Industry Urges Strong Budget Support For India Semiconductor Mission

New Delhi, Jan 22 (KNN) As Finance Minister Nirmala Sitharaman readies the Union Budget 2026, India’s semiconductor sector hopes to get more fiscal and policy support.

The expectations stem from the fact that government is according top priority to developing chip manufacturing ecosystem in the country and making it globally competitive as part of India Semiconductor Mission, reported The Economic Times.

Union IT Minister Ashwini Vaishnaw recently announced that India aims to rank among the world’s top four semiconductor manufacturing nations by 2032, with Micron, Tata, Kaynes, and CG Semi set to start commercial production in 2026.

Policy and Budget Support Key

Industry experts note that Budget 2026 will determine whether ISM evolves from a subsidy-led scheme into a long-term industrial strategy, anchoring fabs, packaging, design ecosystems, and global supply chains in India.

Sujay Shetty, Partner, PwC India, highlighted India’s rising domestic semiconductor demand, projected to reach nearly 10 percent of global consumption over the next five years, offering strong opportunities for local manufacturing.

He emphasised that continued policy support, similar to ISM 1.0, is essential. Timely disbursement of incentives from the Centre and state governments will be critical as projects enter the 36–60 month construction phase.

He added that expanding funding under the Design Linked Incentive (DLI) scheme could help India leverage its growing design talent, especially in Application Specific Integrated Circuits (ASICs) and Graphics Processing Unit (GPU) chipsets.

Semiconductor manufacturing remains highly capital-intensive, and industry participants expect the FY27 Budget to prioritise direct capital subsidies over long-term operating support like power or water concessions. Shetty noted that upfront financial incentives are crucial given thin margins and high risks.

Massive Investments Underway

These projects are among India’s largest industrial investments in decades, including Micron’s ATMP facility in Gujarat at Rs 22,500 crore and the Tata Electronics fab at Dholera, in partnership with Taiwan’s PSMC, at Rs 91,000 crore. 

Additional assembly and packaging units across Gujarat, Assam, Uttar Pradesh, Odisha, and Punjab collectively represent tens of thousands of crores in committed capital.

(KNN Bureau)