Finance Minister Nirmala Sitharaman on Sunday announced a Rs 40,000 crore allocation for the semiconductor sector while presenting the Union Budget 2026,
signalling a major push to strengthen India’s chip ecosystem. Unveiling India Semiconductor Mission 2.0, the Finance Minister said the new phase aims to build on the momentum generated by earlier initiatives and accelerate domestic capabilities in chip manufacturing and design. Sitharaman said the focus of the revamped mission will be on industry-led research, advanced training centres, and the development of equipment and materials aligned with a full-stack semiconductor ecosystem. “Semiconductor Mission 2.0 will focus on producing equipment and materials designed around full-stack Indian intellectual property,” she said, underscoring the government’s intent to reduce import dependence and position India as a global semiconductor hub. The announcement reinforces the government’s broader strategy to boost high-tech manufacturing, attract investment, and enhance supply-chain resilience in critical technologies. Strategic Importance in the Broader Context This Rs 40,000 crore infusion reinforces India's push for high-tech manufacturing amid global supply-chain disruptions, geopolitical tensions, and the rising demand for semiconductors in AI, electric vehicles, 5G/6G telecom, defence, and consumer electronics. The sector is pivotal to Prime Minister Narendra Modi's vision of Viksit Bharat (Developed India), with goals to meet a significant portion of domestic demand locally and position India as a major global hub by the 2030s.Pre-Budget expectations from industry bodies like IESA (India Electronics & Semiconductor Association) had called for continuity in incentives, faster disbursements, and expanded support beyond assembly to full-scale production and R&D. READ HERE: Union Budget 2026 Live Updates: Finance Minister Nirmala Sitharaman Arrives At Rashtrapati Bhavan Ahead Of Here Budget Speech ISM 2.0 addresses many of these by emphasizing indigenous IP, workforce skilling, and ecosystem integration.The move aligns with recent milestones: commercial semiconductor production is expected to begin in 2026 from approved projects (including partnerships like Tata Electronics-PSMC and Micron's ATMP facility), with long-term targets for 3nm chips by 2032 and 2nm by 2035. The government has also scaled up the Design Linked Incentive (DLI) scheme to nurture fabless startups, aiming for at least 50 such companies in the coming years. Market and Industry Reactions The announcement is expected to boost investor confidence in India's semiconductor ambitions. Stocks in related sectors—such as electronics manufacturing, defence, and tech infrastructure—could see positive sentiment, with analysts viewing this as a continuation of capex-driven growth in strategic areas. By doubling down on semiconductors through ISM 2.0, the Budget 2026 signals India's intent to transition from an import-dependent consumer to a design and manufacturing powerhouse in one of the world's most critical technologies. With sustained policy support, timely execution, and global partnerships, the initiative could transform India's position in the global semiconductor value chain over the next decade.
