Budget 2026 might have given second life to legacy industrial clusters as govt plans targeted sector upgrades

New Delhi:The Centre would examine clusters across sectors such as manufacturing, textiles and agro-processing to create a plan that would help revive legacy industrial clusters through a mix of upgrades in equipment and skills.

The budget has announced a scheme to revive 200 legacy industrial clusters to improve their cost competitiveness and efficiency through infrastructure and technology upgradation.

"The scheme is sector agnostic. The clusters are spread over all sectors. We will study and identify the legacy clusters which need refurbishment and redevelopment. These could be taken up in a phased manner," said an official.


These clusters are those under the Micro Small Enterprises-Cluster Development Programme, and Common Facility Centres or those setup by states.

"These sectors might need infrastructure upgradation or have old equipment or unskilled manpower which need to be looked into," the official added.

The Economic Survey last week said that India has attempted to build industrial clusters through various schemes over the past few decades, from the 1997 Industrial Park Scheme and the 2005 SEZ Act to the National Industrial Corridor Development Programme and sector-specific clusters for electronics, textiles, and software.

"Rejuvenating 200 industrial clusters solves critical bottlenecks for micro, small and medium enterprises. By securing upstream supply chains in chemicals and rare earths and developing clusters or corridors for these sectors, the government is looking to build strategic indispensability," said Saurabh Agarwal, Tax Partner, EY India.

As per another official, the focus will be on labour-intensive industrial clusters.

"This gives investors the policy certainty needed to scale high-precision manufacturing. It is a bold move to ensure long-term global competitiveness and resilient growth," Agarwal added.

While India has several organically developed clusters that bolster domestic production, transforming them into globally competitive ecosystems requires addressing two key structural factors- achieving optimal scale and enhancing regulatory flexibility, the Survey had explained.

Their upgradation is key as India is eyeing 25% share of its gross domestic product to come from manufacturing, from around 16-17% at present.