Budget 2026-27 Boosts Electronics, Chips with Manufacturing Focus

The sustained focus on electronics manufacturing, the launch of India Semiconductor Mission (ISM) 2.0, and the significant expansion of the Electronics Component Manufacturing Scheme (ECMS) reaffirm the government's long-term commitment to building resilient domestic supply chains and strengthening India's position in global value chains, said electronics industry body ICEA.

ICEA also welcomed the announcement of a tax holiday till 2047 for foreign companies offering global cloud services using India-based data centres, describing it as a forward-looking measure that provides long-term policy certainty.

"Budget 2026-27 reinforces the government's commitment to manufacturing-led growth, particularly in electronics and semiconductors, through continuity, scale, and targeted reforms. Measures such as the expansion of ECMS, support for ISM 2.0, and long-term incentives for cloud and data infrastructure send a strong signal of strategic intent and policy stability," said Pankaj Mohindroo, Chairman, ICEA.

The exponential growth in mobile manufacturing has clearly demonstrated what bold and consistent policy measures can achieve, he added.

Ashok Chandak, President of IESA, said the Finance Minister's statement on ISM 2.0 is a very important signal for India's semiconductor ambitions.

"It marks a clear evolution from a fab-centric approach to a full value-chain strategy, covering equipment, materials, Indian IP, and supply-chain resilience (chemicals, Gases, materials, etc). This is critical if India is to move from being a participant to a structural player in the global semiconductor ecosystem," he said in a statement.

The significant enhancement of the Electronic Component Manufacturing Scheme to Rs 40,000 crore was also welcomed by the industry.

The semiconductor and electronics sector support mentioned in Union Budget is a direct result of MeitY's sustained and applied efforts in working closely with industry to move from vision to execution.

Pankaj Chadha, Chairman, EEPC India, said the Budget 2026-27 continues the government's thrust on infrastructure development, reforms, and local manufacturing, with additional measures to boost the MSME sector.

Several noteworthy proposals are in the Union Budget, including establishment of the Rs 10,000 crore SME Growth Fund, the Scheme for Container Manufacturing, and the setting up of dedicated rare earth corridors.

"Overall, the Budget is growth-oriented and aimed at providing a big impetus to local manufacturing," said Chadha.

Paritosh Prajapati, CEO of GX Group, said the government is moving from intent to execution evident in increase of the Electronics Component and Manufacturing Scheme (ECMS) outlay from Rs 22,919 crore to Rs 40,000 crore.

"The focus has moved beyond assembling finished products toward building a strong component ecosystem, critical in today's fragmented global supply chains," Prajapati said. The increased allocation will benefit production of high-value and critical components such as PCBs, power electronics, RF and optical subsystems, semiconductor-adjacent packaging and testing, passive components, precision parts, and strategic materials linked to rare earths.

- IANS