Budget 2026: Electronics Components Manufacturing Scheme Outlay Doubled to Rs 40,000 Crore
In a significant move to bolster India's domestic electronics supply chains, Union Finance Minister Nirmala Sitharaman announced during her Union Budget 2026-27 speech that the government will nearly double the outlay for the electronics components manufacturing scheme. The allocation will increase from the current Rs 22,919 crore to a substantial Rs 40,000 crore, reflecting the strong traction the incentive programme has received since its launch.
Capitalizing on Early Success
The electronics components manufacturing scheme, launched in April 2025 with an initial outlay of Rs 22,919 crore, has already exceeded expectations. Finance Minister Sitharaman stated, "The scheme already has investment commitments and double the targets. We propose to increase the outlay to Rs 40,000 crore to capitalise on this." The Union Cabinet had originally cleared the scheme in March 2025 with ambitious goals to generate production worth Rs 4.56 lakh crore and attract incremental investment of Rs 59,350 crore.
Impressive Application Approvals and Investments
So far, the scheme has seen remarkable interest from major industry players:
- A total of 46 applications have been approved under the scheme
- Total proposed investment stands at Rs 54,567 crore
- The scheme could generate direct employment for approximately 51,000 people
Last month alone, the IT Ministry approved 22 applications from prominent companies including:
- Foxconn
- Tata Electronics
- Samsung
- Dixon Technologies
- Hindalco Industries
These fresh approvals continue the momentum from the 24 applications cleared last year, demonstrating sustained industry confidence in the government's manufacturing push.
Target Components and Applications
The scheme specifically targets crucial electronic components that form the backbone of modern devices:
- Display modules
- Sub assembly camera modules
- Printed circuit board assemblies
- Lithium cell enclosures
- Resistors, capacitors, and ferrites
These components are essential for manufacturing smartphones, laptops, and household appliances such as microwave ovens, refrigerators, and toasters. The strategic focus on these components addresses critical gaps in India's electronics manufacturing ecosystem.
Distinctive Incentive Structure
This components incentive scheme differs significantly from the government's earlier Production Linked Incentive (PLI) scheme for electronics manufacturing in its subsidy mechanism. Incentives under the new scheme are linked to three key parameters:
- Annual employment generation
- Capital expenditure requirements
- Annual production targets
This multi-faceted approach ensures that benefits are tied to comprehensive performance metrics rather than just production volumes.
Strategic Importance and Value Addition Goals
The components incentive scheme represents a crucial strategic move as the PLI scheme for smartphone manufacturing approaches its sunset period. Despite successful localization of assembly operations by companies like Apple and Samsung, domestic value addition has remained relatively low at 15-20%. The government aims to substantially increase this to 30-40% through focused component manufacturing.
Among the approved applicants, two of Apple's key India supply chain partners—Foxconn and Tata Electronics—have received approval to manufacture enclosures for phones and IT hardware. Specifically, Foxconn's Yuzhan Technologies (India) Pvt Ltd and Motherson Electronic Components have been cleared for these critical manufacturing activities.
The enhanced outlay of Rs 40,000 crore signals the government's commitment to creating a robust domestic electronics manufacturing ecosystem, reducing import dependence, and positioning India as a global hub for electronics component production. This strategic investment comes at a pivotal moment when global supply chains are being reconfigured, offering India significant opportunities to capture greater value in the electronics manufacturing value chain.
