Budget 2025: Semiconductor players pin hopes on increased allocation; PLIs for IoT, wearables, and AI devices

Tata Elxsi, BHEL, CG Power and Tata Technologies will be the key semiconductor stocks to watch on the Budget day.

With the Union Budget just around the corner, market experts and industry players from the semiconductor sector are hoping for a huge allocation that could help India move towards self-reliance in the semiconductor sector, with the aim of setting up a slew of semiconductor fabs in India.

In FY24, the semiconductor industry was allocated a whopping Rs 6,903 crore in the Union Budget. This year, industry experts are hopeful that the government might significantly increase the allocation.

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Industry Wishlist

Market participants are hopeful that the production-linked incentive (PLI) scheme might be extended to include IoT, wearables, and AI devices. Further, any enhanced funding on the research and development front for semiconductor manufacturing might be seen as a positive.

A recent note by broking firm Asit C Mehta suggested a reduction in import duties for critical components to lower production costs, giving producers a further thrust.

“We anticipate a continued focus on strengthening the semiconductor and display manufacturing sectors. This includes expanding the establishment of semiconductor fabs, modernising infrastructure, and bolstering India’s position in global supply chains,” said Avneet Singh Marwah, CEO of Super Plastronics, a XXX.

He added that any tax reductions on electronic components and raw materials, along with exemptions on critical minerals such as lithium, copper, and rare earth elements, is expected to further boost India’s competitiveness in the global market.

In a similar context, Krishna Vij, VP - TeamLease Digital said that with over $20 billion in commitments from domestic players, it is crucial that the budget allocates substantial funding to advance the semiconductor ecosystem, driving innovation and self-reliance.

“The anticipated tax reforms, including a simplified regime under Section 44, will position India as a magnet for global semiconductor companies, enhancing both domestic manufacturing and international competitiveness," said Vij.

In December 2021, the government launched the India Semiconductor Mission, announcing a Rs 76,000-crore chip incentive scheme, offering a 50 percent subsidy on capital expenditure for plant setup.

Stocks to watch

Currently, the large listed players include Tata Elxsi, BHEL, CG Power and Tata Technologies. Any further announcements in the Union Budget for the semiconductor sector will send these stocks surging sharply.

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