Industry for 12% hike in Centre’s capex in Budget

New Delhi: The Confederation of Indian Industry (CII) has pitched for setting up the second version of National Infrastructure Pipeline (NIP 2.0), with an investment commitment of Rs 150 lakh crore over the next five years and 12% increase in the Centre's capital expenditure for 2026-27.

In its pre-Budget recommendation, the CII has also suggested a 10% increase in capital expenditure (capex) support to states.

For the current financial year, the Centre's budgeted capex stands at Rs 11.21 lakh crore. For 2024-25, it was budgeted at Rs 11.11 lakh crore. However, in the February 2025 Budget, the 2024-25 capex was revised downward to Rs 10.18 lakh crore.

In the Union Budget 2025-26 presented on February 1, Union Finance Minister Nirmala Sitharaman also announced Rs 1.5 lakh crore special interest-free loans to states for capital expenditure.

“The forthcoming Union Budget 2026-27 has to serve the dual role of stabiliser and growth enabler, and promoting investments will be one of the most critical components in this regard,” said CII Director General Chandrajit Banerjee.

To strengthen project selection and execution, the industry lobby has called for institutionalising a Capital Expenditure Efficiency Framework (CEEF) to prioritise high-impact projects, track physical and financial progress, and evaluate outcomes based on productivity and regional spillovers.

CII’s recommendations also include setting up Rs 150 lakh crore National Infrastructure Pipeline (NIP) 2.0 for the 2026-32 period, with a “clear list of shovel-ready projects, including PPP projects, to provide multi-year certainty to investors, developers, and states.”

The first edition of the National Infrastructure Pipeline was launched in 2019 for a five-year period from FY2019-20 to FY2024-25, with an outlay of Rs 100 lakh crore.

To attract long-term capital for priority sectors, the CII has suggested establishing an NRI Investment Promotion Fund. This can be a government-private holding company, with up to 49% government stake, that channels NRI, foreign portfolio investor (FPI), and institutional investments into sectors such as infrastructure and AI, it said.

The Fund can raise capital through long-term convertible bonds benchmarked to FCNR rates, offering secure returns with equity upside, and including special India Global Diaspora Bonds, CII suggested.

The CII has also proposed strengthening the National Investment and Infrastructure Fund (NIIF) by forming a Sovereign Investment Strategy Council (SIFC) to align investments with national priorities, ensure governance excellence, and benchmark performance against leading global sovereign funds.

To boost private investments, the CII has pitched for incremental tax credits or compliance relaxations for firms achieving significant new investment, production, or tax contribution milestones.

“The Government of India has provided a big demand push via income tax relief in last year’s Union Budget and recently via GST 2.0. Investments, especially in the private sector, will be the next big driver for economic growth that needs to be focused on in the next fiscal to continue the growth momentum,” said Banerjee.