Apex business chamber CII, in its proposals for the Union Budget 2026–27, has urged the Central government to mobilise resources through a calibrated approach to privatisation to unlock the value of public sector enterprises.
Chandrajit Banerjee, Director General, CII, said, “India’s growth story is increasingly being powered 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.”
Against this backdrop, CII has called for accelerating the implementation of the Government’s Strategic Disinvestment Policy, which envisions an exit from all Public Sector Enterprises (PSEs) in non-strategic sectors and a minimal presence in strategic ones.
To strengthen and expedite the privatisation programme, CII has outlined a four-pronged comprehensive strategy.
First, CII recommends a shift to a demand-based approach in selecting PSEs for privatisation. Presently, the government identifies specific enterprises for sale and subsequently invites investor interest. However, when sufficient demand or valuation is not achieved, the process often stalls. CII suggests reversing this sequence by first gauging investor interest across a broader set of enterprises and then prioritising those that attract stronger interest and meet valuation expectations. Such an approach, CII believes, would ensure smoother execution and better price discovery.
Second, to provide investors greater clarity and planning time, CII recommends that the government announce a rolling three-year privatisation pipeline, outlining which enterprises are likely to be taken up for privatisation during this period. This visibility would encourage deeper investor engagement and more realistic valuation and price discovery.
Third, an institutional framework can strengthen oversight, accountability, and investor confidence, making privatisation predictable and professionally managed. CII has recommended a dedicated body with a Ministerial Board for strategic guidance, an Advisory Board of industry and legal experts for independent benchmarking, and a professional management team to handle execution, due diligence, market engagement, and regulatory coordination.
Besides, CII has recommended a calibrated disinvestment approach combined with a three-year roadmap, as an interim measure. The government could reduce its stake in listed PSEs in a phased manner to 51 per cent initially, allowing it to remain the single largest shareholder while releasing significant value into the market. Over time, this stake could be brought down further to between 33 and 26 per cent.
According to CII, reducing the government’s stake to 51 per cent in 78 listed PSEs could unlock close to Rs 10 lakh crore. In the first two years of the roadmap, the disinvestment strategy could target 55 PSEs where the government holds 75 per cent or less, mobilising around Rs. 4.6 lakh crore. In the subsequent stage, 23 PSEs with higher government stakes (over 75 per cent) could be disinvested, potentially bringing in Rs 5.4 lakh crore.
These measures can enhance investor confidence, ensure predictable and transparent processes, and maximise value realisation for the government. By focusing on governance, regulation, and enabling infrastructure while allowing competitive markets to drive efficiency, strategic privatisation can unlock public resources for high-impact areas such as health, education, and green infrastructure, while retaining minimal presence in strategic sectors, supporting a self-reliant and globally competitive economy.
