With MeitY’s budget soaring 48%, the semiconductor sector gets ₹70 billion, and smartphone PLI surges to almost ₹90 billion—yet the industry hoped for bolder reforms.
In the Union Budget announcement on Saturday, Finance Minister Nirmala Sitharaman revealed increased funding for semiconductor and mobile phone manufacturing through the production-linked incentive (PLI) scheme.
The Ministry of Electronics and Information Technology (MeitY) saw its semiconductor budget rise to ₹70 billion from ₹69.03 billion, while the PLI allocation increased to ₹90 billion from ₹62 billion.
The previous semiconductor allocation was revised downward to ₹38.16 billion from ₹69.03 billion last year, mainly due to reduced estimates for compound semiconductors, advanced technology manufacturing processes (ATMP), and outsourced semiconductor assembly and test (OSAT).
Plus, ₹39 billion has been allocated for the ‘Modified Scheme for Setting Up Semiconductor Fabs’—up from ₹25 billion in FY24, in the Budget.
On the other hand, the smartphone production-linked incentive (PLI) scheme has received the largest allocation in the 2025-26 Budget, set at ₹88.85 billion, a 45% increase from ₹61.25 billion in FY25. This allocation surpasses those for other PLI schemes.
According to a Financial Express report, Apple and Samsung, alongside local manufacturers like Dixon, have been primary beneficiaries of the scheme, which has led to significant growth in India’s smartphone exports, expected to reach ₹1.70 trillion this year, up 31% from FY24. However, some domestic companies struggled to meet production targets.
For IT hardware, the PLI allocation for laptops, tablets, and servers increased to ₹1.15 billion in FY26 from ₹750 million in FY25. The IT Hardware PLI scheme 2.0 has approved 27 manufacturers, with production set to begin in FY26.
Industry stakeholders have long pushed for stronger incentives to develop India’s semiconductor ecosystem, with a focus on setting up fabs, expanding skilled talent, and addressing infrastructure gaps.
Following recent geopolitical shifts and US sanctions, experts stress the need for India to gain strategic independence by creating its own semiconductor intellectual property and products.
The total allocation for MeitY now stands at ₹260.26 billion, a 48% increase from the last fiscal, which includes ₹20 billion for the AI Mission, ₹12.59 billion for research and development (R&D), ₹5.75 billion for skill development, and ₹7.12 billion for manufacturing clusters.
However, concerns remain about the lack of clarity regarding ISM 2.0 (incentives beyond the $10 billion mark) and the absence of a major PLI scheme for components or product creation.
India is also producing a large number of engineering graduates annually, with the government continuing to invest in expanding IIT infrastructure. Despite investment in the R&D sector, experts note that while India boasts a strong talent pool, addressing gaps in specialised skills for semiconductor manufacturing will be key to staying competitive in the global high-tech sector.
