Budget 2026: India Semiconductor Mission 2.0 Launched With ₹1,000 Crore to Push Chip Manufacturing

Finance Minister Nirmala Sitharaman announced the launch of the second phase of the India Semiconductor Mission (ISM) with a ₹1,000 crore budget for FY27, while presenting the Union Budget 2026 on Sunday.

"ISM 1.0 expanded India's semiconductor sector capabilities. Building on this, we will launch ISM 2.0 to produce equipment and materials, design full-stack Indian IP, and fortify supply chains. We will also focus on industry-led research and training centres to develop technology and skill workforce," she said.

Also read: No Fireworks for Auto, but Some Fuel for EVs and Infrastructure

Sitharaman, in her speech, said that for the Union Budget 2026, the Centre has chosen the path of reforms over rhetoric. She added that India will continue to take steps towards becoming a "Viksit Bharat."

Notably, Union Electronics and Information Technology Minister Ashwini Vaishnaw had earlier this month said that India is on track to begin commercial semiconductor chip production in 2026, meeting the timeline set under the first India Semiconductor Mission launched in January 2022.

Also read: Budget 2026-27: Customs Duty Exemption Extended on Lithium-Ion Cell Manufacturing

The Union Budget 2026 is Sitharaman's ninth consecutive Budget, bringing her closer to former Prime Minister Morarji Desai's record of 10 budgets.

"The strong push for electronics and advanced manufacturing highlighted by the ₹40,000 crore outlay under the Electronics Components Manufacturing Scheme and the launch of India Semiconductor Mission 2.0 focused on equipment and material design will significantly strengthen domestic value chains and support the auto components sector. Additionally, the government’s proposal to establish dedicated rare-earth corridors will help secure supplies of critical materials by promoting research and mining," Ravi Mehra, MD, Uno Minda, said in a statement.

Commenting on Union Budget 2026, Anish Shah, Group CEO & MD, Mahindra Group said: "The emphasis on frontier and strategic manufacturing sectors, including the launch of enhanced schemes such as Biopharma Shakti and the Semiconductor Mission (ISM 2.0), reflects a clear commitment to building global-scale manufacturing capabilities. Strengthening domestic value chains and reducing critical import dependencies will be key to India’s future industrial leadership."