New Delhi: The Union Budget 2026–27 has announced India Semiconductor Mission 2.0, aimed at expanding India’s semiconductor ecosystem by enabling the production of equipment and materials, designing full-stack Indian intellectual property, and fortifying critical supply chains.
Building on the progress of ISM 1.0, the new phase (India Semiconductor Mission 2.0) will focus on industry-led research initiatives and specialised training centres to develop advanced technology capabilities and a skilled workforce.
Presenting the Budget, Union Finance Minister Nirmala Sitharaman stated that India Semiconductor Mission 2.0 will play a central role in strengthening domestic manufacturing capacity while reducing dependence on global supply disruptions.
The India Semiconductor Mission 2.0 initiative is designed to support end-to-end semiconductor development, from design and materials to equipment manufacturing and supply chain resilience.
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India Semiconductor Mission 2.0 Along With ECMS Enhancement
Alongside this, the Union Budget proposes a significant enhancement of the Electronics Components Manufacturing Scheme. Launched in April 2025 with an outlay of ₹22,919 crore, the scheme’s allocation has now been increased to ₹40,000 crore to capitalise on the momentum created in electronics manufacturing.
To support strategic raw material availability, the Budget has proposed a Scheme for Rare Earth Permanent Magnets, focusing on mineral-rich states such as Odisha, Kerala, Andhra Pradesh, and Tamil Nadu.
Under this initiative, dedicated Rare Earth Corridors will be established to promote mining, processing, research, and manufacturing activities.
In an effort to strengthen domestic chemical production and reduce import dependency, the Union Budget also announced a scheme to support states in setting up three dedicated Chemical Parks.
These parks will be developed through a challenge-based route on a cluster-based, plug-and-play model.
Highlighting the importance of capital goods capability in driving productivity and quality across sectors, the Finance Minister announced the establishment of Hi-Tech Tool Rooms by CPSEs at two locations.
These digitally enabled automated service bureaus will focus on local design, testing, and large-scale manufacturing of high-precision components at lower costs.
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India Semiconductor Mission 2.0 to Drive Equipment, Materials, and Indigenous IP Development
Commenting on the announcements, Tejesh Kodali, Group Chairman, Blue Cloud Softech Solutions Limited, said that the Union Budget’s ₹40,000 crore allocation for India’s semiconductor ecosystem reflects a long-term commitment to economic resilience and industrial competitiveness.
He noted that Semiconductor Mission 2.0, along with focused development of critical minerals and supportive policy measures, addresses foundational gaps across manufacturing, supply chains, and technology infrastructure, reinforcing India’s positioning as a global hub for advanced manufacturing and digital infrastructure.
Space Ecosystem Represents Missed Opportunity
Anirudh Damani, Director, Artha India Ventures said, “”The announcement of India Semiconductor Mission 2.0 is a timely and well‑structured step that builds continuity and execution depth into India’s semiconductor ambitions. What stands out is the clarity it provides across manufacturing, design and supply‑chain enablement, which is critical for long‑cycle capital and serious industrial participation. This reinforces India’s intent to emerge as a credible global semiconductor hub and meaningfully improves long‑term confidence for investors and operators alike.
That said, deep tech as a category did not receive a specific mention in this year’s Budget, despite its growing strategic importance. In particular, the space ecosystem represents a missed opportunity. Globally, space technologies are seeing rapid private participation, strong downstream commercial use cases and increasing strategic relevance. A clearer policy signal here would have strengthened India’s positioning in another frontier sector where it already has foundational strengths.”
Nakul Kumar, Co-founder & CMO, Cashify said, ““While the Union Budget 2026–27 is largely focused on strengthening India’s electronics manufacturing ecosystem, its ripple effects will be equally significant for the recommerce sector. Increased domestic production, better component availability, and improved logistics infrastructure will strengthen the lifecycle of devices, making refurbishment more efficient and scalable. Over time, this will aid in expanding access to high-quality, affordable electronics for consumers and reinforce India’s transition towards a more circular and sustainable digital economy.”
