Union Budget 2026-27: Centre adds ₹40,000 crore for electronics scheme, unveils ISM 2.0
India's Finance Minister announced a ₹40,000 crore boost for the Electronics Component Manufacturing Scheme and launched ISM 2.0 to enhance domestic semiconductor production.
Delhi
Finance minister Nirmala Sitharaman announced a sharp increase in funding for the Electronics Component Manufacturing Scheme (ECMS) to ₹40,000 crore and unveiled India Semiconductor Mission (ISM) 2.0, reinforcing the government’s push to build domestic electronics and semiconductor manufacturing capacity.
The ECMS, launched in April 2025 with an initial outlay of ₹22,919 crore, has already attracted investments of over ₹1.15 lakh crore — nearly double the government’s initial target of ₹59,350 crore — across 249 applications, information technology minister Ashwini Vaishnaw said previously. The schemes are under the ministry of electronics and IT.
The scheme currently has 46 approved projects with cumulative investments of ₹54,567 crore, projected production of ₹3.68 trillion, and promises of over 50,000 direct jobs.
The scheme was notified with a six-year budget outlay of ₹22,919 crore, with projected production worth ₹10.34 lakh crore and potential employment generation for 142,000 people, according to the government. It aims to build the foundation for a $500 billion electronics manufacturing ecosystem by 2030-31.
{{/usCountry}}The scheme was notified with a six-year budget outlay of ₹22,919 crore, with projected production worth ₹10.34 lakh crore and potential employment generation for 142,000 people, according to the government. It aims to build the foundation for a $500 billion electronics manufacturing ecosystem by 2030-31.
{{/usCountry}}ECMS sees a clear step-up in allocations in budget 2026-27, rising from nil provision in budget estimates for fiscal 2026 to ₹1,500 crore in fiscal 2027, marking its first substantive year of funding. Revised estimates show spending in the ongoing fiscal was negligible at ₹6.8 crore.
{{/usCountry}}ECMS sees a clear step-up in allocations in budget 2026-27, rising from nil provision in budget estimates for fiscal 2026 to ₹1,500 crore in fiscal 2027, marking its first substantive year of funding. Revised estimates show spending in the ongoing fiscal was negligible at ₹6.8 crore.
{{/usCountry}}“The additional ₹40,000 crore outlay for the ECMS could catalyse substantial investments, enhance domestic value addition, generate high-quality employment, and solidify India’s emergence as a global leader in electronics manufacturing and innovation,” said Sujay Shetty, managing director of ESDM & Semiconductor at PwC India.
{{/usCountry}}“The additional ₹40,000 crore outlay for the ECMS could catalyse substantial investments, enhance domestic value addition, generate high-quality employment, and solidify India’s emergence as a global leader in electronics manufacturing and innovation,” said Sujay Shetty, managing director of ESDM & Semiconductor at PwC India.
{{/usCountry}}Announcing the scaling up of manufacturing in seven strategic and frontier sectors, Sitharaman said India Semiconductor Mission 1.0 had expanded India’s semiconductor sector capabilities.
“Building on this, we will launch ISM 2.0 to produce equipment and materials, design full-stack Indian IP, and fortify supply chains. We will also focus on industry-led research and training centres to develop technology and skilled workforce,” she said.
ISM 2.0 is expected to be announced in three months after the government finalises its structure, including funding, incentives for fabless startups, a sharper focus on advanced design, and a roadmap to achieve 3-nanometre and 2-nanometre technology nodes. The mission made its budget debut in 2026-27 with a fresh ₹1,000 crore allocation in BE fiscal 2027, compared with no provision in BE fiscal 2026.
Vaishnaw said recently that the government plans to support at least 50 fabless chip companies in ISM 2.0 by scaling up the Design Linked Incentive Scheme, with the long-term goal of producing “one AMD” and “one Qualcomm” from India.
Industry executives said the measures could help address the gap between semiconductor demand and domestic manufacturing capacity.
“India today consumes close to $50 billion worth of semiconductors annually, yet domestic manufacturing contributes less than $2 to $3 billion. This imbalance has strategic implications, especially as India generates nearly 20% of the world’s data but hosts only about 3% of global data centre capacity,” said Ashok Mehta, founder of Suchi Semicon, an OSAT company in Gujarat. “With semiconductor consumption expected to cross $100 billion by 2030, capacity creation must now move faster than demand growth to avoid widening this gap.”
Pankaj Mohindroo, chairman of the India Cellular and Electronics Association, said 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,” he said, adding that exponential growth in mobile manufacturing has clearly demonstrated what bold and consistent policy measures can achieve. “To replicate this success across sectors and move towards 25% of GDP through manufacturing, the National Manufacturing Mission is a need of the nation, enabling the ecosystem to truly fire on all cylinders.”
ISM 1.0, announced in late 2021 with a financial outlay of ₹76,000 crore, has approved 10 semiconductor projects spread across six states, with four expected to begin chip production this year. The projects cover fabs, advanced packaging, OSAT/ATMP units and related facilities, collectively representing investment commitments of around ₹1.60 trillion.