Budget marks a shift from electronics assembly to manufacturing at scale

Budget 2026 meaningfully strengthens India’s electronics manufacturing and semiconductor ecosystem, marking a clear transition from assembly-led growth to full-stack capability creation. The launch of Semiconductor Mission 2.0 (ISM 2.0), alongside a near-doubling of the Electronics Components Manufacturing Scheme outlay to Rs.40,000 crore, underscores the government’s intent to localise equipment, materials, components, and semiconductor IP. This policy push is reinforced by hard fiscal backing, with government semiconductor spending raised to Rs.8,000 crore in FY27 (from Rs.4,300 crore) and the MeitY allocation increased to Rs.21,633 crore, improving execution visibility. Further, BCD on mobile phones, PCBA, and chargers has been reduced from 20% to 15%, enhancing cost competitiveness and supporting deeper domestic value addition. Along with BCD exemptions across semiconductor & display manufacturing, solar equipment, and consumer electronics have been extended up to FY28, covering key machinery, components, and inputs. This provides long-term capex visibility for fabs and ensures cost stability while accelerating localisation for EMS and appliance players.

On-ground traction is visible. Across three rounds of ECMS approvals, cumulative investment commitments stand at ~ Rs.54,500 crore, spanning PCBs, camera modules, display and copper clad laminates, and advanced components. Among listed players, Kaynes Technology has emerged as a key early beneficiary with approvals across multi-layer & HDI PCBs, camera modules, and copper clad laminates, positioning it well for backend semiconductor and high-value EMS. Amber Enterprises has secured broad approvals via subsidiaries and JVs across multilayer and HDI PCBs, strengthening backward integration. A 10% import duty on AC components (excluding indoor and outdoor units) is also supportive for domestic manufacturers, benefiting Amber Enterprises. Syrma SGS Technology has approvals for multi-layer PCBs and camera modules, with upside pending approvals in HDI/flex PCBs and laminates, while Dixon Technologies has approvals for camera modules and optical transceivers, with additional component categories still under evaluation.

Parallelly, large integrated initiatives led by Tata Electronics and OSAT players are moving from construction to commissioning, with 10 semiconductor manufacturing and packaging projects approved involving ~ Rs.1.6 lakh crore of investments. With mobile manufacturing already scaling nearly 30x to Rs.5.45 lakh crore in FY25, Budget 2026 materially improves the long-term earnings and margin visibility for India’s EMS and semiconductor value chain.