNION BUDGET 2025: SETTING NEW DIRECTIONS

India is on the cusp of a transformational leap in machine tool and manufacturing growth, thanks to visionary policies and strategic financial allocations announced in the Union Budget 2025. The Union Government’s measures aim to fortify manufacturing, streamline processes, and create a thriving ecosystem for innovation and industrial expansion.

For the Indian machine tool industry, which serves as the backbone of manufacturing, these reforms signal a promising trajectory of growth, modernization, and global competitiveness.

The Indian machine tool industry comprises a large number of micro, small, and medium enterprises (MSMEs), forming the foundation of the country's industrial ecosystem. The Government’s decision to enhance investment and turnover limits by two-and-a-half times, coupled with improved credit guarantee cover, is a game changer for these enterprises. 

With greater access to capital, MSMEs can confidently invest in advanced machine tools, automation, and cutting-
edge technologies. Additionally, the allocation of INR 20,000 crore for private sector-led research ensures that even small-scale industries can experiment, iterate, and compete with global giants.

National Manufacturing Mission for Self-Reliance

In a push for self-reliance in manufacturing, the Government has announced the National Manufacturing Mission, which is a defining moment for India’s industrial resurgence. By incentivizing electronics manufacturing and sustainable toy production, this initiative will drive demand for precision machinery, tool-making equipment, and automation solutions.

For instance, a thriving electronics sector necessitates high-quality machine tools for precision engineering, surface finishing, and component fabrication, leading to increased demand for the machine tool industry’s products and services. 

Strengthening R&D

In a world where competition rules the roost, research and development play a crucial role, and from this perspective, the Government’s move to allocate funds for agriculture research will have a cascading effect on the machine tool industry. With the increased demand for specialized machinery in agro-processing, precision engineering will see exponential growth.

Furthermore, the establishment of an INR 10,000 crore Fund of Funds and a Deep Tech Fund of Funds to support next-generation startups provides a fertile ground for technological advancements in manufacturing. Initiatives such as these will drive the development of AI-driven manufacturing, robotics, and smart factory solutions in manufacturing.

Spurring Innovation Across Regions

The proposed national framework for Global Capability Centres (GCCs) in tier 2 cities is a step towards decentralizing India’s industrial growth. The GCCs will act as innovation hubs, spur the adoption of new-age manufacturing technologies, enhance supply chain efficiencies, and bridge the technological divide between urban and semi-urban regions.

Facilitating Exports and Global Market Access

With easier access to export credit and cross-border factoring support, industries—especially the Indian machine tool sector—can overcome non-tariff barriers and expand their global footprint with ease. 

Additionally, the streamlining of presumptive taxation for non-residents providing technology and other services to electronics manufacturers will create a business-friendly environment. Fast-track mergers and a rationalized process for company integration will encourage industry consolidation, leading to stronger, more competitive manufacturing entities. 

The decriminalization of tax collected at source (TCS) and the rationalization of tax deducted at source (TDS) will simplify compliance, enabling industries to focus on growth rather than navigating bureaucratic hurdles.

Industry Exhibitions: Catalysts for Economic Growth

Large-scale exhibitions and industry events serve as vital platforms for business networking and economic expansion. This year, key events such as IMTEX, Aero India, the Global Investors Meet, and India Energy Week have underscored their importance in driving sectoral growth. 

The Indian Government’s measures along with some of the marquee events mentioned above will lay a solid foundation for building India’s manufacturing sector. India’s vision is set to become a tangible reality, paving the way for a robust, resilient, and globally competitive manufacturing ecosystem.

Source: IMTMA

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