Union Budget 2026: India Semiconductor Mission 2.0 Targets High-Value Chip Ecosystem

India Semiconductor Mission 2.0: A Strategic Upgrade in Budget 2026

Union Finance Minister Nirmala Sitharaman has unveiled India Semiconductor Mission (ISM) 2.0 in the Union Budget 2026, marking a strategic transition in India’s electronics policy. The new phase signals a move away from assembly-driven manufacturing towards high-value semiconductor intellectual property, advanced materials, equipment manufacturing, and resilient domestic supply chains.

Key Announcements Under ISM 2.0

The Finance Minister announced that ISM 2.0 will build on the foundation laid by the first phase of the mission. The renewed focus will be on semiconductor equipment manufacturing, critical materials, and the development of full-stack Indian intellectual property across the chip value chain.

Alongside ISM 2.0, the Budget proposed the removal of customs duty on video game manufacturing parts from April 1, providing a boost to domestic electronics and gaming hardware production. Customs duty exemptions were also announced for television equipment, cameras, and related instruments imported by foreign film and television crews for shooting in India, supporting the creative and media economy.

Moving Beyond Assembly-Led Manufacturing

Addressing Parliament, the Finance Minister emphasised that ISM 2.0 will prioritise industry-led research, training centres, and workforce development. The mission aims to build capabilities across semiconductor design, materials, fabrication equipment, and research and development. This integrated approach is intended to reduce strategic import dependence and position India as a credible participant in global semiconductor supply chains.

Industry Response and Technology Sector Outlook

Electronics and technology industry leaders have welcomed the policy shift. Companies across smartphones, consumer electronics, and industrial technology sectors noted that the emphasis on design-led incentives, localisation of components, and semiconductor-linked supply chains could help Indian firms move up the value chain. Industry executives believe ISM 2.0 can enable sustained innovation, create high-skilled employment, and support the development of affordable, India-designed technologies.

Important Facts for Exams

• India Semiconductor Mission 2.0 focuses on semiconductor materials, equipment, IP, and R&D.

• Customs duty on video game manufacturing parts will be removed from April 1.

• Duty exemption announced for film and TV shooting equipment imported by foreign crews.

• Semiconductors are a strategic sector for economic and national security.

Infrastructure and Manufacturing Ecosystem Support

The Budget also reinforced infrastructure-led growth through higher capital expenditure, which is expected to benefit electronics clusters and manufacturing corridors. Industry bodies highlighted that public investment, combined with expanded electronics component manufacturing schemes, will strengthen the semiconductor and electronics ecosystem.

Taken together, ISM 2.0 and allied Budget measures represent a clear policy intent: to accelerate localisation, improve technological depth, and support India’s ambition to emerge as a global hub for advanced electronics and semiconductor manufacturing.