New Delhi, January 11, 2026, 02: 33 p.m. IST
CII proposes demand-first PSE privatisation strategy to unlock Rs 10 lakh crore. Phased stake cuts, reforms eyed ahead of Budget 2026-27.
The Confederation of Indian Industry (CII) has proposed a bold four-pronged PSE privatisation strategy to mobilise nearly Rs 10 lakh crore through accelerated disinvestment of public sector enterprises (PSEs). Ahead of the Union Budget 2026-27, CII urges the government to adopt a demand-first model, phased stake reductions, and institutional reforms to unlock this massive capital pool for infrastructure and fiscal goals.
This PSE privatisation strategy addresses persistent delays in disinvestment, where fiscal targets have repeatedly fallen short. With the upcoming budget presentation on February 1, industry leaders see this as a timely push to revive momentum.
Demand-First Model Revolutionises PSE Privatisation Strategy
At the heart of CII’s PSE privatisation strategy lies a shift to a “demand-first” disinvestment model. Unlike the current supply-led approach, where the government shortlists PSEs before seeking buyers, often leading to stalled deals due to low valuations, CII advocates gauging investor interest upfront.
Potential buyers would first scan a wide pool of non-strategic PSEs, providing structured feedback on preferences, hurdles, and price expectations. High-demand assets would then jump the queue for privatisation. “This investor-led process ensures better price discovery and faster execution,” CII noted in its recommendations.
To enhance transparency, CII suggests a rolling three-year privatisation pipeline, giving markets clear visibility into upcoming opportunities.
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Institutional Backbone for Smooth Execution
CII’s PSE privatisation strategy includes creating a dedicated framework: a ministerial board for oversight, an advisory panel of industry experts and lawyers, and a professional team handling due diligence. This structure would pre-empt regulatory snags, making the PSE privatisation strategy more investor-friendly.
Phased Stake Reduction: A Pragmatic Path Forward
Recognising full divestment’s challenges, the PSE privatisation strategy proposes gradual stake sales in listed PSEs. Start by cutting government holdings to 51% (retaining majority control), then to 33-26% over time.
CII estimates this could free Rs 10 lakh crore from 78 listed PSEs. Phase one targets 55 PSEs (government stake ≤75%), yielding Rs 4.6 lakh crore in two years. Phase two covers 23 higher-stake entities for Rs 5.4 lakh crore.
“This calibrated PSE privatisation strategy balances control with capital release,” said Chandrajit Banerjee, CII Director General. Funds could turbocharge infrastructure, social projects, and deficit reduction.
Broader Reforms to Boost PSE Privatisation Strategy
Beyond the core pillars, CII’s PSE privatisation strategy emphasises policy tweaks. Simplify labour laws for seamless transitions, offer tax incentives for buyers committing to job preservation, and fast-track approvals via single-window clearances.
Non-strategic PSEs outside atomic energy, defence, transport, power, and banking remain prime targets, aligning with the 2016 National Disinvestment Policy. Yet progress lags: FY26’s Rs 47,000 crore target marks a dip from last year, with no major sale since Air India in 2021.
Why This PSE Privatisation Strategy Matters Now
India’s PSEs hold assets worth trillions but suffer inefficiencies, with many chronically loss-making. Privatisation could inject private sector dynamism, create jobs, and generate revenue amid slowing growth (projected at 6.8% for FY26 per RBI).
Experts hail the PSE privatisation strategy as realistic. “A demand-driven pipeline with phased exits addresses valuation gaps and builds trust,” said economist Rathin Roy. However, challenges persist: union resistance, valuation disputes, and election-year politics.
As Finance Minister Nirmala Sitharaman eyes fiscal consolidation (aiming for 4.5% deficit), embracing CII’s PSE privatisation strategy could bridge gaps. Markets await Budget 2026-27 signals will this unlock Rs 10 lakh crore?
