India approves Rs 33,660cr BHAVYA scheme to build 100 plug-and-play industrial parks across all states

The Union Cabinet of India, chaired by Prime Minister Narendra Modi, approved the Bharat Audyogik Vikas Yojana (BHAVYA) on Wednesday, allocating Rs 33,660 crore (approximately USD 3.6 billion) to develop 100 plug-and-play industrial parks across the country. The scheme will be implemented over a six-year period spanning financial years 2026-27 to 2031-32 and is designed to cover all states and Union Territories of India. The approval marks the most significant single expansion of India’s centrally coordinated industrial park infrastructure since the launch of the National Industrial Corridor Development Programme framework.

The announcement was made by Union Minister for Information and Broadcasting Ashwini Vaishnaw following the Cabinet meeting. Vaishnaw stated that the initiative is aimed at unlocking India’s manufacturing potential and delivering world-class industrial infrastructure to both domestic and international investors.

What is the BHAVYA scheme and how does the plug-and-play industrial park model work in India?

Under the BHAVYA scheme, industrial parks ranging in size from 100 to 1,000 acres will be developed across India. The central government will extend financial assistance of up to Rs 1 crore per acre to qualifying projects. The parks will include core infrastructure comprising internal roads, underground utilities, drainage systems, common treatment facilities, information and communications technology systems, and administrative services. The integrated underground utility corridors are designed to enable what the government describes as a no-dig environment, reducing disruption during maintenance and ensuring uninterrupted industrial operations.

The plug-and-play model at the centre of BHAVYA means that land, utilities, approvals, and supporting infrastructure will be pre-developed before industries are invited to operate. This approach is intended to allow businesses to move from planning to production without delays associated with land acquisition, regulatory approvals, or infrastructure setup. Streamlined approvals and effective single-window clearance systems will be core operational features of each park.

This model builds on the work of the National Industrial Corridor Development Corporation Limited (NICDC), which operates under the Department for Promotion of Industry and Internal Trade (DPIIT) within the Ministry of Commerce and Industry. NICDC is currently implementing 20 projects across 13 states under the National Industrial Corridor Development Programme (NICDP) framework. The BHAVYA scheme extends that corridor-centric approach to a nationwide, state-partnership-driven rollout at a scale not previously attempted under a single central sector scheme.

How will the BHAVYA challenge mode mechanism select and evaluate industrial park proposals from states?

Project selection under BHAVYA will be carried out through a competitive challenge mode mechanism. Proposals submitted by state governments, central public sector undertakings, and private developers will be evaluated on the basis of alignment with PM GatiShakti principles for multimodal connectivity, adoption of green energy and sustainable resource use, provision of integrated underground utility infrastructure, and demonstrable reforms to improve ease of doing business at the state level. The government stated that only high-quality, reform-oriented, and investment-ready proposals will be advanced through this process.

This challenge-based selection methodology reflects a growing emphasis in Indian federal infrastructure policy on competitive grant allocation rather than administrative formula-based disbursement. Similar mechanisms have been deployed in schemes such as the Smart Cities Mission and elements of the Production Linked Incentive programme. The approach allows the central government to prioritise states that demonstrate regulatory reform commitments alongside physical infrastructure capacity.

What are the employment and land targets set by the Indian government under the BHAVYA industrial parks plan?

The BHAVYA scheme is projected to generate approximately 15 lakh direct jobs, in addition to substantial indirect employment across manufacturing, logistics, and services sectors. The scheme is expected to unlock approximately 34,000 acres of plug-and-play industrial land nationally. The government described primary beneficiaries as manufacturing units, micro, small and medium enterprises (MSMEs), startups, and global investors seeking ready-to-use industrial infrastructure. Secondary beneficiaries include workers, logistics providers, service sector enterprises, and local communities.

The government’s employment projection situates BHAVYA within a broader policy challenge facing India: the need to generate large-scale formal manufacturing employment as the country’s working-age population continues to expand. India’s manufacturing sector currently accounts for approximately 17 percent of gross domestic product, well below the government’s stated target of 25 percent under the Make in India initiative. Industrial park infrastructure is considered a critical enabling condition for raising this share by reducing investor entry costs and accelerating time-to-production for new manufacturing facilities.

India’s attractiveness to foreign direct investment in manufacturing has increased significantly over the preceding period. According to the United Nations Conference on Trade and Development (UNCTAD) 2025 World Investment Report, India ranks among the top five global destinations for greenfield project investments. Total foreign direct investment inflows during April to August 2025-26 reached USD 43.76 billion on a provisional basis, compared with USD 37.03 billion during the same period in 2024-25.

How does BHAVYA fit within India’s Atmanirbhar Bharat, Make in India, and PLI manufacturing strategy?

The BHAVYA scheme is explicitly positioned by the government as an instrument of the Atmanirbhar Bharat (Self-Reliant India) programme and the Make in India initiative. By fostering cluster-based development and enabling the co-location of industries, suppliers, and service providers within common infrastructure zones, BHAVYA is designed to deepen domestic supply chains and reduce dependence on imported intermediate goods and manufacturing inputs.

The scheme complements a range of other manufacturing policy instruments introduced in recent years. The Production Linked Incentive programme, with a total outlay of Rs 1.97 lakh crore, has already been deployed across multiple sectors to scale domestic manufacturing output. The Union Budget 2026-27 introduced additional measures including the expansion of electronics manufacturing incentives to Rs 40,000 crore, a Rs 40,000 crore allocation under the India Semiconductor Mission 2.0, and new schemes targeting container manufacturing, rare earth processing, and capital goods. The government has also identified seven priority sectors including semiconductors, biopharmaceuticals, electronics, chemicals, and textiles as focal points for supply chain strengthening and export acceleration.

What other decisions did the Union Cabinet of India approve alongside the BHAVYA industrial parks scheme in March 2026?

The approval of BHAVYA was accompanied by several other Cabinet decisions on 18 March 2026. The Cabinet approved reimbursement of Rs 11,712 crore related to cotton procurement by the Cotton Corporation of India at the Minimum Support Price during the 2023-24 season, benefiting approximately 7.25 lakh cotton farmers through the purchase of 33 lakh cotton bales. In addition, the Cabinet approved a separate reimbursement of Rs 1,718 crore for expenditure incurred during those MSP operations.

A 101.5-kilometre, four-lane access-controlled highway connecting Barabanki and Bahraich in Uttar Pradesh was also approved at a cost of Rs 6,969 crore under National Highway 927. The project is expected to reduce travel time between the two cities from three hours to approximately one hour and is designed to strengthen India-Nepal trade connectivity. The highway includes a six-lane bridge over the Ghaghara river and is expected to benefit sectors including agro-processing, textiles, logistics, and pharmaceuticals by reducing transit time and transport costs. The project will also improve access to Shravasti airport and Buddhist tourist destinations in eastern Uttar Pradesh.

In the energy sector, the Cabinet approved a Rs 2,585 crore Small Hydro Power Development Scheme for the period 2026-31, targeting 1,500 megawatts of additional installed capacity from projects ranging between 1 megawatt and 25 megawatts. Financial assistance under this scheme will cover up to 30 percent of project costs in northeastern and border regions and up to 20 percent in other parts of the country, with per-project caps of Rs 30 crore and Rs 20 crore respectively. The initiative is expected to attract approximately Rs 15,000 crore in private investment and reduce carbon emissions by an estimated 4.3 million tonnes annually.

The government stated that since June 2024, the Union Cabinet has approved projects across railways, highways, metro systems, airports, ports, and ropeways, along with major investments in housing, smart cities, and water supply schemes. The combined value of projects cleared during this period totalled approximately Rs 22.3 lakh crore.

Key takeaways on what the BHAVYA scheme means for India’s manufacturing ambitions, industrial policy, and investment landscape

• The Union Cabinet approved the Bharat Audyogik Vikas Yojana (BHAVYA) on 18 March 2026, allocating Rs 33,660 crore to develop 100 plug-and-play industrial parks across all Indian states and Union Territories between financial years 2026-27 and 2031-32.
• The scheme will be implemented through a competitive challenge mode mechanism, with proposals evaluated on PM GatiShakti alignment, green energy adoption, underground utility provision, and state-level ease of doing business reforms; financial assistance will extend to up to Rs 1 crore per acre for parks ranging from 100 to 1,000 acres.
• BHAVYA is projected to generate approximately 15 lakh direct jobs and unlock around 34,000 acres of investment-ready industrial land, with the National Industrial Corridor Development Corporation Limited (NICDC) designated as the implementing agency.
• The scheme is positioned as a core instrument of the Atmanirbhar Bharat and Make in India programmes, complementing the Rs 1.97 lakh crore Production Linked Incentive programme and Union Budget 2026-27 measures covering semiconductors, electronics, and capital goods manufacturing.
• India’s total provisional foreign direct investment inflows reached USD 43.76 billion during April to August 2025-26, compared with USD 37.03 billion in the same period a year earlier, providing an investment climate context for the BHAVYA rollout.