ISM 2.0 to act as a semiconductor push for future: IESA

Ashok Chandak, President, IESA, presented his views on the Union Budget 2026-2027 today. 

The Union Budget announced today builds strongly on the progress achieved under the India Semiconductor Mission (ISM), ECMS, PLI, DLI, C2S and other ESDM initiatives over the past year. India has clearly moved from aspiration to credibility and is now recognised as a serious, investible destination for electronics and semiconductors. As the ecosystem enters a critical phase of execution and scale-up, the Budget rightly sustains policy momentum.

Announcement of ISM 2.0 as a semiconductor push
The Finance Minister’s statement on ISM 2.0 is a very important signal for India’s semiconductor ambitions. It marks a clear evolution from a fab-centric approach to a full value-chain strategy, covering equipment, materials, Indian IP, and supply-chain resilience (chemicals, gases, materials, etc ). This is critical if India is to move from being a participant to a structural player in the global semiconductor ecosystem.

For India, this means the ambition is no longer limited to manufacturing chips, but to own capabilities across design, tools, materials, and upstream inputs—areas that define long-term competitiveness, sustainable future and strategic autonomy. Though, The quantum of funds for ISM 2.0 to be clarified. 

Electronics
The significant enhancement of the Electronic Component Manufacturing Scheme to ₹40,000 crore as this scheme has received strong response. A unique 2% profit margin support for electronic manufacturers, Components Warehousing, Logistics Hubs,  to enhance their global competitiveness. 

The mention of value addition, customs simplifications, focused support for MSMEs, capital goods, ease of doing business, and reforms-led manufacturing growth provide strong continuity and confidence to the electronics industry.

Equally important is the emphasis on technology adoptions through industry-led research and training, job creation, and strategic initiatives focus such as AI Mission, Quantum Mission, and RDI funding. 

Benefits for batteries, energy storage, solar sector, rare earth support, infrastructure measures, ease of doing business, customs clearance procedures, etc., are also positive aspects for ESDM. 

The increased spend allocation for 2026-27 is close to Rs. 8000 crore. That includes Rs. 2,000 crore for fabs, Rs. 5,000 crore for OSATs, and Rs. 900 cr for SCL modernization. ECMS sector gets Rs. 1,500 crore allocation.

Going forward, it important to address ambition vs. execution, private sector readiness, bridging talent gap, and international tie-ups. 

Taken together, these measures will consolidate recent gains, accelerate execution of approved projects, deepen domestic value addition, and further establish India as a globally competitive and trusted hub for electronics and semiconductor manufacturing—while laying a strong foundation to meet a significant share of domestic semiconductor demand through local design and manufacturing in the years ahead.

The semiconductor and electronics sector support mentioned in Union Budget is a direct result of MeitY’s sustained and applied efforts in working closely with industry to move from vision to execution. IESA applauds Meity officials for this achievement and enablement of the semiconductor and electronics sectors growth.