New Delhi, February 1, 2026 – In a strategic move to strengthen India’s technological and manufacturing capabilities, the Union Budget 2026-27, presented by Finance Minister Nirmala Sitharaman, announced a significant increase in the component manufacturing outlay to Rs 40,000 crore. The budget also unveiled the India Semiconductor Mission 2.0 (ISM 2.0), aimed at establishing India as a global hub for semiconductor design, fabrication, and innovation.
Expanding the Semiconductor Ecosystem
The India Semiconductor Mission (ISM), first launched in 2021, has already laid the groundwork for a vibrant domestic semiconductor ecosystem. With ISM 2.0, the government seeks to deepen component manufacturing, foster research and development, and attract global investments in chip design and fabrication. The increased outlay is expected to accelerate production-linked incentive (PLI) schemes, supporting startups and large-scale manufacturers alike.
Key Focus Areas
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Component Manufacturing: Rs 40,000 crore will be allocated to strengthen domestic production of critical semiconductor components, reducing dependence on imports.
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Technology Development & R&D: Emphasis on fostering innovation in chip design, testing, and next-generation semiconductor technologies, including AI and IoT-enabled applications.
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Global Competitiveness: ISM 2.0 aims to make India a preferred destination for semiconductor investments, creating a self-reliant supply chain and promoting exports.
Strategic Importance
Semiconductors are the backbone of modern electronics, powering devices from smartphones to electric vehicles and AI-enabled systems. By boosting component manufacturing and launching ISM 2.0, the government aims to position India as a global tech leader, enhance supply chain resilience, and create high-skilled employment opportunities.
The Road Ahead
Experts expect ISM 2.0 to attract foreign direct investment (FDI), strengthen public-private partnerships, and accelerate the country’s push toward Aatmanirbhar Bharat in technology. With this enhanced focus on semiconductors, India is poised to become a major player in the global electronics and tech manufacturing landscape by 2030.