High compliance burden, limited access to capital drag manufacturing growth: Survey

New Delhi, Jan 15 (PTI) Industry stakeholders have flagged high compliance burden, logistics and energy costs, and limited access to long-term capital as main constraints for manufacturers, according to a survey by Assocham.

Business leaders have urged the government to take measures to boost domestic manufacturing and strengthen the 'Make in India' initiative in the Budget 2026-27. The survey covered about 120 respondents over three weeks across sectors, including manufacturing, services, infrastructure, startups, IT and ITeS, among others.

It found that 55 per cent of respondents remain optimistic about the business outlook over the next 12 months, while 32 per cent maintain a neutral stance, and the remaining 13 per cent expressed a pessimistic outlook.

Citing the survey's findings, Assocham stated that while government initiatives such as infrastructure capital expenditure, GST 2.0 reforms and Production Linked Incentive (PLI) schemes are seen as directionally positive, their on-ground impact remains muted.

Around 35 per cent of respondents said these measures have delivered limited benefits so far, while 39 per cent felt the impact has been only moderate, underscoring the need for improved design, wider accessibility and stronger last-mile execution.

"On the key hurdles to manufacturing expansion, compliance and regulatory burden was cited as the biggest constraint, followed by global demand and market access, availability of skilled manpower, high logistics and energy costs, and technology and automation gaps. Respondents also flagged challenges related to quality standards and certification requirements," the industry lobby stated.

On the taxation front, respondents pointed to persistent compliance challenges, with a majority agreeing that complex TDS and TCS provisions create a significant cash-flow and administrative burden. More than half of the respondents felt that the new Income Tax Act, 2025, would only partially meet its stated objectives of simplification and certainty.

Boosting domestic manufacturing emerged as the single most important Budget priority to advance the vision of an Aatmanirbhar and Viksit Bharat, followed by strengthening MSMEs and simplifying tax and compliance systems.

Infrastructure and logistics development, skills and job creation, and accelerated digital and AI-led growth also featured prominently among industry expectations from the Budget.

To accelerate manufacturing growth, industry participants said the Budget should focus on providing cheaper long-term capital, enhancing credit availability and offering targeted tax incentives for technology up-gradation, automation and artificial intelligence adoption.

Expansion of PLI schemes to more sectors, tax incentives linked to Industry 4.0, rationalisation of customs duties on critical raw materials, and faster clearances at industrial parks, SEZs and industrial clusters were also highlighted.

Overall, the findings suggest that the Union Budget 2026-27 should prioritise execution-oriented reforms, rationalise compliance frameworks and deploy targeted fiscal incentives to unlock private investment, strengthen MSMEs and enable manufacturing scale-up, the report said. PTI RSN RSN BAL BAL