Finance Minister Nirmala Sitharaman, while presenting the Union Budget 2026, unveiled the ambitious "India Semiconductor Mission 2.0" with a substantial outlay of Rs 40,000 crore. This strategic initiative aims to build upon the momentum generated by the first phase of the semiconductor mission, positioning India as a global hub in this critical technology sector.
Building on Semiconductor Success
Sitharaman highlighted that India's Semiconductor Mission 1.0 had successfully expanded the country's semiconductor sector capabilities. The new ISM 2.0 will focus on multiple fronts including production of equipment and materials, enabling full-stack design capabilities, developing Indian intellectual property, and strengthening domestic supply chains. The finance minister emphasized that this comprehensive approach would create a robust ecosystem for semiconductor innovation and manufacturing.
Shakti Initiative and Electronics Manufacturing Boost
In addition to the semiconductor push, Sitharaman announced the Shakti initiative with an allocation of Rs 10,000 crore over the next five years to further develop the semiconductor ecosystem. She also revealed that the Electronics Components Manufacturing Scheme, launched in April 2025 with an initial outlay of Rs 22,999 crore, has already received investment commitments at double the target. To capitalize on this success, the government proposes to increase the scheme's outlay to Rs 40,000 crore.
Pharmaceutical Sector Transformation
The budget also contained significant announcements for the pharmaceutical industry. Sitharaman outlined a comprehensive strategy for domestic production of biologics and biosimilars that includes establishing a biopharma-focused network with three new National Institutes of Pharmaceutical Education and Research (NIPERs) and upgrading seven existing ones. The government plans to create a network of 1,000 accredited clinical trial sites across the country to support research and development.
The finance minister stated that the Central Drug Standard Control Organisation would be strengthened to meet global standards and ensure faster approvals through a dedicated scientific review system and specialists. This move aims to streamline regulatory processes while maintaining high safety standards.
Rare Earth Manufacturing Support
Sitharaman also announced support for rare earth manufacturing, building on a scheme for rare earth permanent magnets launched in November 2025. The government now proposes to support mineral-rich states including Odisha, Kerala, Andhra Pradesh and Tamil Nadu to establish dedicated rare earth corridors. This initiative aims to leverage India's natural resources while creating specialized manufacturing zones.
Comprehensive Economic Vision
The budget announcements reflect a comprehensive approach to strengthening India's manufacturing and technology sectors. By combining substantial financial allocations with strategic sector-specific initiatives, the government aims to create a self-reliant industrial ecosystem. The semiconductor, electronics, pharmaceutical, and rare earth initiatives together represent a coordinated push toward technological sovereignty and economic resilience.
Presenting her record ninth consecutive budget, Sitharaman emphasized that these measures would help India navigate global economic challenges while creating employment opportunities and fostering innovation across multiple high-tech sectors.
