The Confederation of Indian Industry (CII) has encouraged the government to implement a calibrated privatization approach in the Union Budget 2026–2027 in order to maintain capital investment and achieve important development objectives in the face of global economic uncertainties.
Privatisation Strategy Recommended by CII
According to the industry association, resource mobilization via privatization should concentrate on industries where private involvement can boost global competitiveness, increase efficiency, and introduce cutting-edge technology.
Confederation of Indian Industry Director General Chandrajit Banerjee emphasized the significance of privatization in the present economic climate, stating that private business and innovation are increasingly driving India’s development pace. “A forward-looking privatization strategy, in line with Viksit Bharat’s vision, would empower the private sector to drive industrial transformation and job creation while allowing the government to concentrate on its primary tasks,” Banerjee said.
Strategic Disinvestment Policy and Four-Point Plan
In light of this, CII has demanded that the government’s Strategic Disinvestment Policy, which aims to eliminate all public sector enterprises (PSEs) in non-strategic sectors while maintaining a minimal presence in key areas, be implemented more quickly. According to CII, the policy objective offers a clear path forward for the privatization drive. CII has suggested a thorough four-point plan to improve and expedite the procedure.
First, in order to select PSEs for privatization, the industry association has suggested switching to a demand-driven strategy. At the moment, the government chooses businesses to sell and then looks for investor interest; this process often slows when demand or values are inadequate. By first evaluating investor appetite across a larger pool of businesses and then giving priority to those that draw more interest and suitable values, CII has proposed reversing this order. It claimed that such a change would facilitate improved price discovery, easier implementation, and the use of structured investor feedback to detect regulatory or procedural obstacles.
Second, CII has suggested that the government establish a rolling three-year pipeline for privatization, giving insight into the businesses that are anticipated to be acquired over this time. Longer planning horizons and more transparency, it said, would boost investor participation, enable more realistic valuations, and speed up the whole process.
📈 Demand-Driven Privatisation Focus
- Focus: PSEs with highest investor interest
- Goal: Better price discovery & execution
- Method: Evaluate investor appetite first
- Result: Identify procedural/regulatory bottlenecks
Third, in order to enhance monitoring, accountability, and investor trust, CII has demanded a strong institutional structure. It suggested establishing a specialized system with a professional management team to oversee execution, due diligence, market engagement, and regulatory coordination, an Advisory Board of industry and legal experts for objective benchmarking, and a Ministerial Board for strategic direction. In order to facilitate ongoing improvement, this organization may also monitor market trends, stakeholder input, and post-privatization results.
Fourth, CII has recommended a calibrated disinvestment strategy supported by a three-year plan as an intermediate step, admitting that full privatization of all non-strategic PSEs is complicated and time-consuming. With this strategy, the government could progressively cut its ownership in listed PSEs to 51%, maintaining its position as the biggest stakeholder while releasing substantial market value. The share may eventually drop to between 33% and 26%.
💰 Strategic Disinvestment Potential
- Government Stake: Reduce to 51% in 78 PSEs
- Phase 1: 55 PSEs with ≤75% stake → ₹4.6 lakh crore
- Phase 2: 23 PSEs with >75% stake → ₹5.4 lakh crore
- Total Potential: ~₹10 lakh crore unlocked
- Impact: Funds for infrastructure & fiscal consolidation
Frequently Asked Questions
1. What justifies a demand-driven approach to privatization?
Instead of the government choosing PSEs for sale first, a demand-driven model gives priority to businesses that have significant investor interest and acceptable prices. This facilitates better price discovery, more efficient execution, and faster detection of regulatory or procedural impediments.
2. What are the potential benefits of a three-year rolling privatization pipeline?
The companies that are most likely to be privatized during the next three years are made clear by a rolling pipeline. By enabling longer-term planning, it increases investor participation, enhances valuation accuracy, and speeds up the whole disinvestment process.
3. What kind of institutional structure does CII suggest for privatization?
CII recommends a specific framework that consists of:
- A Ministerial Board to provide strategic guidance
- An industrial and legal expert advisory board for benchmarking
- A competent management group for regulatory coordination, implementation, and due diligence
This framework guarantees responsibility, openness, and ongoing development.
4. How much money would smart privatization bring in for India?
According to CII, the government could free about ₹10 lakh crore by lowering its ownership in 78 listed PSEs to 51%. 55 PSEs with less than 75% government ownership could raise around ₹4.6 lakh crore in the first two years, while 23 PSEs with more than 75% ownership might raise ₹5.4 lakh crore in the second phase.
5. What are the anticipated advantages of this kind of privatization approach?
Unlocking substantial funding for social and infrastructural development, increasing market predictability and investor confidence, encouraging efficiency and innovation in the private sector, and promoting budgetary restraint and a worldwide competitive economy.
Conclusion
For India’s 2026–2027 budget, a demand-driven, carefully phased privatization strategy might be revolutionary. The government may liberate significant resources for infrastructure, social development, and fiscal consolidation while maintaining strategic control over important industries by emphasizing investor interest, transparent governance, and progressive disinvestment. This kind of forward-thinking strategy is in line with India’s overarching objective of developing a self-sufficient and internationally competitive economy.
Disclaimer
This content is for informational purposes only and does not constitute financial or investment advice.
