Govt widens scope of India Semicon Mission 2.0, doubles ECMS outlay to Rs 40,000 cr

Mobile manufacturers industry body India Cellular and Electronics Association ICEA said that measures such as the five-year income tax exemption for foreign suppliers of capital equipment in bonded zones, the safe harbour framework for non-resident component warehousing, customs decriminalisation, and extended validity of advance rulings are expected to improve ease of doing business, reduce compliance friction, and strengthen investor confidence.

The government has announced the next edition of India Semiconductor Mission with a broad objective to promote chip manufacturing ecosystem, covering equipment, materials, indigenous designs and other components that are required to produce the high-tech components. Finance Minister Nirmala Sitharaman on Sunday, without announcing the outlay for the scheme, proposed that the India Semiconductor Mission 2.0 will also focus on industry-led research and training centres to develop technology and skilled workforce. ''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 fullstack Indian IP, and fortify supply chains,'' she said. Buoyed by the response to the electronics component manufacturing scheme (ECMS), Sitharaman almost doubled the outlay for it. ''The Electronics Components Manufacturing Scheme, launched in April 2025 with an outlay of Rs 22,919 crore, already has investment commitments at double the target. We propose to increase the outlay to Rs 40,000 crore to capitalise on the momentum,'' Sitharaman said. The Ministry of Electronics and IT has received 46 applications by January, totalling an investment proposal of Rs 54,567 crore and promising to generate direct employment for about 51,000 people. The scheme has seen participation from Samsung, Tata Electronics, Dixon, Foxconn's Yuzhan Technology, ATLbattery, Motherson Electronic, Kaynes, Amber Electronics, etc. The budget has made an attempt to reduce dependency on imports including access to high-level experts for electronics manufacturing. The move follows the impact of the recent geopolitical situation that threatened the local production of electronic products. Sitharaman proposed a five-year income tax exemption for any non-resident who provides capital goods, equipment, or tooling to a toll manufacturer in a bonded zone. ''To encourage a vast pool of global talent to work in India for a longer period of time, I propose to provide exemption to global (non-India sourced) income of a non-resident expert, for a stay period of 5 years under notified schemes,'' she said. Mobile manufacturers industry body India Cellular and Electronics Association (ICEA) said that measures such as the five-year income tax exemption for foreign suppliers of capital equipment in bonded zones, the safe harbour framework for non-resident component warehousing, customs decriminalisation, and extended validity of advance rulings are expected to improve ease of doing business, reduce compliance friction, and strengthen investor confidence. ICEA Chairman Pankaj Mohindroo said that the Budget 2026–27 reinforces the government's commitment to manufacturing-led growth, particularly in electronics and semiconductors, through continuity, scale, and targeted reforms. ''At the same time, key structural issues, especially inverted duty structures, unfinished MOOWR reforms, and tax-related uncertainties, need timely resolution to ensure cost competitiveness and speed of execution,'' Mohindroo said. Semiconductor industry body IESA President Ashok Chadak said the budget proposals of ISM 2.0 as a Semiconductor Policy focus and reforms-led manufacturing growth provide strong continuity and confidence to the industry. ''The expanded focus beyond fabs -- covering semiconductor equipment, materials, chemicals, design tools, R&D and training, and supply-chain resilience -- will help reduce import dependence and strengthen domestic capabilities and build an end-to-end ecosystem for a sustainable future,'' Chandak said. Broadband gear maker GX Group CEO Paritosh Prajapati said the increase in ECMS outlay signals that ECMS has moved from policy intent to real execution on the ground. ''The focus is no longer limited to assembling finished products but is shifting toward building a strong component ecosystem, which is critical in today's fragmented global supply chains,'' Prajapati said. He said the Budget proposal transitions India from assembled in India to engineered and manufactured in India for the world. Electronics manufacturing services firm DBG Technology Director Abhishek Garg said the focused thrust on electronics components manufacturing, skills development and targeted investment incentives will have a multiplier effect across the value chain. ''These measures are expected to reduce import dependence, improve supply-chain resilience and create high-quality employment opportunities,'' Garg said. The government's policy measures have led to multifold growth in the country's electronics manufacturing sector. In FY25, India's electronics production grew about 19 per cent to Rs 11.3 lakh crore, exports rose 37.5 per cent to Rs 3.3 lakh crore while imports grew 15 per cent to Rs 8.4 lakh crore on a year-on-year basis. Mobile phone production in the country is expected to reach about Rs 6.76 lakh crore, comprising exports over USD 30 billion, or about Rs 2.7 lakh crore, by the end of the current fiscal year. As of August 2025, 10 semiconductor manufacturing and packaging projects have been approved in the country with a cumulative investment of around Rs 1.6 lakh crore in six states.

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