Union Budget 2026 unveils India Semiconductor Mission 2.0, boosts outlay

The Union Budget has announced a major expansion of India’s semiconductor strategy with the launch of India Semiconductor Mission (ISM) 2.0, aimed at strengthening domestic capabilities across the semiconductor value chain. Union Finance Minister Nirmala Sitharaman said on Sunday (February 1) that the new phase will build on the foundation laid under ISM 1.0 and respond to the growing global and strategic importance of chips.

Under ISM 2.0, the government plans to move beyond fabrication alone and focus on producing semiconductor equipment and critical materials within the country. The mission will also prioritise designing full-stack Indian IT solutions, integrating hardware and software development while reducing dependence on global supply chains. Strengthening and fortifying semiconductor supply chains has been identified as a key objective amid continuing global disruptions.

To support this expanded vision, Sitharaman proposed increasing the outlay for the Electronics Components Manufacturing Scheme to Rs 40,000 crore. The enhanced allocation is intended to capitalise on the momentum generated by the first phase of the semiconductor mission and attract further private investment into component manufacturing.

A significant emphasis under ISM 2.0 will be on industry-led research and training centres to build a skilled semiconductor workforce. These centres are expected to bridge gaps between academia and industry, supporting innovation and long-term capacity building.

The finance minister also said the mission will support mineral-rich states such as Odisha, Kerala, Andhra Pradesh and Tamil Nadu, which are critical to India’s electronics and materials ecosystem. Through ISM 2.0, the government aims to position India as a resilient and competitive player in the global semiconductor landscape.