Union Budget 2026-27: ECMS outlay nearly doubled to ₹40,000 crore

Phase-II of semicon mission announced

The Union Budget for 2026-27 continued its focus on increasing manufacturing in the country, with higher outlays for electronics and semiconductor manufacturing and a boost for domestic textiles manufacturing.

 

For electronics and allied component manufacturing in India, the Budget raised the allocation for the Electronics Component Manufacturing Scheme (ECMS) by nearly 75 per cent to ₹40,000 crore.

 

The scheme, launched in April 2025, has so far seen 46 applications approved by the Ministry of Electronics and Information Technology (MeitY).

 

These 46 projects, with a cumulative investment of ₹54,567 crore, are estimated to generate ₹3.67 trillion in production. They are likely to create direct employment for nearly 51,000 people.

 

 

The projects, spread across 11 states, will produce electronic components such as printed circuit boards, capacitors, connectors, mobile phone and other device enclosures. They also include lithium-ion cells, camera and display modules, optical transceivers, aluminium extrusions, anode materials and copper-clad laminates.

 

All these components are used in manufacturing products such as mobile phones, laptops, televisions, computer displays, and servers, among others.

 

“We had expected around 50-55 applications for the ECMS scheme but received 149 applications in total. The announcement to increase the outlay to ₹40,000 crore will help in sustaining that momentum to add more companies under the scheme,” Union Electronics and Information Technology Minister Ashwini Vaishnaw said in a post-Budget briefing.

 

Apart from increased allocation for ECMS, Finance Minister Nirmala Sitharaman on Sunday also announced the launch of the second phase of India Semiconductor Mission (ISM).

 

The second phase of ISM, Sitharaman said, will help produce semiconductor equipment and materials, design full-stack Indian intellectual property, and fortify supply chains.

 

“We will also focus on industry-led research and training centres to develop technology and skilled workforce,” she said.

 

The announcement of ISM 2.0 is not just about ensuring self-reliance but also ensuring that the intelligence, computing power, and hardware powering next-generation artificial intelligence (AI) systems are designed and manufactured in India, said Aditya Khemka, managing director (MD) of Aditya Infotech. Aditya Infotech is the maker of CP Plus cameras and other surveillance equipment.

 

On Sunday, Sithraman also announced that the government would eliminate basic Customs duty on specified parts used in the manufacture of microwave ovens. This, she said, would help deepen domestic value addition in the consumer electronics sector.

 

The textiles industry got a booster dose through an integrated programme at a time when it was struggling due to the 50 per cent US tariff on Indian goods.

 

The programme includes five key parts targeted at improving production, skilling, and global competitiveness. They include the National Fibre Scheme, Textile Expansion and Employment Scheme, National Handloom and Handicraft Programme, Tex-ECO initiative, and SAMARTH 2.0.

 

The Tex-ECO initiative aims to promote globally competitive and sustainable textiles and apparel, while SAMARTH 2.0 will modernise and upgrade the textiles skilling ecosystem. It would be through collaboration with industry and academic institutions.

 

“I propose to set up mega textile parks in challenge mode. They can also focus on bringing value addition to technical textiles. I propose to launch the Mahatma Gandhi Gram Swaraj initiative to strengthen khadi, handloom, and handicrafts. This will help in global market linkage and branding. This will benefit our weavers, village industries, the One District–One Product initiative, and rural youth,” Sitharaman said in her Budget speech.

 

Confederation of Indian Textile Industry (CITI) chairman Ashwin Chandran said, “The Budget is a strong manifestation of the government’s commitment to future-proof the textiles and apparel sector. It would make it more resilient to global headwinds, and comes as a huge shot in the arm for the industry.”

 

At nearly $11 billion, India’s export of textiles and apparel items to the US accounted for about 28 per cent of the country’s total exports of these products in 2024–25.

 

Industry also considers this a right step towards creating infrastructure to meet the rising demand once the UK and the European Union (EU) free trade agreements (FTAs) are in place.

 

“Competitiveness in textiles begins with raw material security and competitive pricing. The Budget’s proposal for a National Fibre Mission, covering the full fibre spectrum, will ensure supply stability, price competitiveness, and stronger global positioning of finished textile and apparel products. Textile clusters and scale will determine how effectively India captures FTA opportunities. With clusters forming the backbone of exports, Tamil Nadu also stands to gain, contributing over 40 per cent of India’s apparel exports,” said Prabhu Dhamodharan, Convenor, Indian Texpreneurs Federation (ITF).