The electronics and semiconductor industry has responded positively to the Union Budget 2026–27, welcoming its steady and forward-looking approach to strengthening India’s manufacturing and technology ecosystem. Industry stakeholders say the budget reinforces long-term policy continuity while deepening India’s integration into global value chains through targeted reforms and scale-driven initiatives.
A sustained focus on electronics manufacturing, the rollout of the India Semiconductor Mission (ISM) 2.0, and the significant expansion of the Electronics Component Manufacturing Scheme (ECMS) are being viewed as clear indicators of the government’s commitment to building resilient domestic supply chains and reducing import dependence.
Strong Signal for Manufacturing-Led Growth
Industry bodies believe the budget reinforces manufacturing-led growth by combining infrastructure investment, fiscal incentives, and ecosystem development. The continuation and scaling up of electronics-focused schemes are expected to enhance investor confidence and accelerate localisation across the value chain.
The exponential rise in mobile phone manufacturing over the past few years is widely seen as evidence of what consistent and well-calibrated policy support can deliver. The Budget’s emphasis on continuity rather than disruption is expected to help replicate this success across components, semiconductors, and advanced electronics.
ISM 2.0 Expands India’s Semiconductor Ambitions
The announcement of ISM 2.0 is being seen as a major evolution in India’s semiconductor strategy. Unlike earlier approaches that focused largely on fabrication units, the new framework adopts a comprehensive value-chain perspective. It aims to strengthen capabilities in equipment manufacturing, materials, intellectual property development, and supply-chain resilience, including critical inputs such as chemicals and gases.
Industry experts say this shift is essential for India to move beyond participation and establish itself as a structural player in the global semiconductor ecosystem.
ECMS Expansion to Deepen Component Ecosystem
The enhancement of the Electronics Component Manufacturing Scheme to ₹40,000 crore has been widely welcomed as a decisive step toward deepening domestic manufacturing. The expanded outlay is expected to accelerate investments in high-value and critical components, moving the industry beyond final assembly toward true value addition.
The increased funding is likely to support the production of printed circuit boards, power electronics, RF and optical subsystems, semiconductor packaging and testing, passive components, precision engineering parts, and strategic materials linked to rare earth supply chains. This focus is particularly relevant in the context of fragmented global supply chains and rising geopolitical risks.
Boost for Cloud, Data Infrastructure and MSMEs
Another key announcement drawing industry attention is the extension of tax holidays till 2047 for foreign companies offering global cloud services using India-based data centres. This measure is expected to provide long-term policy certainty and attract sustained investments in digital and data infrastructure, strengthening India’s position as a global cloud and data hub.
The broader manufacturing ecosystem also stands to benefit from proposals such as the ₹10,000 crore SME Growth Fund, the Scheme for Container Manufacturing, and the creation of dedicated rare earth corridors. These initiatives are expected to improve access to capital, enhance logistics capabilities, and secure critical raw material supply for electronics and allied sectors.
From Vision to Execution
Industry stakeholders note that the budget’s support for electronics and semiconductors reflects sustained collaboration between policymakers and industry, particularly the Ministry of Electronics and Information Technology. The emphasis is increasingly shifting from vision-setting to execution, with clearer pathways for investment, localisation, and scale.
Overall, the Union Budget 2026–27 is being viewed as growth-oriented and strategically aligned with India’s long-term ambition of becoming a global manufacturing and technology powerhouse. By prioritising components, semiconductors, cloud infrastructure, and MSMEs, the budget lays the groundwork for a more resilient, competitive, and innovation-driven electronics ecosystem.