CICU Reacts on Union Budget 2026–27: A Measured Boost for Punjab’s MSMEs with Green Shoots and Guarded Optimism

Ludhiana, February 2, 2026: The Chamber of Industrial & Commercial Undertakings (CICU), Ludhiana, today held a press conference to deliberate on the Union Budget 2026–27 and its implications for Punjab’s MSME-driven industrial economy. The discussion brought together industry leaders and tax experts to assess the budget’s impact on manufacturing, exports, green energy, and financial markets, with a specific focus on Punjab’s key industrial clusters.
Presenting a balanced industry perspective, CICU noted that the Union Budget 2026–27, presented by Union Finance Minister Nirmala Sitharaman, reflects the Government of India’s continued emphasis on manufacturing-led growth, export competitiveness, sustainability, and long-term structural reforms. While the budget does not offer direct tax relief to MSMEs, it seeks to reduce production costs through customs duty rationalisation and targeted sectoral incentives, even as it tightens certain financial market transactions.
Manufacturing and Exports: Cost Relief with Strategic Intent
CICU highlighted that one of the most significant positives for MSMEs lies in the extension and expansion of duty-free inputs for textiles, garments, leather, synthetic footwear, and select engineering and electronic components. The reduction in customs duty on specific electronic and microwave oven parts, along with an increase in duty-free input allowance for seafood exports from 1% to 3%, is expected to enhance India’s export competitiveness.
Additionally, the long-term customs duty exemption on imported equipment for nuclear power projects until 2035 signals policy stability and a commitment to clean energy infrastructure.
“These measures collectively aim to reduce production costs, improve price stability, and strengthen the global competitiveness of Indian MSME exporters,” CICU observed, adding that Punjab’s export-oriented units stand to gain if supported by efficient logistics and timely credit.
Green Energy and EV Push: New Pathways for Punjab Industry
A strong green and sustainable manufacturing thrust emerged as a defining feature of the budget. Customs duty exemptions on several lithium-ion battery storage inputs, removal of duty on sodium antimonite used in solar glass, and tax relief on components for electric vehicles, solar panels, and renewable energy systems open new diversification avenues for MSMEs.
Engineering and auto-component units in Ludhiana and surrounding regions can potentially integrate into EV and renewable energy supply chains, provided skill development and technology adoption are prioritised.
“This is an opportunity for Punjab to move beyond traditional manufacturing and build future-ready green industrial clusters,” CICU noted.
 
Healthcare and Pharma: Input Cost Relief
The budget’s decision to impose zero basic customs duty on 17 life-saving cancer drugs, as well as medicines and special foods for seven rare diseases, was welcomed by the industry. While the direct impact on Punjab-based MSMEs may be limited, pharma and chemical units benefit from reduced input costs and improved integration into India’s expanding healthcare manufacturing ecosystem.
Financial Transactions and Input Costs: Areas of Concern
CICU also flagged key concerns emerging from the budget. The increase in Securities Transaction Tax (STT) on futures and options, along with stricter tax treatment of share buybacks by promoters, is expected to raise the cost of financial market participation.
“These measures may reduce flexibility for MSME promoters who rely on capital markets for restructuring and liquidity management,” CICU cautioned.
Further, the withdrawal of customs duty exemptions on certain chemicals, minerals, and scrap materials—leading to basic customs duties of up to 7.5%—could increase raw material costs for metal, chemical, and engineering units.
“This may result in margin compression unless industries are able to pass on costs or improve operational efficiencies,” the chamber noted.
Sector-Specific Impact on Punjab
For Punjab’s textile, hosiery, and garment industry hubs in Ludhiana and Amritsar, duty-free inputs enhance export viability and reinforce the state’s standing in global textile markets.
Leather and footwear units in the Jalandhar region are likely to benefit from relief on synthetic footwear inputs, improving working capital cycles and export momentum.
Engineering, auto, and cycle parts manufacturers may find new growth opportunities in EV and green components, though rising scrap and mineral costs remain a challenge.
Renewable energy and new-age manufacturing sectors could emerge as growth drivers if supported by state-level facilitation.
Expert Insights
Sharing her assessment, CA Divyapreet Kaur of Aneja Associates stated, “The Union Budget 2026 clearly prioritises production efficiency and sustainability over short-term tax concessions. MSMEs that align with exports, green energy, and technology-led manufacturing will be better positioned to benefit in the medium to long term.”
Echoing this view, CA Prateik Gautam of S.P. Gautam & Associates remarked, “While the absence of direct tax relief may disappoint some segments, the rationalisation of customs duties and clarity in long-term policy direction offer predictability. MSMEs must now focus on compliance, cost optimisation, and strategic restructuring.”
CICU Leadership Perspective
Expressing cautious optimism, Upkar Singh Ahuja, President, CICU, said, “The Union Budget 2026 is not a populist budget, but it is a purposeful one. Its strong emphasis on manufacturing, exports, and green energy aligns well with India’s long-term growth vision. For Punjab’s industry, this is a moment to recalibrate strategies, invest in technology, and integrate with emerging global supply chains. With the right support from the state government, Punjab can convert these policy signals into tangible industrial growth.”
Delivering a strong industry message, Honey Sethi, General Secretary, CICU, added, “This budget sends a clear message: competitiveness will come from efficiency, innovation, and sustainability—not from short-term tax sops. However, MSMEs cannot walk this path alone. We urge both the Centre and the Punjab Government to complement these announcements with easier access to finance, faster approvals, and robust infrastructure. Only then can the true intent of the budget translate into on-ground industrial revival.”
Way Forward
Summing up, CICU stated that the Union Budget 2026–27 is production-oriented rather than tax-relief-oriented. Punjab’s MSMEs must now focus on export expansion, green manufacturing adoption, cost optimisation, and strategic diversification into EV and renewable sectors.
CICU reaffirmed its commitment to working closely with policymakers, financial institutions, and industry stakeholders to ensure that Punjab’s industrial ecosystem effectively leverages the opportunities offered by the budget while addressing its challenges.