Union budget 2025-26: India Electronics & Semiconductor Association seeks tax relief, higher budgetary allocation

India’s semiconductor industry is in a rapid expansion mode with the Government of India’s intent to place India as a crucial player in the Semiconductor supply chain. The government of India launched the ₹76,000 crore Indian Semiconductor Mission to fulfil its semiconductor demand. India’s current semiconductor demand comes from electronics, automotive and 5G infrastructure. Global and domestic players like Micron Technology, Tata Semiconductor, CG Power+ Renesas, Kaynes Technologies are involved in fab manufacturing, testing, marking and packaging and expect further push from the government in the budget.

Tata Semiconductor is building India’s first commercial FAB facility in Dholera, followed by Micron Technology, which is setting up a massive ATMP unit in Sanand, Gujarat. The government’s impetus to these manufacturers holds critical importance in a world clouded with more geopolitical concerns. The consistent threats of tariffs, India’s semiconductor mission holds utmost significance and could lead the way for India to become fully self-reliant semiconductor supply chain.

Industry body, India Electronics and Semiconductor Association, has presented various recommendations for the Union Budget, and some of the following are:

The sector’s immediate priority is the continuation of the India Semiconductor Mission (ISM) 2.0 and the Design Linked Incentive (DLI) schemes. Higher budgetary allocation for projects that have already been approved. Modify the 15% concessional manufacturing tax regime to include semiconductor fabs, electronics components and advanced manufacturing units. The government should shift from concentrating on volume-led manufacturing towards domestic value addition, he said.

Export incentives for electronics and semiconductors should be linked to the extent of value added in India rather than shipment volumes alone.

The budget should prioritise simplifying testing and certification frameworks by expanding government-supported testing centres and reducing testing and certification fees, particularly for startups and MSMEs.

The development of integrated semiconductor and electronics parks with plug-and-play infrastructure.