Big push for India’s electronics sector in the Union Budget 2026-27 presented on February 1, 2026! Finance Minister Nirmala Sitharaman announced a massive hike in the outlay for the Electronics Components Manufacturing Scheme (ECMS) from ₹22,919 crore (launched in April 2025) to ₹40,000 crore, nearly doubling the allocation to capitalize on strong investor momentum. This comes alongside the launch of India Semiconductor Mission (ISM) 2.0 with ₹1,000 crore for FY 2026-27, focusing on equipment, materials, full-stack Indian IP, and supply chain fortification.
For manufacturing hubs like Bengaluru (India’s Silicon Valley) and Chennai (emerging electronics powerhouse), this means faster growth in component ecosystem, job creation, reduced imports, and stronger global competitiveness – potentially attracting billions in new investments and making India a key player in global electronics value chains.
Know Complete Details of the Electronics Components Scheme Hike in Budget 2026
The ECMS, notified in April 2025 with an initial six-year outlay of ₹22,919 crore, already saw investment commitments double the target (proposals worth over ₹1.1 lakh crore). Key announcements from the Budget speech:
- New Outlay: Increased to ₹40,000 crore to sustain momentum and deepen domestic capabilities for components like printed circuit boards (PCBs), camera modules, displays, batteries, and more.
- ISM 2.0 Launch: Builds on ISM 1.0; focuses on semiconductor equipment/materials production, Indian IP design, supply chain resilience, and industry-led research/training centres.
- ₹1,000 Crore Provision: For ISM 2.0 in FY 2026-27 to develop technology and skilled workforce.
- Other Electronics Measures: Safe harbour provisions for IT component warehousing (2% profit margin), tax exemptions for foreign capital goods suppliers to electronics manufacturers, and basic customs duty exemption on parts for microwave ovens.
- Goal: Strengthen ₹10 lakh crore+ electronics manufacturing ecosystem by 2030-31; reduce 90%+ import dependence on key components like PCBs.
The hike signals continuity in ‘Make in India’ and ‘Atmanirbhar Bharat’ for high-tech sectors.
What It Means for Manufacturing Hubs in Bengaluru & Chennai
- Bengaluru (Electronics Capital):
- Already home to Foxconn, Dixon Technologies, and many EMS players; increased outlay will accelerate component suppliers for mobiles, laptops, EVs, and defence electronics.
- Expected: More ancillary units in Electronics City, Peenya, Bommasandra; thousands of skilled jobs in assembly/testing/IP design.
- Benefits: Faster supply chain for IT giants (Infosys, Wipro ecosystem), reduced lead times, cost savings; positions Bengaluru as a global electronics R&D hub.
- Chennai (Rising Electronics Powerhouse):
- Strong in auto-electronics, consumer durables, and mobile manufacturing (Foxconn, Samsung, Pegatron clusters in Sriperumbudur/Oragadam).
- Hike will boost PCB, display, and battery component makers; attract new investments in EV/renewable electronics.
- Benefits: Strengthens “Detroit of India” for electronics; better integration with Chennai’s ports for exports; job growth in manufacturing and testing.
- Broader South Impact: Complements high-speed rail corridors (Hyderabad-Bengaluru-Chennai) announced in the same Budget – faster logistics between IT/electronics clusters.
- Investment & Jobs: Could attract ₹50,000-₹1 lakh crore additional commitments; generate 1-2 lakh direct/indirect jobs in South hubs alone.
- Challenges & Nuances: Land acquisition, skilled labour shortage, power/water needs; focus on indigenous tech to avoid import traps.
This ₹40,000 crore push accelerates India’s electronics journey – big opportunities for Bengaluru and Chennai!
Excited about the electronics boom in your city? Which component manufacturing area will grow fastest? Comment below and share your views!
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