The Southern India Engineering Manufacturers’ Association (SIEMA) has welcomed several progressive and forward-looking measures announced in the Union Budget 2026, stating that they will significantly strengthen India’s manufacturing ecosystem and provide vital support to micro, small and medium enterprises (MSMEs).

SIEMA said the Union Government has demonstrated a strong commitment to building a self-reliant, competitive and technology-driven industrial sector.

Key Observations and Recommendations

Hi-Tech Tool Room

SIEMA welcomed the announcement of a modern hi-tech tool room for high-accuracy component manufacturing at scale. The association urged the Government to establish one such centre in Coimbatore, citing the city’s strong engineering base and its contribution to precision manufacturing.

Mining of Rare Earth Permanent Magnets

The decision to permit mining of rare earth permanent magnets in Odisha, Kerala, Andhra Pradesh, Chhattisgarh and Tamil Nadu was described as a highly welcome move. SIEMA noted that India’s dependence on China was exposed earlier this year when magnet supplies were disrupted. The initiative is expected to strengthen domestic supply chains and benefit sectors such as solar pumps and BLDC motors used in drones, fans, electric vehicles and other emerging technology products.

₹10,000 Crore Container Manufacturing Fund

The announcement of a ₹10,000 crore fund for container manufacturing was termed encouraging. SIEMA requested that Coimbatore be considered as a key location for this initiative, which would significantly boost the local fabrication and heavy engineering sector.

Enhanced Allocation to CGTMSE

The increased allocation to the Credit Guarantee Scheme for Micro and Small Enterprises (CGTMSE), with coverage extended to capital goods and existing customers, was welcomed. SIEMA said this move will improve access to working capital and encourage technology upgradation among MSMEs.

Expansion of TReDS Platform

The expansion of the Trade Receivables Discounting System (TReDS), making it mandatory for PSU procurement, was described as a major step towards improving payment discipline. Recognition of receivables as asset-backed securities is expected to enhance liquidity and financial security for MSMEs.

Duty Exemption for BESS and Solar Glass Raw Materials

The exemption of import excise duty on raw materials for Battery Energy Storage Systems (BESS) and solar panel glass manufacturing was welcomed, as it will reduce production costs and promote domestic manufacturing in the renewable energy sector.

Expansion of Inland Waterways

SIEMA also welcomed the expansion of inland waterways for transportation, stating that it will help reduce logistics costs and improve competitiveness, particularly for bulk and heavy engineering industries.

Intervention Sought on Raw Material Price Fluctuations

While welcoming the Budget, SIEMA expressed concern over the absence of measures to protect MSMEs from raw material price volatility. The association reiterated its demand for the creation of a raw material bank, which could be covered under CGTMSE, and the formation of a price monitoring committee.

SIEMA noted that prices of key raw materials used in pump manufacturing have increased sharply over the past six months, with copper rising by around 50 per cent, aluminium by 30 per cent and electrical steel by 15 per cent.