Finance Minister Nirmala Sitharaman on Saturday (Feb 1, 2026) laid out an expansive Swadeshi-first economic roadmap in the Union Budget 2026-27, positioning domestic production, technological self-reliance and value-chain integration as the central pillars of India’s growth strategy.
Presenting the Budget in Parliament, Sitharaman announced a six-point framework aimed at accelerating economic expansion with Swadeshi industry as its primary engine, marking a clear intent to move beyond mere assembly and import substitution towards deeper technological capability, export competitiveness and indigenous intellectual property.
The six-point Swadeshi framework
The six pillars outlined by the Finance Minister include:
1. Scaling up Swadeshi production in seven strategic and frontier sectors
2. Rejuvenating legacy industrial sectors to preserve jobs and regional economies
3. Creating champion MSMEs through targeted funds and institutional support
4. Delivering a major push for infrastructure
5. Ensuring long-term security and economic stability
6. Developing city economic regions as growth hubs
Swadeshi production features prominently in the first three pillars, underlining the government’s focus on technology depth, domestic supply chains and employment-intensive growth.
India Semiconductor Mission 2.0
A major announcement under the Swadeshi push was the launch of India Semiconductor Mission (ISM) 2.0 with an outlay of Rs 40,000 crore. Building on ISM 1.0, which expanded India’s semiconductor assembly and fabrication ecosystem, the new phase will focus on industry-led research and training centres.
The emphasis will be on developing semiconductor technologies, equipment and materials tailored to Indian needs, with a clear shift towards “producing equipment and materials designed for full-stack Indian IP.” This marks a strategic move away from assembly-driven participation to deeper involvement across the semiconductor value chain.
Biopharma SHAKTI
To establish India as a global biopharmaceutical hub, the Budget proposed Biopharma SHAKTI, with an allocation of Rs 10,000 crore over five years.
The initiative includes the creation of a biopharma network supported by three new National Institutes of Pharmaceutical Education and Research (NIPERs), upgrades to seven existing NIPERs, the establishment of 1,000 accredited clinical trial sites, and the upgradation of the Central Drugs Standard Control Organisation to align with global regulatory standards.
Electronics components manufacturing
To reduce import dependence in a sector critical to smartphones, automobiles and defence, the Budget proposed an Electronics Components Manufacturing Scheme aimed at deepening domestic supply chains and strengthening Swadeshi production capabilities.
Rare earth corridors
Recognising the strategic importance of critical minerals, the government announced dedicated rare earth corridors in Odisha, Kerala, Andhra Pradesh and Tamil Nadu. These corridors will promote mining, processing, research and manufacturing of rare earth permanent magnets, which are essential for electric vehicles, wind turbines and defence applications.
Chemical parks
Three dedicated chemical parks were announced to strengthen India’s position in speciality and bulk chemicals, a sector seen as vital for both domestic consumption and exports.
Container manufacturing
A new scheme for shipping container manufacturing was announced, with ₹10,000 crore allocated over five years. The objective is to build a globally competitive Swadeshi ecosystem and reduce India’s dependence on imported containers.
Textiles
The Budget laid out an ambitious integrated programme for textiles aimed at growth, employment generation and global competitiveness.
Large textile parks will be developed through a “challenge mode”, a competitive process where private players bid to build and operate facilities. A special focus will be placed on technical textiles and value addition.
A five-part support package for the textile sector includes:
1. National Fibre Scheme to achieve self-reliance in natural, man-made and modern fibres
2. Textile Expansion and Employment Scheme to modernise existing clusters with better machinery, shared testing and certification facilities
3. National Handloom and Handicrafts Programme to consolidate support for artisans and weavers
4. TEX-ECO initiative to promote environmentally sustainable and globally competitive textile production
5. SAMARTH 2.0, an upgraded skilling programme in collaboration with industry and educational institutions
Additionally, Sitharaman announced the Mahatma Gandhi Gram Swaraj Initiative, aimed at strengthening khadi, handlooms and handicrafts by improving branding, market access, training and quality certification, including access to global markets.
Legacy industries and MSMEs
To address regional imbalances and employment concerns, the Budget announced a scheme to revive 200 legacy industrial clusters, traditional Swadeshi production centres that have declined but retain skilled labour and local economic importance.
For MSMEs, a Rs 10,000 crore fund was proposed to create “champion” enterprises, alongside the establishment of two high-tech tool rooms to boost capital goods manufacturing.
Capital goods and sports goods
The Finance Minister announced initiatives to promote high-value construction and infrastructure equipment manufacturing. India’s potential to emerge as a global hub for affordable, high-quality sports goods was also highlighted, with proposals for research and production support.
Green Swadeshi manufacturing
To align Swadeshi production with sustainability goals, the Budget allocated Rs 20,000 crore over five years for Carbon Capture, Utilisation and Storage (CCUS) technologies, aimed at scaling green manufacturing and improving readiness for end-use applications.
The Swadeshi push comes amid global trade disruptions, including higher US tariffs on Indian exports. The Economic Survey 2025-26 had earlier stressed the need to strengthen domestic production and reduce import dependence, particularly in electronics and critical minerals.
The Budget extends the Production-Linked Incentive framework to new sectors while deepening supply chains in existing ones. “Keeping atmanirbharta as a lodestar, we have built domestic manufacturing capacity, energy security and reduced critical import dependencies,” Sitharaman said in her speech.
The focus on full-stack Indian IP, clinical trial infrastructure, rare earth processing and legacy cluster revival reflects an attempt to move up the value chain while addressing employment realities.
