Union Budget 2026: What Is ISM 2.0? Nirmala Sitharaman Announces Rs 40,000 Cr Outlay To Strengthen India’s Semiconductor Ecosystem

Finance Minister Nirmila Sitaraman has announced the next phase of its semiconductor strategy with the launch of India Semiconductor Mission (ISM) 2.0 and has announced a major expansion of incentives for electronics component manufacturing scheme. 

While presenting the Union Budget FM Niramala Sitharaman stated that ISM 2.0 will build on the progress made under the first phase of the mission which is aimed on establishing chip fabrication and assembly capacity in India 

The new phase will accelerate the scope to include semiconductor equipment and materials production, the design of full-stack Indian intellectual property. 

The government of India will also place greater emphasis on industry-led research and development to promote indigenous technology creation and build a skilled workforce for the semiconductor sector as per FM 

With the announcement of ISM 2.0, the FM has also announced a sharp increase in funding for the Electronic Components Manufacturing Scheme (ECMS), which was unveiled in April 2025 with an outlay of Rs.22,919 crore. 

The FM Sitharaman claims that the scheme has already attracted investments at more than double the initial target, which prompts the central government to increase its allocation to Rs.40,000 crore to capitalise on the momentum. 

The ECMS scheme is developed to boost the domestic manufacturing of key electronic components and part which will reduce the country’s dependence on imports, especially from East Asian supply chains.  

Also Read: Union Budget 2026: Meet The Team Of Top Bureaucrats Who Helped FM Nirmala Sitharaman Prepare The 9th Budget, Shaping India’s Economic Vision