Budget 2026-27: CII wants Centre to fast-track PSE privatisation

Ahead of the Union Budget 2026-27, CII has urged the Centre to adopt a demand-based, three-year privatisation pipeline for public sector enterprises to unlock nearly Rs 10 trillion of value

Amid global economic uncertainties and the need to sustain capital expenditure, the Confederation of Indian Industry (CII) has urged the Centre to fast-track privatisation of public-sector enterprises (PSEs) through a more predictable, investor-led and institutionally driven framework.

 

In its pre-Budget proposals for the Union Budget 2026-27, the CII said a calibrated privatisation strategy would help the government mobilise resources for developmental priorities, while improving efficiency, technology adoption and global competitiveness in sectors where private participation can add value.

 

Highlighting the importance of privatisation in the country’s growth trajectory, Chandrajit Banerjee, director general, CII, said India’s growth story is increasingly driven by private enterprise and innovation. “A forward-looking privatisation policy, aligned with the vision of Viksit Bharat, will enable the government to focus on its core functions while empowering the private sector to accelerate industrial transformation and job creation,” he said.

 

 

The CII has called for faster implementation of the government’s strategic disinvestment policy, which envisages exiting all PSEs in non-strategic sectors and maintaining only a minimal presence in strategic areas.

 

To strengthen execution, the industry body has proposed a four-pronged strategy.

 

First, the CII has recommended a shift to a demand-based approach for selecting PSEs for privatisation. Currently, the government identifies specific enterprises for sale and then seeks investor interest, which often results in delays when demand or valuations fall short. Instead, the CII suggested that the government should first assess investor interest across a wider pool of enterprises and prioritise those with stronger demand and valuation potential. According to the CII, structured investor feedback could also help identify and address regulatory or procedural bottlenecks early in the process.

 

Second, the CII has called for the announcement of a rolling three-year privatisation pipeline, giving investors greater visibility and planning certainty. Such advance clarity, it said, would improve valuation discovery, encourage wider participation and help speed up transactions.

 

Third, the industry body has proposed the creation of a dedicated institutional framework to oversee privatisation. This could include a ministerial board for strategic direction, an advisory board comprising industry and legal experts for independent benchmarking, and a professional execution team to manage due diligence, market engagement and regulatory coordination. The proposed framework would also track post-privatisation outcomes to strengthen accountability and investor confidence.

 

Fourth, acknowledging that full privatisation of all non-strategic PSEs may take time, the CII has recommended a calibrated disinvestment road map as an interim measure. Under this approach, the government could first reduce its stake in listed PSEs to 51 per cent, retaining majority control while unlocking value. Over time, this stake could be further reduced to between 33 per cent and 26 per cent.

 

According to CII’s analysis, lowering the government’s stake to 51 per cent in 78 listed PSEs could unlock close to ₹10 trillion. In the first two years, disinvestment in 55 PSEs where government ownership is already 75 per cent or less could mobilise around ₹4.6 trillion. In a subsequent phase, stake reduction in 23 PSEs with government holdings above 75 per cent could yield another ₹5.4 trillion.

 

“A calibrated reduction of the government’s stake in listed PSEs is a pragmatic step that balances strategic control with value creation. Unlocking nearly ₹10 trillion of productive capital would provide vital resources to accelerate infrastructure development and support fiscal consolidation,” Banerjee said.

 

The CII said a transparent and predictable privatisation framework would enhance investor confidence and allow the government to redeploy capital towards high-impact areas such as health, education and green infrastructure, while retaining a minimal presence in strategic sectors and supporting a globally competitive economy.