Union Budget 2026: Govt increases outlay for electronics component manufacturing to Rs 40,000 Cr

Finance Minister Nirmala Sitharaman on Sunday said the government has increased the outlay for the electronics components manufacturing scheme (ECMS) to Rs 40,000, from the original Rs 22,919 crore announced in April 2025. 

The scheme has been a success as investment commitments have exceeded twice the target set out originally. “We propose to increase the outlay to Rs 40,000 crore to accelerate this momentum,” Sitharaman said as she tabled the Union Budget 2026 in the parliament. 

Under ECMS, the government offers turnover-linked incentives, capex incentives, and hybrid incentives on target segment products.

India’s electronics sector is now the third-largest and fastest-growing export category in FY25, from the seventh-largest export category in FY22, the Economic Survey 2025-26 noted.

“This momentum continued into the first half of FY26, with electronics exports reaching $22.2 billion, positioning the sector on track to become the second-largest exported item,” the government said in the Economic Survey report.

She added that the government will launch the second phase of the India Semiconductor Mission (ISM). “The ISM 1.0 has expanded India’s semiconductor 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 tech and a skilled workforce,” Sitharaman said.

Under the Rs 76,000 crore ISM programme, the government has approved big-ticket projects, including Micron’s ATMP (Assembly, Testing, Marking and Packaging) facility, Tata Electronics’ Semiconductor Fab, one compound semiconductor fab, and various other packaging facilities. 

To be sure, India imports almost all the chips that it consumes. With electronics and chip import bills touching $100 billion-120 billion in FY25, the government is funding up to half of the capex for semiconductor fabrication and packaging.