Budget 2026: ₹40,000 crore allocated to boost India’s semiconductor sector
- 1st February 2026
- 12:20 PM
- 2 min read
PL Capital
Summary
The Union Budget 2026 announced a ₹40,000 crore outlay for India Semiconductor Mission (ISM) 2.0, signalling a deeper push to build a self-reliant chip ecosystem. Semiconductor and electronics manufacturing stocks moved into focus following the policy announcement.Mumbai | 12:20 PM
Union Budget 2026–27 delivered a major boost to India’s semiconductor and electronics ecosystem, with Finance Minister Nirmala Sitharaman announcing a ₹40,000 crore outlay for India Semiconductor Mission (ISM) 2.0, marking a decisive expansion of the government’s chip manufacturing strategy.
ISM 2.0 builds on the original 2021 mission, under which 10 projects worth ₹1.6 lakh crore were approved. The new phase shifts focus beyond assembly and testing towards creating a comprehensive, self-reliant semiconductor value chain.
A key pillar is the domestic manufacturing of semiconductor equipment and specialised materials, aimed at reducing reliance on global supply chains. The mission also incentivises Indian-owned, full-stack chip intellectual property, supporting the government’s “Designed in India” vision for strategic sectors such as defence and aerospace.
The Budget further outlined plans for industry-led research and training centres to address skill gaps and support India’s goal of becoming a top four semiconductor manufacturing nation by 2032. Mineral-rich states including Odisha, Andhra Pradesh, Tamil Nadu and Kerala will receive targeted support to secure critical raw materials.
Alongside ISM 2.0, the government raised the outlay for the Electronics Components Manufacturing Scheme to ₹40,000 crore, strengthening domestic production of PCBs, sensors and passive components.
Markets reacted positively, with electronics stocks such as Dixon Technologies, Kaynes Technology, PG Electronics and others rising up to 7%.
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