India’s Union Budget 2026, unveiled by Finance Minister Nirmala Sitharaman on February 1, 2026, signals a bold pivot toward a full-stack electronics and semiconductor ecosystem.
Moving beyond assembly to design, fabrication, equipment, and materials, the allocations aim to slash import dependence, attract global giants, and cement India’s role as a manufacturing powerhouse.
Key focus: scaling India Semiconductor Mission (ISM) 2.0 and doubling down on components amid surging investments.
ISM 2.0 Takes Center Stage
Budget 2026 launches the second phase of India Semiconductor Mission (ISM 2.0), building on ISM 1.0’s INR 76,000 crore success that drew projects like Micron’s Gujarat ATMP and Tata’s Dholera fab.
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Fresh Incentives: Up to 50% fiscal support for semiconductor fabs, display units, equipment makers, and materials suppliers targeting full-stack Indian IP and resilient supply chains.
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Global Magnet: Aims to lure equipment giants and attract INR 1,000+ crore in Phase 2 funding, per early announcements.
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Approved Wins: Boost for INR 91,000 crore Tata-Powerchip fab (Gujarat), ?27,000 crore Tata ATMP (Assam), INR 7,600 crore CG Power-Renesas OSAT.
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Timeline Push: Commercial chip production on track for late 2026, per MeitY Minister Ashwini Vaishnaw.
Electronics Components: Massive Scale-Up
The Electronics Components Manufacturing Scheme (ECMS) launched April 2025 with INR 22,919 crore sees its outlay nearly doubled to INR 40,000 crore as commitments already hit double the original target.
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Passive & Active Focus: Covers resistors, capacitors, inductors, diodes, transistors reducing INR 2 lakh crore+ annual imports.
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Investment Surge: PLI electronics production jumped 146% to ?5.45 lakh crore (FY21-25); FDI inflows hit $4B, 70% to PLI winners.
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Job Creation: 1.3M+ roles via PLI; new scheme eyes skilled workforce via industry-led R&D/training centers.
| Scheme | Budget 2026 Outlay | Growth from Prior | Key Goal |
|---|---|---|---|
| ECMS | INR 40,000 crore | +75% (from INR 22,919 Cr) | Local components, cut imports |
| ISM 2.0 | INR 40,000 crore (est.) | New Phase | Fabs, IP, equipment ecosystem |
| PLI Large-Scale Electronics | INR 38,645 crore (ongoing) | Steady | Mobile/IT hardware scale |
| Modified Semiconductor Fab | INR 8,000 crore | +86% (from INR 4,300 Cr) | Display & chip production. |
Ministry of Electronics & IT (MeitY) budget rises to INR 21,633 crore, prioritizing semis, AI, and components over pure assembly.
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PLI Continuity: INR 1.97 lakh crore total across 14 sectors; disbursals up to ?23,946 crore (Sep 2025), with electronics leading at ?38,645 crore.
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Skills & Innovation: New industry-led research centers and training hubs; high-tech tool rooms for capital goods.
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Self-Reliant Fund: INR 4,000 crore top-up for SMEs in electronics/semicon.
Industry Reactions & Road Ahead
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Optimism on Momentum: “ECMS commitments doubled target INR 40,000 crore unlocks supply chain resilience,” noted analysts amid stock rallies in Dixon, Amber, Kaynes.
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Calls for Speed: India Electronics & Semiconductor Association seeks faster payouts, tax relief, DLI extension for fabs/OSATs.
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Global Play: Positions India for $75B mobile production, $30B exports by FY26; aligns with Viksit Bharat via reforms over rhetoric.
The question still looms that can the Budget 2026 reframe electronics from import substitution to export leadership. Watch for fab inaugurations and component 
