Union Budget 2026: ECMS Outlay Raised to Rs 40,000 Crore to Deepen India’s Electronics Manufacturing

Presenting her ninth straight Union Budget in Parliament on February 1, 2026, Finance Minister Nirmala Sitharaman unveiled a strong push to reinforce India’s electronics manufacturing ecosystem, announcing a sharp increase in funding for the Electronics Component Manufacturing Scheme (ECMS) to Rs 40,000 crore.

The decision highlights the government’s broader strategy to move India’s electronics sector beyond final-stage assembly and develop a stronger, more self-reliant domestic supply chain.

The ECMS was rolled out on May 1, 2025 with an initial financial allocation of Rs 22,919 crore and targeted investment commitments of Rs 59,350 crore. While the application window was originally open for three months from May 1, 2025, it was later extended until September 30, 2025. During this period, the scheme received 249 applications, with proposed investments amounting to Rs 1.15 lakh crore.

To date, 46 projects have been approved under the scheme, attracting cumulative investments of Rs 54,567 crore. These projects are expected to create direct employment for more than 51,000 people and are spread across 11 states, including Rajasthan, Jammu & Kashmir, Uttar Pradesh, Gujarat, Andhra Pradesh, Tamil Nadu, Haryana, Maharashtra, Goa, Karnataka and Madhya Pradesh.

Industry leaders note that the enhanced allocation signals a clear acknowledgement that long-term growth cannot be driven by assembly operations alone.

“The higher allocation for the Electronics Components Manufacturing Scheme will help propel the Make in India initiative into its next phase by expanding the depth and breadth of the manufacturing supply chain. Strengthening core component manufacturing will support a wider electronics ecosystem, extending beyond smartphones to PCs, servers, robotics and other segments. This is essential to steadily increase value addition by enabling both domestic and global companies to participate in India’s manufacturing ecosystem. At present, India still lacks a strong base of tier-1 PCBs, MLCC capacitors, inductors, sensors, advanced motors and several other critical components,” said Neil Shah, vice president at Counterpoint Research.

Earlier, S Krishnan, Secretary at the Ministry of Electronics and Information Technology, had explained that the scheme focuses on components that India already manufactures, along with higher-value electronics segments. “We identified two categories of components—those where India already has some presence, and higher-value electronic components such as display modules and camera modules. Many of these items account for a significant share of the overall bill of materials,” he said.

Under the ECMS framework, the government is prioritising domestic manufacturing of high-value components that currently form a large portion of India’s electronics imports. The scheme covers four broad categories: sub-assemblies, bare components, selected bare components and supply chain ecosystems, and capital equipment. Bare components include passive parts like capacitors and resistors, while selected bare components are project-specific.

Approvals have already been issued for printed circuit boards (including HDIs), capacitors, connectors, enclosures for mobile and IT hardware devices, and lithium-ion cells for digital applications. In the sub-assembly segment, approved projects include Dixon Electroconnect Private Limited for optical transceivers (SFP), Kunshan Q Tech Microelectronics (India) Private Limited for camera module sub-assemblies, and Samsung Display Noida Private Limited for display module sub-assemblies.

Market participants believe the larger budgetary support could accelerate India’s shift from an assembly-focused hub to a more integrated electronics manufacturing destination.

“The government’s move to increase the ECMS allocation in the Union Budget 2026 reflects strong industry interest and the early momentum of the scheme, supported by a high number of applications and rising confidence in India’s electronics manufacturing potential. With the expanded funding, the emphasis is likely to remain on high-value components such as PCBs, camera modules and displays. The additional resources should encourage broader participation, speed up ecosystem development, deepen localisation and lower import dependence, thereby strengthening India’s position in the global electronics value chain,” said Rahul Sharma, co-founder of Bhagwati Products Limited, who has also applied under the scheme.

India’s electronics production has grown from Rs 1.9 lakh crore in 2014–15 to Rs 11.3 lakh crore in 2024–25, driven mainly by smartphone manufacturing, computer hardware and telecom equipment. Despite this growth, domestic value addition—the share of locally manufactured components and sub-assemblies—continues to remain between 18% and 20% of total output, compared with around 40% in countries such as China and South Korea.

According to Prabhu Ram, vice president at CyberMedia Research, the higher ECMS allocation, coupled with India Semiconductor Mission (ISM) 2.0, points to a more comprehensive long-term strategy.

“This enhanced outlay is expected to guide India’s expansion across upstream value chains, from core component manufacturing to deeper integration with global supply networks and increased component exports,” Ram said.

He added that when combined with ISM 2.0, the approach represents a holistic roadmap for the semiconductor and electronics ecosystem, covering materials and equipment, end-to-end design, front-end fabrication, back-end assembly and testing, and the production of critical chips to meet domestic demand while also boosting exports.