Finance minister Nirmala Sitharaman announced an increase in the Union Budget allocations for semiconductors and mobile phone manufacturing under the production-linked incentive (PLI) scheme.
Under the Central Sector Schemes for the Ministry of Electronics and Information Technology (MeitY), the semiconductor budget rose to ₹7,000 crore from ₹6903 crore, while the PLI budget reached ₹9,000 crore from ₹6200 crore.
Previously, the semiconductor allocation for the last year was revised down from ₹6,903 crore to ₹3,816 crore, primarily due to lower revised estimates for compound semiconductors, Advanced Technology Manufacturing Processes (ATMP), and Outsourced Semiconductor Assembly and Test (OSAT).
Over the past year, many industry leaders have voiced their expectations for the Indian semiconductor ecosystem, focusing on incentives for setting up fabs, expanding talent pools, and addressing critical gaps in the semiconductor manufacturing infrastructure.
With the recent geopolitical shifts and US sanctions, India must urgently secure strategic autonomy by developing its own semiconductor IP and products.
Implications on the Electronics & Semiconductor Sector
A total of ₹22,071 crore has been earmarked under MeitY. Apart from PLI and semiconductors, the government has allocated ₹2,000 crore for the AI Mission, ₹1,259 crore for R&D, ₹575 crore for skilling, and ₹712 crore for manufacturing clusters and related initiatives.
Despite these measures, concerns remain regarding the Budget’s lack of clarity on ISM 2.0 (incentives beyond the $10 billion mark) and the absence of a major PLI scheme for components or a dedicated product creation initiative.
These gaps could slow down the pace of value addition in India’s electronics ecosystem.
Investment in Talent
Producing around 1.5 million engineering graduates annually, India has established a strong foundation for technological innovation by consistently developing a highly skilled workforce. Over the past decade, student intake at IITs has doubled from 65,000 to 1.35 lakh. To accelerate higher education, the government is investing in the expansion of IIT infrastructure.
Sitharaman also announced a ₹20,000 crore investment to drive private sector-led research, development, and innovation, building on the initiative introduced in the July Budget.
As part of this initiative, the PM Research Fellowship Scheme will provide 10,000 fellowships over the next five years for technological research in IITs, NITs, and IISc, with enhanced financial support.
While India takes pride in the sheer volume and quality of its engineering talent, experts have also raised concerns about gaps in specialised skills essential for cutting-edge semiconductor manufacturing and design.
Industry leaders have pointed out that while the country has a broad talent base, it needs further strengthening to match the evolving demands of global technology giants. Addressing these skill gaps will be critical in ensuring India’s competitiveness in the high-tech manufacturing sector.
