Industry body CII has pitched for a faster and more structured approach to divestment of public sector enterprises, arguing that a predictable and market-aligned strategy is essential to unlock value and mobilise resources. In its recommendations for the Union Budget 2026-27, the lobby group said a calibrated privatisation push could help sustain capital expenditure and fund development priorities at a time of heightened global economic uncertainty.
The Confederation of Indian Industry said the government should adopt a clearer and more transparent roadmap, rather than ad-hoc decisions, to ensure smoother execution and stronger investor participation in the disinvestment process.
Three-year visibility to boost investor confidence
One of CII’s key suggestions is the announcement of a rolling three-year privatisation pipeline. Such a pipeline would spell out which public sector enterprises are likely to be taken up for privatisation over the medium term, while acknowledging that exiting all non-strategic PSEs is neither simple nor quick.
According to CII, this forward visibility would help investors plan better, deepen engagement and lead to more credible valuations. Clear signalling by the government, it said, would improve price discovery and reduce delays that often plague privatisation efforts.
Phased stake reduction strategy
The industry lobby proposed a gradual dilution of the government’s holding in listed PSEs, beginning with a reduction to 51 per cent. This would allow the Centre to remain the single largest shareholder while unlocking substantial market value.
“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,” CII stated.
Based on its analysis, lowering the government’s stake to 51 per cent across 78 listed PSEs could potentially unlock nearly Rs 10 lakh crore.
Sequenced disinvestment and resource mobilisation
CII outlined a two-stage roadmap for disinvestment. In the first phase, spanning two years, the focus could be on 55 PSEs where government ownership is already at 75 per cent or lower. This phase alone could mobilise around Rs 4.6 lakh crore.
The second stage would involve 23 PSEs with government stakes exceeding 75 per cent, which could together generate about Rs 5.4 lakh crore. The industry body said this sequencing would allow for smoother execution while maintaining market stability.
“A calibrated reduction of the government's stake in listed PSEs to 51 per cent and even lower is a pragmatic step that balances strategic control with value creation. Unlocking nearly Rs 10 lakh crore of productive capital would provide vital resources to accelerate physical and social infrastructure development and support fiscal consolidation,” said CII Director General Chandrajit Banerjee.
Demand-driven selection of PSEs
CII also called for a rethink of how enterprises are chosen for privatisation. At present, it noted, the government identifies specific PSEs and then seeks investor interest. When demand or valuation expectations are not met, transactions tend to stall.
To address this, the industry lobby recommended reversing the process by first gauging investor appetite across a wider pool of enterprises and then prioritising those that attract stronger interest. This, it argued, would lead to better outcomes and smoother execution, while structured investor feedback could help resolve regulatory or procedural hurdles.
Governance framework and long-term vision
To make privatisation more predictable and professionally managed, CII suggested setting up a dedicated institutional framework. This would include a ministerial board for strategic direction, an advisory panel of industry and legal experts for benchmarking, and a professional management team to handle execution, due diligence and regulatory coordination.
Such a structure could also track post-privatisation performance and evolving market conditions. Emphasising the broader economic context, CII said strategic privatisation would allow the government to focus on governance and regulation, while competitive markets drive efficiency.
“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,” it said.
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