Industry lobby Confederation of Indian Industry (CII) has suggested a quick four-pronged strategy to unlock value from disinvestment of public sector enterprises, calling for following a demand-driven approach and a predictable roadmap in the selection of units for privatisation.
In its proposals for the Union Budget 2026-27, CII urged the government to mobilize resources through a calibrated approach to privatization, focusing on areas where private participation can enhance efficiency, technology infusion and global competitiveness, to sustain capital expenditure and address developmental priorities amid global economic uncertainties.
CII called on the Center to announce a three-year privatization pipeline detailing which enterprises are likely to be taken up for privatization during this period, recognizing that complete privatization of all non-strategic PSEs is a complex and time-consuming process.
It was argued that this visibility would encourage deeper investor engagement and more realistic valuation and value discovery, which would contribute to accelerating the privatization process.
“The government may reduce its stake in listed PSEs (public sector enterprises) in a phased manner initially to 51%, thereby allowing it to remain the largest shareholder while releasing significant value in the market. Over time, this stake may be further reduced to between 33% to 26%,” CII said.
According to its analysis, reducing the government’s stake in 78 listed PSUs to 51% could yield benefits of around ₹10 lakh crore.
In the first two years of the roadmap, the disinvestment strategy could target 55 PSUs where the government’s stake is 75% or less, thereby raising about ₹4.6 lakh crore.
In a subsequent phase, 23 PSUs with high government shareholding (more than 75%) may be disinvested, potentially fetching ₹5.4 lakh crore.
CII Director General Chandrajit Banerjee said, “Reducing government stake in listed PSEs to 51% and below is a pragmatic step that balances strategic control with value creation. Unlocking productive capital worth about ₹10 lakh crore will provide critical resources to accelerate physical and social infrastructure development and support fiscal consolidation.”
CII said that by focusing on governance, regulation and enabling infrastructure while allowing competitive markets to increase efficiency, strategic privatization can unlock public resources for high-impact sectors such as health, education and green infrastructure.
“India’s growth story is increasingly being driven by private enterprise and innovation. A visionary privatization policy, in line with the vision of a developed India, will enable the government to focus on its core functions while empowering the private sector to accelerate industrial transformation and job creation.”
CII suggested accelerating the implementation of the government’s strategic disinvestment policy, which envisages exit of all PSEs in non-strategic sectors and minimum presence in strategic sectors.
Recommending a change to a demand-based approach in the selection of PSEs for privatisation, the industry lobby said that, at present, the government identifies specific enterprises for sale and subsequently invites interest from investors. However, when sufficient demand or valuation is not received, the process often stalls.
CII suggests reversing this sequence by first assessing investor interest in a wider range of enterprises and then giving priority to those enterprises that attract more interest and meet valuation expectations. Such an approach, it said, will ensure smooth execution and better price discovery. Structured feedback from potential investors can also help overcome procedural or regulatory hurdles.
CII also recommended an institutional framework to strengthen oversight, accountability and investor confidence, making privatization predictable and professionally managed.
It called for the establishment of a ministerial board for strategic guidance, an advisory board of industry and legal experts for independent benchmarking and a dedicated body with a professional management team to handle execution, due diligence, market engagement and regulatory coordination.
The structure will also monitor market developments, stakeholder feedback and post-privatisation performance to enable continuous improvement.
published – January 11, 2026 10:16 PM IST
