Budget 2026: Govt hikes ECMS outlay to Rs 40,000 crore to boost electronics component manufacturing

In a significant move to enhance India's electronics manufacturing landscape, Finance Minister Nirmala Sitharaman unveiled a substantial increase in funding for the Electronics Component Manufacturing Scheme (ECMS) during the Union Budget presentation on February 1, 2026. The allocation has been raised to a remarkable Rs 40,000 crore, signaling the government's commitment to developing a comprehensive domestic supply chain beyond mere assembly. Originally launched on May 1, 2025, with a budget of Rs 22,919 crore, the ECMS aimed to attract investment commitments of around Rs 59,350 crore. The initial application window was extended several times due to overwhelming interest, ultimately closing on September 30, 2025, with 249 applications submitted that could lead to an anticipated investment of Rs 1.15 lakh crore. To date, the government has greenlit 46 projects under the scheme, amounting to investments of Rs 54,567 crore. These initiatives are poised to create direct employment for more than 51,000 individuals across 11 states, including Rajasthan, Jammu & Kashmir, and Tamil Nadu. Industry leaders assert that this increased funding reflects a crucial shift in India’s manufacturing strategy, emphasizing the need for a robust ecosystem capable of producing not just smartphones but also PCs, robotics, and more. Neil Shah, Vice President at Counterpoint Research, commented on the allocation's significance, stating, 'The enhanced funding for the Electronics Components Manufacturing Scheme will propel the Make In India initiative forward, broadening the manufacturing supply chain's reach. The expansion to core components is essential to elevate the value added by both local and international companies participating in this ecosystem.' The Secretary of the Ministry of Electronics & IT, S. Krishnan, highlighted that the focus of the ECMS is on components that India is capable of producing, especially high-value electronics such as display and camera modules, which constitute a sizeable portion of the materials cost. The scheme encompasses four categories: sub-assemblies, bare components, selected bare components, and capital equipment. Notably, approvals have been granted for critical components such as capacitors, connectors, and Li-ion cells for digital technologies. Industry participants see this expanded allocation as a crucial step towards transforming India from an assembly-centric hub to a more integrated manufacturing powerhouse. Rahul Sharma, co-founder of Bhagwati Products Limited, noted that the increased ECMS funding reflects the strong industry response and early successes, which promise to enhance India's position in the global electronics supply chain. India's electronics production has surged from Rs 1.9 lakh crore in 2014-15 to an impressive Rs 11.3 lakh crore in 2024-25, primarily driven by smartphone assembly and telecom equipment. However, the share of locally sourced parts still lingers between 18% and 20%, significantly lower than China or South Korea. Prabhu Ram of CyberMedia Research emphasized that the expanded ECMS funding, along with the India Semiconductor Mission 2.0, represents a cohesive strategy designed to bolster India's growth in the electronics sector and beyond.