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Union Budget 2026: In her ninth speech presenting the Union Budget, Finance Minister Nirmala Sitharaman announced the Semiconductor Mission 2.0, which builds on the success of the first generation to grow the country into a manufacturing hub for chips. Sitharaman has proposed an outlay of ₹40,000 crore for the Semiconductor Mission 2.0 to “capitalise on this momentum," allowing the industry to move beyond the nascent stage of establishing fabrication units to production of materials.

Addressing the Lok Sabha on Sunday, the Finance Minister said the ISM 2.0 will aim to deepen the layers of the semiconductor ecosystem, enabling stakeholders to fortify supply chains. This means streamlining the procurement of raw materials for fabrication units in India by solidifying supply chains with the global network.

The Semiconductor Mission 1.0, announced in late 2021, began with an allocated outlay of ₹76,000 crore, kicking off the development of the chip manufacturing sector in India and minimising reliance on global chip supplies to cater to an increasing demand for smartphones, appliances, and other electronics. As part of the mission, the government has approved 10 projects, in partnership with private players, to set up fabrication units in different parts of the country. Four of them are expected to begin chip production as early as this year.

The semiconductor demand in India is expected to grow significantly, accounting for 10 per cent of the global consumption, in the next five years. However, the current pace of development of fabrication units, which aligns with typical timelines of between 36 months and 60 months, a fast-track through additional funds could prove crucial to the vision of localised manufacturing.

The Finance Minister also increased the allocation designated for electronics manufacturing to ₹40,000 crore as part of the government's Electronics Component Manufacturing Scheme (ECMS). In addition to this, Sitharaman also encouraged designing Intellectual Property (IP) in the sector.