Government Boosts Electronics Manufacturing with ₹9,000 Crore PLI Allocation for FY26
The government has announced a ₹9,000 crore allocation for the Production Linked Incentive (PLI) scheme in the Budget for FY26. This marks a 45% increase from the ₹6,200 crore allocated last year. While industry leaders have welcomed the increased focus on the electronics manufacturing sector, they have also expressed concerns regarding some gaps in the budgetary measures.
The ₹9,000 crore allocation is designed to drive large-scale electronics manufacturing in India, with a significant portion—₹8,885 crore—dedicated to this segment. Additionally, ₹115 crore has been set aside for the development of IT hardware. In 2023, the Cabinet had doubled the overall budget for this initiative to ₹17,000 crore, which is spread over six years to boost domestic production, particularly of IT hardware. This funding is part of the government’s efforts to make India a hub for electronics manufacturing, providing incentives to businesses that manufacture electronics domestically. By promoting such manufacturing within the country, the initiative is expected to reduce the reliance on imports and contribute to the growth of India’s economy, creating jobs and enhancing technological self-sufficiency.
While the increased funding has been largely welcomed by industry bodies such as the India Cellular and Electronics Association (ICEA) and the Indian Electronics and Semiconductor Association (IESA), some concerns remain. Notably, Ashok Chandak, President of IESA, highlighted that while the PLI scheme for electronics manufacturing is a positive step, the lack of a dedicated PLI scheme for electronics components could slow down the pace of value addition in India’s electronics ecosystem. “Although the PLI scheme’s enhanced allocation is encouraging, the absence of a similar scheme for electronics components means that India will continue to rely heavily on imports from countries like China and Hong Kong. This is an area that needs urgent attention,” Chandak said. The industry had earlier recommended a total outlay of around ₹40,000 crore to build a robust components and sub-assembly ecosystem, but this was not addressed in the current budget. Without such schemes, there are concerns that India may struggle to fully realise its potential as a global leader in electronics manufacturing.
In addition to the PLI scheme, the government has also allocated ₹7,000 crore to the Modified Programme for the Development of Semiconductors, a sharp increase from ₹3,816 crore in FY24. While this is seen as a step in the right direction, there is uncertainty surrounding the implementation of the India Semiconductor Mission 2.0 (Semicon 2.0), which was announced in September 2024. Semicon 2.0 is expected to play a crucial role in developing India’s semiconductor, display manufacturing, and design ecosystems. However, despite previous comments from Ashwini Vaishnaw, the Minister for Electronics and IT, there has been no further clarity on the specific plans or timelines for the mission’s rollout. “The Budget 2025 has been muted on the Semicon 2.0 initiative, and we remain unclear about its future,” Chandak added. “The announcement of an incentive for semiconductor manufacturing beyond $10 billion, which was made earlier, also remains vague. We hope more details will emerge soon.”
Despite the budget’s shortcomings in certain areas, the overall sentiment in the electronics manufacturing sector remains positive. The additional funds and the government’s commitment to further developing this crucial sector are seen as critical steps toward achieving greater self-reliance in technology and reducing dependency on foreign imports. Industry leaders are hopeful that future policy announcements will address the missing pieces of the puzzle, particularly in the areas of electronics components manufacturing and semiconductor development. The demand for a comprehensive approach that spans the entire electronics ecosystem is clear, and stakeholders are optimistic that the government will continue to refine its strategies to drive growth in this important sector. With the increased allocation for the PLI scheme and the rise in funding for semiconductor development, the government’s budget for FY26 reflects a stronger commitment to boosting India’s electronics manufacturing capabilities. While the lack of a specific focus on components manufacturing and a clearer roadmap for the India Semiconductor Mission 2.0 leaves some questions unanswered, the overall direction is encouraging for the sector’s long-term growth. As the budget’s provisions unfold, industry players will be watching closely for further policy developments that could unlock the full potential of India’s electronics and semiconductor industries.
