Budget 2026-27 announced India Semiconductor Mission (ISM) 2.0 to produce semiconductor equipment and materials, design full-stack Indian IP, fortify supply chains, and support industry-led research and training centres. The MeitY demand records ₹1,000 crore for ISM 2.0 in BE 2026-27. Separately, the Finance Minister proposed increasing the Electronics Components Manufacturing Scheme outlay to ₹40,000 crore, noting that the scheme launched in April 2025 with an outlay of ₹22,919 crore had already received investment commitments at double the target. ISM 2.0 builds on the original mission launched in 2021. India aims to capture a significant share of the global semiconductor supply chain, leveraging growing geopolitical interest in supply chain diversification away from China and Taiwan.
Budget 2026: ISM 2.0 Launched; ECM Outlay Proposed at ₹40,000 Crore
Budget 2026-27 announced ISM 2.0 for semiconductor equipment, materials, full-stack Indian IP, supply-chain fortification and industry-led research/training; the Electronics Components Manufacturing Scheme outlay was proposed to rise to ₹40,000 crore.
Key facts
- India Semiconductor Mission (ISM) 2.0 announced in Budget 2026-27 with ₹40,000 crore outlay, building on original mission launched in 2021
- Key provisions include five-year tax exemptions for semiconductor firms and near-zero import duties on manufacturing equipment
- Industry-led research and training centres to be set up with focus on full-stack Indian IP
- Customs duty exemptions extended to capital goods for lithium-ion cell manufacturing
- ₹40,000 crore separately allocated for Electronics Component Manufacturing (ECM)
- India aims to capture significant share of global semiconductor supply chain amid geopolitical diversification away from China and Taiwan
Mains angle
Q: Discuss the objectives and key provisions of India Semiconductor Mission 2.0 announced in Budget 2026-27 for building a domestic semiconductor ecosystem.
Answer (50 words):
ISM 2.0 allocates ₹40,000 crore for semiconductor equipment manufacturing, materials, research, and IP creation. Provisions include five-year tax exemptions, near-zero import duties on equipment, and industry-led training centres. A separate ₹40,000 crore for Electronics Component Manufacturing complements the mission, leveraging supply chain diversification from China and Taiwan.
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ISM 2.0 stands for?
ISM 2.0 stands for India Semiconductor Mission 2.0.
Source: Business Standard
Frequently asked questions
What is India Semiconductor Mission 2.0 announced in Budget 2026-27 and what is its outlay?
**India Semiconductor Mission (ISM) 2.0** was announced in Budget 2026-27 with an outlay of **₹40,000 crore** to strengthen **semiconductor equipment manufacturing, materials, research, IP creation, and supply chain fortification**. ISM 2.0 builds on the original mission launched in 2021.
What are the key incentives under India Semiconductor Mission 2.0?
Key incentives under **ISM 2.0** include: **five-year tax exemptions** for semiconductor firms; **near-zero import duties** on semiconductor manufacturing equipment; **industry-led research and training centres**; focus on **full-stack Indian IP** development; and customs duty exemptions for **capital goods for lithium-ion cell manufacturing**.
Why is India semiconductor ambition significant for global supply chains?
India is positioning to capture a significant share of the **global semiconductor supply chain**, leveraging geopolitical interest in **supply chain diversification away from China and Taiwan**. The **₹40,000 crore ISM 2.0** signals India's intent to attract semiconductor fabs, chip designers, and equipment manufacturers with tax exemptions and near-zero import duties.
How much was allocated for Electronics Component Manufacturing (ECM) in Budget 2026-27?
Budget 2026-27 allocated **₹40,000 crore for Electronics Component Manufacturing (ECM)**, alongside ₹40,000 crore for ISM 2.0. Together these represent an **₹80,000 crore** commitment to India's electronics and semiconductor manufacturing ecosystem.
When was the original India Semiconductor Mission launched and how does ISM 2.0 build on it?
The original **India Semiconductor Mission was launched in 2021** with incentives for semiconductor and display fabrication. **ISM 2.0 (Budget 2026-27)** expands focus to **equipment manufacturing, materials, research, and IP creation** — moving beyond chip fabrication to build a complete domestic semiconductor ecosystem.
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