In a significant move to strengthen India's electronics manufacturing ecosystem, Finance Minister Nirmala Sitharaman announced during her Union Budget 2026 speech that the government will nearly double the outlay of the electronics components manufacturing scheme from Rs 23,000 crore to Rs 40,000 crore. This expansion aims to capitalize on the strong traction the incentive program has received and represents a strategic push to fortify domestic supply chains.
Scheme Background and Initial Success
The Union Cabinet originally cleared the scheme in March 2025 with an initial outlay of Rs 22,919 crore. According to the Finance Minister, the scheme launched in April 2025 has already attracted investment commitments exceeding double the original targets. "We propose to increase the outlay to 40,000 crores to capitalise on this," Sitharaman stated during her budget presentation.
The scheme was initially projected to generate production worth Rs 4.56 lakh crore and bring incremental investment of Rs 59,350 crore. So far, the government has approved 46 applications under the scheme, representing total proposed investment of Rs 54,567 crore. These approved applications are expected to create direct employment opportunities for approximately 51,000 people.
Recent Approvals and Key Players
Last month, the IT Ministry gave its nod to 22 applications from prominent companies including Foxconn, Tata Electronics, Samsung, Dixon Technologies, and Hindalco Industries. These fresh approvals build upon the clearance for 24 applications announced last year, demonstrating growing industry participation.
Among the approved applicants are two of Apple's key India supply chain partners. Foxconn's Yuzhan Technologies (India) Pvt Ltd and Tata Electronics have received approval to manufacture enclosures for mobile phones and IT hardware. Motherson Electronic Components has also been approved for similar manufacturing activities.
Dixon Technologies secured two approvals - one for manufacturing optical transceivers and another through its subsidiary Kunshan Q Tech Microelectronics for producing camera modules. Notably, Dixon had acquired a 51 percent stake in the Indian arm of China-based Kunshan Q Technology in September 2025. Samsung has received approval to manufacture display modules in India.
Targeted Components and Applications
The government is specifically targeting several critical components through this scheme, including:
- Display modules
- Sub assembly camera modules
- Printed circuit board assemblies
- Lithium cell enclosures
- Resistors, capacitors, and ferrites
These components find applications in various electronic devices including smartphones, laptops, and household appliances such as microwave ovens, refrigerators, and toasters.
Distinctive Features and Strategic Importance
This incentive scheme differs significantly from the government's earlier Production Linked Incentive (PLI) scheme for electronics manufacturing in how participating companies can avail subsidies. The current scheme links incentives to three key parameters: annual employment generation, capital expenditure needs, and annual production.
The components incentive scheme represents a crucial next step as the PLI scheme for smartphone manufacturing approaches its sunset period. Despite successfully attracting companies like Apple and Samsung to localize some assembly operations in India, domestic value addition has remained relatively low at around 15-20 percent. The government aims to raise this to at least 30-40 percent through enhanced component manufacturing capabilities.
This expanded outlay reflects the government's commitment to building a comprehensive electronics manufacturing ecosystem in India, moving beyond assembly to include critical component production that will reduce import dependence and create sustainable employment opportunities.
