Govt Allocates INR 40,000 Crore for Semiconductor Push, Says Nirmala Sitharaman

Finance Minister Nirmala Sitharaman disclosed a Rs 40,000 crore allocation for semiconductors during the presentation of the Union Budget 2026 today. The 'India Semiconductor Mission 2.0' was announced by the Finance Minister in order to leverage the momentum of the semiconductor mission. Sitharaman stated that the primary concentration will be on semiconductor research and training centers that are industry-led. According to the Finance Minister, the semiconductor mission 2.0 will concentrate on the development of apparatus and materials that are specifically designed for full-stack Indian intellectual property.

India on Track Against Semiconductor Manufacturing Race

Earlier this month, Ashwini Vaishnaw, the Union Minister of Electronics and Information Technology, stated that India is on course to commence commercial semiconductor chip production in 2026. The nation is adhering to the timeline established by the initial India Semiconductor Mission, which was initiated in January 2022. Four plants are anticipated to initiate operations this year, according to the minister.

The initial commercial production will commence in 2026. Three facilities have initiated pilot production in 2025. In her speech, Sitharaman stated that the government has prioritised reforms over rhetoric for the Union Budget 2026. She further stated that India will persist in its efforts to become a Viksit Bharat. Sitharaman's ninth consecutive budget, the Union Budget 2026, brings her closer to the record of 10 budgets held by former Prime Minister Morarji Desai.

Applauding the announcement, Anil Agrawal, Founder & CEO of CIMCON Automation, said, "The India Semiconductor Mission 2.0 represents a meaningful commitment by the Government of India to the growth of the utilities automation sector. With a INR 40,000 crore outlay, this initiative provides vital support to full-stack, deep-tech enterprises like ours as we develop domestic intellectual property and scale Indian innovation globally. The localization of critical semiconductor components will create a powerful snowball effect: improving accessibility, reducing lead times, and lowering costs, unlocking opportunities in price-sensitive domestic markets, and accelerating the digital transformation of utilities."

Government Pushing India to Lead Tech Race

Budget 2026-27 has proposed new safe harbour provisions for IT/ITeS with a higher threshold and competitive margin to support the IT sector as India's growth engine and to provide tax certainty. Software development, IT-enabled knowledge process outsourcing, and contract research and development services are among India's most prominent exports.

The budget has suggested that all of these services be consolidated under a single category, Information Technology Services, in recognition of the interconnectedness of these business segments. This has been accomplished using a universal safe harbour margin of 15.5%.

Sharing his views on the subject, Anurag Jain, CEO and Founder, Oriserve, "The government’s renewed focus on AI and emerging technologies signals a clear intent to move India from technology adoption to technology leadership. Strengthening national missions around AI, deep-tech R&D, and innovation creates a strong foundation for building scalable and responsible digital systems.

"For the fintech ecosystem, continued policy backing for the AI Mission and R&D funding will accelerate intelligent solutions that improve efficiency and financial inclusion. Initiatives like Bharat Vistaar emphasize the importance of multilingual, AI-led platforms in widening access. This approach is especially relevant for financial services, where trust, personalization, and reach are critical," added Jain.