Budget 2026: Govt hikes ECMS outlay to Rs 40,000 crore to boost electronics component manufacturing
Industry executives say the higher allocation reflects a growing recognition that India cannot rely on assembly alone.
- Feb 1, 2026,
- Updated Feb 1, 2026 5:17 PM IST
Presenting the ninth consecutive Union Budget in Parliament on February 1, 2026, Finance Minister Nirmala Sitharaman announced a major push to strengthen India’s electronics manufacturing ecosystem, sharply raising the outlay for the Electronics Component Manufacturing Scheme (ECMS) to Rs 40,000 crore.
The move underscores the government’s intent to take India’s electronics ambitions beyond final assembly and build a deeper domestic supply chain.
The scheme was launched on May 1, 2025 with a fiscal outlay of Rs 22,919 crore and investment commitments targeting Rs 59,350 crore. The application window, initially open for three months from May 1, 2025, was later extended till September 30, 2025. In total, 249 applications were received, with anticipated investment commitments of Rs 1.15 lakh crore.
So far, the government has approved 46 projects under the scheme, with cumulative investments of Rs 54,567 crore. These are expected to generate direct employment for over 51,000 people and span 11 states, including Rajasthan, Jammu & Kashmir, Uttar Pradesh, Gujarat, Andhra Pradesh, Tamil Nadu, Haryana, Maharashtra, Goa, Karnataka and Madhya Pradesh.
Industry executives say the higher allocation reflects a growing recognition that India cannot rely on assembly alone.
“The increased allocation of the Electronics Components Manufacturing Scheme will help in accelerating the Make In India initiative into the next stage to expand the depth and breadth of the manufacturing supply chain. The expansion of core supporting component manufacturing will support a broader electronics ecosystem beyond smartphones to PCs, servers, robotics and more. That is the need of the hour to keep on increasing the value addition by supporting companies, local or overseas, to participate in the Indian manufacturing ecosystem. We still don’t have a robust ecosystem of tier-1 PCBs, MLCC capacitors / Inductors, sensors, advanced motors and other component manufacturers,” said Neil Shah, vice president at Counterpoint Research.
Earlier, the Secretary of the Ministry of Electronics & IT, S Krishnan, had outlined that the scheme focuses on components that India can already manufacture, as well as higher-value electronics. “We picked two kinds of components - where India already has a presence and electronic components which are more high-value such as display module, camera module. Some of these elements represent a fairly significant proportion of the bill of materials.”
Under ECMS, the government is prioritising domestic production of high-value components that currently account for the bulk of India’s electronics imports. The scheme spans four categories: sub-assemblies, bare components, selected bare components and supply chain ecosystems, and capital equipment. Bare components include passive parts such as capacitors and resistors, while selected bare components are project-specific parts.
Approvals have already been granted for PCBs (including HDIs), capacitors, connectors, enclosures for mobile and IT hardware devices, and Li-ion cells for digital applications. In the sub-assembly category, approvals include Dixon Electroconnect Private Limited for optical transceivers (SFP), Kunshan Q Tech Microelectronics (India) Private Limited for camera module sub-assemblies, and Samsung Display Noida Private Limited for display module sub-assemblies.
Industry participants believe the expanded allocation could speed up India’s transition from an assembly-led hub to a more integrated manufacturing base.
“The government’s decision to raise the ECMS outlay in the 2026 Union Budget reflects the strong industry response and early success of the scheme, driven by a surge in applications and growing confidence in India’s electronics manufacturing capabilities. Under the expanded allocation, focus is expected to remain on high-value components such as PCBs, camera modules, displays, etc. The increased funding will enable wider participation, accelerate ecosystem development, deepen localisation and reduce import dependence, strengthening India’s role in the global electronics value chain,” said Rahul Sharma, co-founder of Bhagwati Products Limited, who has also applied under the scheme.
India’s electronics production has risen from Rs 1.9 lakh crore in 2014–15 to Rs 11.3 lakh crore in 2024–25, driven largely by smartphone assembly, computer hardware and telecom equipment. However, domestic value addition, the share of locally made parts and sub-assemblies, continues to hover between 18% and 20% of output, roughly half of China’s or South Korea’s 40%.
According to Prabhu Ram, vice president at CyberMedia Research, the expanded ECMS allocation, alongside India Semiconductor Mission 2.0, signals a more comprehensive strategy.
“This additional outlay is expected to steer India’s growth across upstream value chains, from core component production to deeper integration with global value chains and higher component exports,” Ram said.
He added that together with ISM 2.0, the approach reflects a holistic plan for the semiconductor and electronics ecosystem, covering materials and equipment, full-stack design, front-end fabs, back-end assembly and testing, and critical chip production to meet domestic demand while boosting exports.
Track live Budget updates, breaking news, expert opinions and in-depth analysis only on BusinessToday.in
Presenting the ninth consecutive Union Budget in Parliament on February 1, 2026, Finance Minister Nirmala Sitharaman announced a major push to strengthen India’s electronics manufacturing ecosystem, sharply raising the outlay for the Electronics Component Manufacturing Scheme (ECMS) to Rs 40,000 crore.
The move underscores the government’s intent to take India’s electronics ambitions beyond final assembly and build a deeper domestic supply chain.
The scheme was launched on May 1, 2025 with a fiscal outlay of Rs 22,919 crore and investment commitments targeting Rs 59,350 crore. The application window, initially open for three months from May 1, 2025, was later extended till September 30, 2025. In total, 249 applications were received, with anticipated investment commitments of Rs 1.15 lakh crore.
So far, the government has approved 46 projects under the scheme, with cumulative investments of Rs 54,567 crore. These are expected to generate direct employment for over 51,000 people and span 11 states, including Rajasthan, Jammu & Kashmir, Uttar Pradesh, Gujarat, Andhra Pradesh, Tamil Nadu, Haryana, Maharashtra, Goa, Karnataka and Madhya Pradesh.
Industry executives say the higher allocation reflects a growing recognition that India cannot rely on assembly alone.
“The increased allocation of the Electronics Components Manufacturing Scheme will help in accelerating the Make In India initiative into the next stage to expand the depth and breadth of the manufacturing supply chain. The expansion of core supporting component manufacturing will support a broader electronics ecosystem beyond smartphones to PCs, servers, robotics and more. That is the need of the hour to keep on increasing the value addition by supporting companies, local or overseas, to participate in the Indian manufacturing ecosystem. We still don’t have a robust ecosystem of tier-1 PCBs, MLCC capacitors / Inductors, sensors, advanced motors and other component manufacturers,” said Neil Shah, vice president at Counterpoint Research.
Earlier, the Secretary of the Ministry of Electronics & IT, S Krishnan, had outlined that the scheme focuses on components that India can already manufacture, as well as higher-value electronics. “We picked two kinds of components - where India already has a presence and electronic components which are more high-value such as display module, camera module. Some of these elements represent a fairly significant proportion of the bill of materials.”
Under ECMS, the government is prioritising domestic production of high-value components that currently account for the bulk of India’s electronics imports. The scheme spans four categories: sub-assemblies, bare components, selected bare components and supply chain ecosystems, and capital equipment. Bare components include passive parts such as capacitors and resistors, while selected bare components are project-specific parts.
Approvals have already been granted for PCBs (including HDIs), capacitors, connectors, enclosures for mobile and IT hardware devices, and Li-ion cells for digital applications. In the sub-assembly category, approvals include Dixon Electroconnect Private Limited for optical transceivers (SFP), Kunshan Q Tech Microelectronics (India) Private Limited for camera module sub-assemblies, and Samsung Display Noida Private Limited for display module sub-assemblies.
Industry participants believe the expanded allocation could speed up India’s transition from an assembly-led hub to a more integrated manufacturing base.
“The government’s decision to raise the ECMS outlay in the 2026 Union Budget reflects the strong industry response and early success of the scheme, driven by a surge in applications and growing confidence in India’s electronics manufacturing capabilities. Under the expanded allocation, focus is expected to remain on high-value components such as PCBs, camera modules, displays, etc. The increased funding will enable wider participation, accelerate ecosystem development, deepen localisation and reduce import dependence, strengthening India’s role in the global electronics value chain,” said Rahul Sharma, co-founder of Bhagwati Products Limited, who has also applied under the scheme.
India’s electronics production has risen from Rs 1.9 lakh crore in 2014–15 to Rs 11.3 lakh crore in 2024–25, driven largely by smartphone assembly, computer hardware and telecom equipment. However, domestic value addition, the share of locally made parts and sub-assemblies, continues to hover between 18% and 20% of output, roughly half of China’s or South Korea’s 40%.
According to Prabhu Ram, vice president at CyberMedia Research, the expanded ECMS allocation, alongside India Semiconductor Mission 2.0, signals a more comprehensive strategy.
“This additional outlay is expected to steer India’s growth across upstream value chains, from core component production to deeper integration with global value chains and higher component exports,” Ram said.
He added that together with ISM 2.0, the approach reflects a holistic plan for the semiconductor and electronics ecosystem, covering materials and equipment, full-stack design, front-end fabs, back-end assembly and testing, and critical chip production to meet domestic demand while boosting exports.
Track live Budget updates, breaking news, expert opinions and in-depth analysis only on BusinessToday.in