Indian Finance Minister Nirmala Sitharaman on Sunday announced the launch of India Semiconductor Mission (ISM) 2.0, alongside a significant increase in government support for electronics components manufacturing, as part of the Union Budget 2026-27. The outlay for electronics component manufacturing has been raised to Rs 40,000 crore, underlining the government’s long-term strategy to build a resilient, innovation-driven semiconductor and electronics ecosystem in India.
Presenting the Budget in Parliament, Sitharaman said ISM 2.0 will build on the progress made under India Semiconductor Mission 1.0, which helped expand the country’s semiconductor capabilities. The new phase will focus on producing semiconductor equipment and materials, developing full-stack Indian intellectual property, and strengthening domestic and global supply chains.
“We will also focus on industry-led research and training centres to develop technology and a skilled workforce,” Sitharaman said. She added that the Electronics Components Manufacturing Scheme, launched in April 2025 with an outlay of Rs 22,999 crore, has already attracted investment commitments that are double the original targets.
Industry Welcomes Semiconductor and Electronics Push
Industry leaders across telecom, electronics, semiconductors, IT services, and digital infrastructure welcomed the Budget announcements, highlighting the clarity and continuity of policy direction.
Sunil Bharti Mittal, Founder and Chairman of Bharti Enterprises, described the Budget as a strong blend of growth and inclusion.
“A bold Budget that combines growth with inclusion. The strong emphasis on skilling, alongside sustained investments in science, innovation, and research are timely and will strengthen domestic capabilities, advancing import substitution in critical sectors,” Mittal said.
He also highlighted the focus on infrastructure, logistics, and energy efficiency, noting that increased support for the data centre ecosystem will reinforce confidence in India’s fast-growing digital economy. Mittal reiterated Bharti Group’s commitment to technology-led growth, financial inclusion, and future-ready education through the Bharti Airtel Foundation.
Digital Infrastructure Seen as Key Growth Enabler
Manoj Kumar Singh, Director General of the Digital Infrastructure Providers Association (DIPA), said the Union Budget 2026-27 presents a transformative vision for India’s digital future.
“Union Budget 2026 delivers a transformative vision for India’s digital future. The tax holiday until 2047 for cloud providers leveraging Indian data centers is bold policy-making that positions us as a global hub while advancing our $3 trillion digital economy ambition,” Singh said.
He emphasized that robust telecom networks and data centres act as enablers across sectors, supporting fintech, telemedicine, smart manufacturing, artificial intelligence research, and digital governance. Singh also pointed to the Rs 10,000 crore SME Growth Fund and the Rs 2,000 crore top-up for the Self-Reliant India Fund as critical measures for strengthening supply chains that rely heavily on small and medium enterprises.
According to Singh, sustainability measures such as customs duty exemptions on battery storage and solar glass demonstrate foresight in building green, energy-efficient digital infrastructure aligned with Viksit Bharat 2047 and Net Zero 2070 goals.
Strong Signal for Advanced Manufacturing and IP Creation
Niranjan Nayak, Managing Director of Delta Electronics India, said the scale and consistency of the government’s approach to electronics and advanced manufacturing stood out in Union Budget 2026.
“The launch of India Semiconductor Mission 2.0 with an outlay of Rs 40,000 crore, along with the expansion of the electronics components manufacturing scheme to a similar level, clearly signals a long-term commitment to building strong domestic capabilities,” Nayak said.
He noted that the focus goes beyond capacity creation to include full-stack design, development of Indian intellectual property, skill creation, and supply-chain resilience. According to Nayak, this approach reflects a practical understanding of how globally competitive technology ecosystems are built and gives industry confidence to plan long-term investments and move up the electronics manufacturing value chain.
Semiconductor Ecosystem and Talent Development in Focus
Hitesh Garg, Vice President and India Managing Director at NXP Semiconductors, said the Budget provides a structured framework for strengthening India’s semiconductor and electronics manufacturing ecosystem.
“The announcement of India Semiconductor Mission 2.0, together with the enhanced Rs 40,000 crore outlay for the Electronics Components Manufacturing Scheme, signals a strong commitment to strengthening chip design, advanced research, electronics systems design, manufacturing, and talent development,” Garg said.
He added that the emphasis on research infrastructure, design enablement, and skill-building will be critical in positioning India as a global hub for electronic systems research and development and full-stack design excellence. NXP, he said, remains committed to supporting India’s ambition to become an ESDM product nation.
IT Services, AI, and Data Centres Get Budget Boost
Aparna Iyer, Chief Financial Officer of Wipro Limited, welcomed the government’s ability to meet fiscal deficit targets for FY26 despite global volatility and ongoing tax rationalization.
“The budget clearly articulates the Government’s vision to promote the Indian IT services sector as a primary driver of India’s economic growth, leveraging Artificial Intelligence as the force multiplier,” Iyer said.
She noted that identifying AI as central to accelerating and sustaining economic growth underscores India’s ambition to emerge as an AI-powered economic superpower. The proposal to provide long-term tax exemption for data centre services provided from India to foreign customers is expected to strengthen India’s position as a global data centre hub.
Iyer also welcomed measures aimed at tax certainty, including combining IT services and R&D services into a single category, increasing safe harbour thresholds, and providing a two-year timeline for concluding unilateral advance pricing agreements. According to her, these steps will reduce compliance costs and improve ease of doing business across the sector.
Long-Term Vision for India’s Technology Ecosystem
With the launch of India Semiconductor Mission 2.0, expanded incentives for electronics manufacturing, and strong support for digital infrastructure, AI, and data centres, Union Budget 2026-27 signals a decisive push to strengthen India’s position in the global technology value chain. Industry leaders see the announcements as a clear statement of intent to build domestic capabilities, foster innovation, and create a future-ready workforce aligned with India’s long-term economic and strategic goals.
BABURAJAN KIZHAKEDATH
