Union Budget 2026-27: Govt Raises Electronics Component Outlay to Rs 40,000 Crore and Launches India Semiconductor Mission 2.0

Giving a strong push to ‘Make in India’ and domestic manufacturing, Finance Minister Nirmala Sitharaman on Sunday announced the launch of the India Semiconductor Mission (ISM) 2.0 and increased the outlay for electronics component manufacturing to Rs 40,000 crore, aimed at strengthening local production, innovation and supply chains.

Presenting the Union Budget 2026–27, Sitharaman said India’s Semiconductor Mission 1.0 had expanded the country’s semiconductor capabilities and that the next phase would build on these foundations. ISM 2.0 will focus on producing equipment and materials, developing full-stack Indian intellectual property, and strengthening semiconductor supply chains.

She also highlighted the need for capacity-building in the sector, saying, “We will also focus on industry-led research and training centres to develop technology and a skilled workforce. The Electronics Components Manufacturing Scheme, launched in April 2025 with an outlay of Rs 22,999 crore, already has investment commitments at double the targets.”

SME Growth Fund And Textile Sector Push

As part of measures to boost employment and entrepreneurship, the Union Budget 2026–27 proposed a dedicated Rs 10,000 crore SME growth fund to help create future jobs by incentivising enterprises based on select criteria.

Finance Minister also announced a comprehensive package for the labour-intensive textile sector through an integrated programme with five key components. The first component is the National Fibre Scheme, which aims to achieve self-reliance in natural fibres such as silk, wool and jute, along with man-made and new-age industrial fibres.

The second component, the Textile Expansion and Employment Scheme, is designed to modernise traditional textile clusters by offering capital support for machinery, technology upgrades, and common testing and certification facilities.

The third element is the National Handloom and Handicraft Programme (NHHP), which seeks to integrate and strengthen existing schemes while providing targeted support to weavers and artisans.

Rare Earth Corridors In Mineral-Rich States

The Budget also highlighted the government’s focus on strategic minerals. A government scheme for rare-earth permanent magnets was launched in November 2025, and further steps have now been outlined to strengthen this sector.

Announcing a major regional push, Sitharaman said, “We now propose to support the mineral-rich states of Odisha, Kerala, Andhra Pradesh and Tamil Nadu to establish dedicated rare earth corridors.”

The measures announced in the Budget signal a broader strategy to deepen domestic manufacturing, strengthen supply chains in critical sectors, and position India as a key global hub for electronics, semiconductors and advanced materials.

Also Read: Union Budget 2026–27: FM Sitharaman Outlines Three ‘Kartavyas’ To Speed Up Growth And Empower The Disadvantaged