Union Budget 2026 strengthens semiconductors, manufacturing depth and MSME growth

The Union Budget 2026, presented by Finance Minister Nirmala Sitharaman, places manufacturing, semiconductors, and MSMEs at the centre of India’s next growth phase. The government has identified six focus areas aimed at holistic economic growth, with a clear emphasis on strengthening domestic manufacturing, improving competitiveness, and creating future-ready enterprises.

Among the most consequential announcements is the Rs 40,000 crore enhanced outlay for Semiconductor Mission 2.0, reflecting growing confidence in India’s electronics and chip-making ambitions. The Budget also signals support for industry-led research and training centres for semiconductors and introduces a scheme to enable states to establish three chemical parks through a challenge-based route, strengthening the foundation for advanced manufacturing.

Alongside this, the Finance Minister reiterated priorities such as boosting manufacturing across seven strategic sectors, reinventing legacy industries to raise productivity, ensuring long-term economic stability, and creating future champions in MSMEs.

Semiconductor Mission 2.0: from fabrication to full ecosystems

Industry voices see Semiconductor Mission 2.0 as a structural shift rather than a tactical policy move.

Gokul NA, Founder, CynLr, said the launch of ISM 2.0 marks a move away from a narrow focus on fabrication towards building capabilities across equipment, materials, design, and Indian IP. He noted that for hardware and deep-engineering startups, this creates the foundation to design and build globally competitive technology in India.

Madhav Sheth, CEO, Ai+ Smartphone and Founder, NxtQuantum Shift Technologies, described Budget 2026–27 as a signal that India is now playing for depth, not just scale, in electronics. He said the focus is shifting from assembly to building a resilient, high-value, India-led ecosystem.

Sunil Gupta, Co-Founder & CEO, QNu Labs, shared his views, stating that the Union Budget 2026 charts a path for the country to assert itself as a global leader in deep tech and secure digital infrastructure. The expansion of the India Semiconductor Mission 2.0 and targeted allocations for high-value technology platforms signal a clear commitment to building sovereign capabilities. With the rise of quantum computing and post-quantum cybersecurity, sustained R&D support is critical to safeguarding India’s strategic advantage. Initiatives like the Rs. 10,000 crore Fund of Funds, expanded credit guarantees, and MSME and startup reforms address capital barriers, empower high-risk, high-impact innovation across AI, semiconductors, quantum technologies, and cybersecurity, and support millions of jobs, enabling Indian innovators to deliver solutions of global significance.

Prakash Ravindran, CEO & Director, InstiFi, stated that the Union Budget 2026 underscores the government’s intent to build a stronger, more inclusive MSME ecosystem through enhanced credit access, equity support, and digital-first liquidity measures. Initiatives such as the Rs.10,000 crore SME Growth Fund, expanded credit guarantee cover, and deeper integration of platforms like TReDS and GeM will be instrumental in unlocking growth for small businesses across India.

Paritosh Prajapati, CEO, GX Group, pointed to the jump in the Electronics Components Manufacturing Scheme outlay from Rs 22,919 crore to Rs 40,000 crore as proof that the scheme has moved from intent to execution. According to him, the Budget nudges India from “assembled in India” to “engineered and manufactured in India for the world”.

Dr Rajeev Gautam, President, HORIBA India, said they commend the government’s strong focus on semiconductors and advanced technologies, which signifies the government's strategic priority to equip our nation with a globally competitive, future-ready technological ecosystem.

The emphasis on strengthening the semiconductor value chain from manufacturing and materials to design, testing, and R&D will certainly accelerate India’s journey to becoming a trusted global hub for electronics and deep-tech innovation.

The new reform will catalyse stronger industry-academia collaboration, foster innovation, and push the vision of Atmanirbhar Bharat in the semiconductor and technology space.

Pankaj Shah, Founding Secretary and Ex-President, ASIRT, added that the renewed focus on semiconductor and electronic component manufacturing, combined with customs duty exemptions, will reduce import dependence and give manufacturing a strong push in focused sectors.

Offering a technical perspective, Kshitij M Kotak, Ex-CIO and Founder, BLACKBOX Data Safe, noted that semiconductor fabrication units are only one part of the ecosystem, adding that many integrated circuits beyond processors will need to be manufactured to realise higher value creation.

MSMEs and skills: building future champions

Beyond large-scale manufacturing, the Budget places strong emphasis on MSMEs and workforce readiness, recognising their role in sustaining long-term growth.

Rahul Sharma, Director, Praruh Technologies, said the Union Budget sends a strong signal on technology-led growth for MSMEs. He highlighted the Rs 10,000 crore MSME Growth Fund as a timely move that addresses the need for patient capital, calling the Budget practical and supportive of sustainable, long-term MSME growth.

As technology adoption accelerates, several leaders stressed the need to balance innovation with employability.

Yuvraj Shidhaye, Founder and Director, TreadBinary, said Budget 2026 highlights the importance of balancing AI-driven scale and efficiency with long-term skill development and employability, warning that growth should not come at the cost of workforce resilience.

Dr Ramya Chatterjee, Chief of Solitaire, said India’s electronics and technology manufacturing sector needed a policy push that goes beyond assembly and scale, and the Union Budget 2026 begins to address that gap with intent. The focused emphasis on electronic components manufacturing is especially significant as it strengthens domestic value addition, reduces import dependence and enables more resilient supply chains. Equally relevant for the sector is the proposal to establish a High Powered Education to Employment and Enterprise Standing Committee, recognising that advanced manufacturing and design capabilities are ultimately powered by skilled talent and applied research. 

Vikram Labhe, Founder & CEO, Melooha, observed that most innovation today is built on an AI backbone and welcomed the focus on decentralising innovation. He said bringing high-quality research closer to emerging talent pools will strengthen the pipeline of skills and applied intelligence.

Sujata Seshadrinathan, Co-Founder and Director, Digital Transformation, Basiz Fund Service Private Limited, said digital enablement has benefited multiple sectors and that addressing AI’s impact across youth, farmers, women in STEM, and Divyang communities responds to an urgent need for inclusive technology adoption.

Manufacturing with stability at the core

Taken together, the Budget’s focus on semiconductors, advanced manufacturing, and MSMEs reflects a broader strategy anchored in long-term stability. By combining capital support, ecosystem building, skills development, and targeted industrial policy, Budget 2026 aims to move Indian industry up the value chain rather than simply expanding scale.

The emphasis is not on quick wins. It is on building depth of capability, talent, and confidence.