Economic Survey 2025-26 arrives at a difficult moment. While the economy is projected to grow at a robust 7.4 %, the geopolitical situation is likely to remain turbulent. This makes the survey’s structural emphasis on growth beyond the headline numbers very welcome. The survey recognises that while services have done the heavy lifting, they cannot be the sole pillar on which India’s economy rests. It thus brings out the importance of a goods export-based ecosystem to build a foundation of durable economic and national security stability in an uncertain world.
Yet, the survey’s most crucial insight lies not in what we must produce, but how we must support that production. It moves beyond the traditional binary of protectionism versus openness. Truly strategic defence related industries may be urgent and important for India to support. For the broader manufacturing economy however, the survey holds the position that the smartest industrial policy lies in creating an environment conducive to business. So conducive in fact, that global firms become our allies, lobbying for India’s success because it is linked to their own. The survey argues that success in manufacturing depends as much on the quality of institutions and the ease of doing business as it does on capital or intent. This position is much better supported by evidence, theory and history than is trying to micromanage the economy via narrow incentives or policy tweaks.
This argument is crystallised in the survey’s proposal for a “National Input Cost Reduction Strategy”. This is a paradigm shift: it frames competitiveness as regulatory infrastructure. Just as physical infrastructure connects markets, the regulatory and cost environment determines how efficiently players in those markets can function. The survey argues that inputs -- whether raw materials, energy, or logistics -- should not be treated as revenue sources or instruments of protection if they raise costs for the wider economy. Reducing these input costs through deregulation is critical because it acts as a direct stimulus for downstream manufacturing, exports, and employment. When upstream inputs are costly, they act as a tax on every firm that uses them; lowering these costs is a far more efficient way to support industrialisation than erecting tariff walls.
The survey posits that the geopolitical uncertainty that India faces needs us to move to a position of ‘strategic indispensability’ -- where the world needs us as much as we need them. This will require a whole-of-government approach to build globally successful ecosystems in India. Crucially, this is not just a statement of intent but a visible administrative process. The Government’s deregulation task force has been working at the level of the states. The High-Level Committee for Non-Financial Regulatory Reforms has also been reported to have taken vital steps in this direction. These bodies have been tasked with dismantling the friction that hampers business, and public reports on the outcomes of the efforts of both bodies is encouraging. But other ministries also appear to be working towards the same goal. The labour codes have been notified. The India-EU FTA has been signed. The finance ministry rationalised GST rates and the minister has signalled that she will rationalise customs duties as well. The economic survey is a signal that the government intends to double down on this strategy, which is exactly what India needs.
By institutionalising deregulation and treating competitiveness as a core infrastructural priority, the government is laying the groundwork for long-term growth. As the survey notes, state capacity is the foundation on which strategic resilience is built. If we continue down this path, ensuring our regulatory environment is as robust as our physical one, we will not only attract the world’s best firms but empower our own to win on the global stage.
(Rahul Ahluwalia is Founder, Foundation for Economic Development and Yuvraj Khetan, Program manager, FED; The views expressed are personal)
