Budget 2026: Semiconductor push deepens as Centre doubles outlay to Rs 8,000 crore

Key schemes in the semiconductor sector has received major boost

• Government ups semiconductor spending to Rs 8,000 crore for FY2026-27
• India Semiconductor Mission 2.0 gets Rs 1,000 crore allocation
• Electronics Components Manufacturing Scheme funding jumps to Rs 1,500 crore

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The government has significantly stepped up its semiconductor spending in FY2026-27, allocating Rs 8,000 crore for the Modified Programme for Development of Semiconductors and Display Manufacturing Ecosystem, compared with Rs 4,300 crore in the previous year.

According to budget documents, funding for compound semiconductors, silicon photonics, sensors, and OSAT facilities has been raised to Rs 5,000 crore from Rs 3,175 crore, while the allocation for setting up semiconductor fabs has doubled to Rs 2,000 crore.

The modernisation of the Semiconductor Laboratory (SCL) in Mohali has received a major boost, with funding jumping from Rs 20 crore to Rs 900 crore.

In addition, the newly introduced India Semiconductor Mission 2.0 has been allotted Rs 1,000 crore.

A major new push is also visible in electronics components manufacturing.

The Electronics Components Manufacturing Scheme has received ₹1,500 crore in FY2026-27, compared with just Rs 6.8 crore in the previous year.

In contrast, the Production Linked Incentive (PLI) scheme for large-scale electronics manufacturing has seen a sharp cut to Rs 1,345 crore from Rs 6,960 crore last year.

Earlier in the day, Finance Minister Nirmala Sitharaman announced that the government will be coming up with ISM 2.0 and that the component PLI scheme outlay has been increased to Rs 40,000 crore.

"The Finance Minister’s statement on ISM 2.0 is a very important signal for India’s semiconductor ambitions. It marks a clear evolution from a fab-centric approach to a full value-chain strategy, covering equipment, materials, Indian IP, and supply-chain resilience ( chemicals, Gases, materials, etc ). This is critical if India is to move from being a participant to a structural player in the global semiconductor ecosystem," IESA president Ashok Chandak said.