Finance Minister Nirmala Sitharaman announced ISM 2.0 and increased the Electronic Component Manufacturing Scheme outlay to ₹40,000 crore in Budget 2026–27.
She said these schemes are already creating jobs and supporting economic growth.
The initiatives aim to strengthen India’s semiconductor and electronics manufacturing ecosystem.
Finance Minister Nirmala Sitharaman, presenting the Union Budget 2026–27, proposed the second phase of the India Semiconductor Mission (ISM 2.0) and announced an increase in the budget outlay for the Electronic Component Manufacturing Scheme to ₹40,000 crore
While addressing the House, she said that these schemes are already delivering positive results, particularly in terms of employment generation and economic growth.
3 February 2026
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"India Semiconductor Mission (ISM) 1.0 expanded India’s semiconductor sector capabilities. Building on this, we will launch ISM 2.0 to produce equipment and materials, design full stack Indian IP, and fortify supply chains. We will also focus on industry led research and training centres to develop technology and skilled workforce," said FM.
The Electronics Components Manufacturing Scheme, launched in April 2025 with an outlay of ₹22,919 crore, has already received investment commitments worth more than double its target. To capitalise on this momentum, the government has proposed increasing the outlay to ₹40,000 crore in the Union Budget 2026–27.
Ashwini Vaishnaw, Minister of Electronics and Information Technology, has welcomed the Union Budget 2026–27, calling it a “great budget” for its strong focus on manufacturing, particularly in semiconductors and electronic components.
He also expressed his gratitude to the Finance Minister and her team for prioritising data centres, which he said will serve as critical infrastructure in the coming years for India’s digital journey, while also contributing significantly to employment generation.
Leaders across both industries have also expressed their delight at the increased budget outlay and the launch of the next phase of the Indian Semiconductor Mission (ISM 2.0).
"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 )," said Ashok Chandak , President, IESA.
He also mentioned that the expanded focus beyond fabs;covering semiconductor equipment, materials, chemicals, design tools, R&D and trainings, and supply-chain resilience will help reduce import dependence and strengthen domestic capabilities and build end to end ecosystem for sustainable future.
The India Semiconductor Mission was launched in December 2021 with an initial outlay of about ₹76,000 crore to build a semiconductor and display manufacturing ecosystem in India while the Electronics Component Manufacturing Scheme was launched in April 2025 with an initial outlay around ₹22,919 crore.
