Finance Minister Nirmala Sitharaman laid out the federal government’s push to scale up manufacturing throughout seven strategic and frontier sectors, together with semiconductors and electronics manufacturing, as offered within the Union Finances 2026-27 Sunday.
The Finances comes towards the backdrop of a realignment of the worldwide financial order, as commerce wars, tariff regimes, supply-chain fragmentation, and rising geopolitical battle erode the foundations of decades-long globalisation. India has sought to offset these international headwinds by strengthening its home resilience within the know-how sector.
Here’s a roundup of all of the proposals in Finances 2026-27 associated to new synthetic intelligence (AI) instruments, AI infrastructure, cloud and information providers, electronics part manufacturing, and extra.
Semiconductor Mission 2.0 with Rs 8,000-crore outlay
In her Finances speech, Sitharaman proposed to launch the subsequent iteration of India’s semiconductor coverage. Constructing on the India Semiconductor Mission (ISM) 1.0, ISM 2.0 will deal with producing tools and supplies, designing full-stack Indian IP, and strengthening provide chains.
“We will even deal with industry-led analysis and coaching centres to develop know-how and a talented workforce,” she mentioned.
The newly unveiled nationwide semiconductor technique strikes past fabs and Meeting, Testing, Marking, and Packaging (ATMP) models and proposes a design-linked incentive (DLI) scheme with a Rs 100-crore outlay for no less than 30 semiconductor design firms in India, in keeping with the Consequence Finances doc.
ISM 2.0 additionally goals to offer Rs 5,000 crore in fiscal help for the setup of semiconductor fabs to fabricate compound semiconductors, discrete semiconductors, ATMP models, silicon photonics (SiPh), and sensors. Moreover, the mission prices for organising semiconductor fabs will even be lined underneath the scheme as much as Rs 2,000 crore.
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ECMS outlay expanded to Rs 40,000 crore
“The Electronics Elements Manufacturing Scheme, launched in April 2025 with an outlay of ₹22,919 crore, already has funding commitments at double the goal. We suggest to extend the outlay to ₹40,000 crore to capitalise on the momentum,” Sitharaman mentioned.
Alongside the semiconductor incentive scheme, the federal government helps manufacturing throughout virtually all layers of electronics, making the sector an important progress driver for the Indian financial system. The parts the federal government plans to focus on by means of the scheme embrace show modules, sub-assembly digicam modules, printed circuit board assemblies, lithium cell enclosures, resistors, capacitors, and ferrites, amongst others.
These digital elements are utilized in devices like smartphones and laptops, and home equipment like microwave ovens, fridges and toasters, amongst others. This incentive scheme differs from the federal government’s earlier production-linked incentive (PLI) scheme for electronics manufacturing in how collaborating firms can avail subsidies.
Uncommon earth corridors in Odisha, Kerala, Tamil Nadu, and Andhra Pradesh
The federal government proposed to arrange devoted uncommon earth corridors in India’s coastal states, Odisha, Kerala, Andhra Pradesh, and Tamil Nadu, “to advertise mining, processing, analysis and manufacturing,” Sitharaman mentioned in her funds speech.
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Heavy uncommon earth components (HREE) can be utilized in superior applied sciences starting from electrical automobiles and next-generation fighter jets and robots to AI infrastructure, similar to semiconductors and information centre {hardware}. India has the world’s third-largest reserves of uncommon earths (6.9 million tonne), however solely mines a fraction of it as a result of personal firms make restricted investments, in keeping with the US Geological Survey.
Tax vacation for cloud providers firms until 2047
In an try to spice up funding in information centres, the Centre has proposed a tax vacation till 2047 for any international firm that gives cloud providers globally utilizing information centre providers from India. Nevertheless, these cloud service firms must present providers to Indian prospects by means of an Indian reseller entity.
“I additionally suggest to offer a secure harbour of 15 per cent on value in case the corporate offering information centre providers from India is a associated entity,” Sitharaman mentioned.
The announcement comes at a time when India is pursuing a bottom-up strategy to AI growth regardless of being late to the worldwide AI race. Flagging the structural challenges going through India, the Financial Survey 2026-27 famous that the nation’s entry to cutting-edge computing infrastructure stays severely restricted. It additional cited World Financial institution information exhibiting that, by quantity, over 70 per cent of all information centres are positioned in high-income international locations, with India accounting for simply 3 per cent.
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New multilingual AI software for farmers
The federal government proposed launching a brand new multilingual AI software referred to as ‘Bharat-VISTAAR’ to be built-in with its Agri-Stack portals, and to stipulate greatest practices for AI programs, as outlined by the Indian Council of Agricultural Analysis (ICAR). “It will improve farm productiveness, allow higher choices for farmers and cut back threat by offering customised advisory help,” Sitharaman mentioned.
The Ministry of Agriculture’s Agri-Stack contains a nationwide registry of farmers and farm plots linked to crop and soil information, accessible to authorities companies and authorized personal gamers, similar to agritech firms, agricultural suppliers, and credit score suppliers.
Content material creator labs in colleges, faculties
The federal government proposed establishing devoted Animation, Visible Results, Gaming, and Comics (AVGC) content-creator labs in over 15,000 secondary colleges and 500 faculties throughout India, underneath an initiative spearheaded by the Indian Institute of Inventive Applied sciences in Mumbai. It added that India’s AVGC sector is projected to require two million professionals by 2030.
Different tech and AI-related bulletins
– Nationwide Vacation spot Digital Data Grid: It will likely be established to “digitally doc all locations of significance—cultural, religious and heritage”. “This initiative will create a brand new ecosystem of jobs for native researchers, historians, content material creators and know-how companions.”
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– Non-intrusive scanning of containers utilizing AI: The federal government will roll out superior AI-powered imaging instruments to scan each main container in any respect main ports within the nation. The rollout might be carried out in phases, Sitharaman mentioned. She additional mentioned that the federal government is creating a single, built-in, and scalable platform for all customs processes, referred to as Customs Built-in System (CIS), which is anticipated to be rolled out in two years.
-BCD exemption for manufacturing Li-Ion battery storage programs: The federal government proposed exempting capital items used to fabricate Lithium-Ion cells for battery vitality storage programs from fundamental customs responsibility (BCD), along with the exemption for capital items used to fabricate Lithium-Ion cells for batteries. It has additionally proposed to abolish BCD levied on imports of sodium antimonate used to fabricate photo voltaic glass.