Delhi
Union Budget 2026-27: Center adds ₹40,000 crore for electronics scheme, unveils ISM 2.0Finance Minister Nirmala Sitharaman has announced increased funding for the Electronics Component Manufacturing Scheme (ECMS). ₹40,000 crore and unveiled the India Semiconductor Mission (ISM) 2.0, strengthening the government’s push to build domestic electronics and semiconductor manufacturing capacity.
ECMS, launched in April 2025 with an initial outlay ₹22,919 crore, has already attracted more investments ₹1.15 lakh crore – almost double the government’s initial target ₹59,350 crore – across 249 applications, Information Technology Minister Ashwini Vaishnav said earlier. The schemes are under the Ministry of Electronics and IT.
The scheme currently has 46 sanctioned projects with increasing investment ₹54,567 crore, projected production ₹3.68 trillion, and over 50,000 direct job commitments.
The scheme was announced with a six-year budget outlay ₹22,919 crore, with projected production value ₹10.34 lakh crore and potential employment generation for 142,000 people, according to the government. It aims to lay the foundation for a $500 billion electronics manufacturing ecosystem by 2030-31.
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ECMS sees a clear step up in allocations in the 2026-27 budget, up from zero provision in the FY 2026 budget estimates. ₹1,500 crore in FY 2027, the first significant year of funding. The revised estimates show that the expenditure during the current financial year was negligible ₹6.8 crores.
“Extra ₹An expenditure of Rs 40,000 crore on ECMS can catalyze substantial investment, increase domestic value addition, create high-quality employment and solidify India’s emergence as a global leader in electronics manufacturing and innovation,” said Sujoy Shetty, Managing Director, ESDM & Semiconductors, PwC India.
Announcing the scaling-up of manufacturing in seven strategic and frontier sectors, Sitharaman said India Semiconductor Mission 1.0 has expanded the capabilities of India’s semiconductor sector.
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“Based on this, we will launch ISM 2.0 to develop tools and materials, design full-stack Indian IP and strengthen the supply chain. We will also focus on industry-led research and training centers to develop technology and skilled workforce,” he said.
ISM 2.0 is expected to be announced within three months of the government finalizing its framework, which includes funding, incentives for fabless startups, a sharper focus on advanced design, and a roadmap for acquiring 3-nanometer and 2-nanometer technology nodes. The mission debuted its budget afresh in 2026-27 ₹1,000 crore allocation in BE FY 2027, no provision in BE FY 2026.
Vaishnav recently said the government plans to support at least 50 fabless chip companies in ISM 2.0 by scaling up the Design Linked Incentive Scheme with a long-term goal of producing “one AMD” and “one Qualcomm” from India.
Industry executives said the measures could help bridge the gap between semiconductor demand and domestic manufacturing capacity.
“India today consumes $50 billion worth of semiconductors annually, yet domestic manufacturing contributes less than $2 to $3 billion. This imbalance has strategic implications, especially since India generates about 20% of the world’s data but hosts only 3% of the global data center capacity,” said Ashok Mehta, founder of Such CATMI, a Gujarat-based company. “With semiconductor spending expected to exceed $100 billion by 2030, capacity creation must now move faster than demand growth to avoid widening the gap.”
India Cellular and Electronics Association chairman Pankaj Mohindru said Budget 2026-27 reinforces the government’s commitment to manufacturing-led growth, particularly in electronics and semiconductors, through “continuity, scale and targeted reforms”.
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“Steps like 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,” he said, adding that the exponential growth in mobile manufacturing has clearly demonstrated what bold and consistent policy moves can achieve. “To replicate this success across sectors and move towards 25% of GDP through manufacturing, the nation needs a National Manufacturing Mission, which enables the ecosystem to truly fire on all cylinders.”
ISM 1.0, announced at the end of 2021 with financial costs ₹76,000 crore, approved 10 semiconductor projects spread across six states, four expected to start chip production this year. The projects cover fabs, advanced packaging, OSAT/ATMP units and related facilities, collectively representing investment commitments around ₹1.60 trillion.
