IESA Recommendations for India’s Union Budget 2025-26: Electronics and Semiconductor Sector

By Ashok Chandak

To support India’s ambition of becoming a global hub for electronics and semiconductor design and manufacturing, the following proposals are suggested:

1. Semiconductors manufacturing: Expansion of the PLI Scheme

• Enhanced Allocation: Extend the Production-Linked Incentive (PLI) scheme beyond the current allocation of ₹76,000 crore (~$10 billion) with an additional provision of $20 billion over the next five years.
• Rationale:
• • India’s semiconductor sector is at a pivotal growth stage, driven by government initiatives, strategic collaborations, and a robust domestic market.
  • Indian companies and IESA (India Electronics and Semiconductor Association) members, have committed to projects worth over $20 billion.
  • The Semicon India Program and ISM have delivered significant contributions to GDP growth, job creation, foreign investments, industrial self-reliance, and bolstering India’s position in the global semiconductor market.
• Proposal: Allocate $20 billion in the upcoming budget to propel the next phase of growth, innovations, and Atmanirbhar Bharat with Global Impact.

2. Enhancing Electronics Value Addition

• Current State:
• • India’s electronics manufacturing can reach $500 billion by 2030-32 from 150 Bn$ of this year.
  • Current local value addition stands at less than 18%. Increasing this to 40% will create extensive job opportunities and retain significant economic value domestically.
• Proposal:
• • Introduce additional PLI outlays linked to local value addition – strictly.  PLI to be paid for minimum 25% in 2025-26 and 30 % by 2027.
  • Focus particularly on the mobile phone segment, which represents the largest opportunity. Enforce stricter value addition norms as a prerequisite for availing PLI benefits.
  • Provide 5 Bn$ of Incentives for electronics components industry for Companies and JV’s having Majority holding/Stake of Indian corporates/ entrepreneurs.

3. Product Creation and R&D

• Long-Term Sustainability: For the electronics and semiconductor industry to thrive sustainably, fostering product creation and intellectual property (IPR) development through dedicated R&D is critical.
• Proposal:
• • Allocate ₹10,000 crore for targeted R&D initiatives in ESDM sector on PPP model, separate from generic funding and not just the funding to academic institutes but to boost Industry collaborated R&D.
  • Consolidate multiple schemes under a unified Product Creation Initiative to high priority products of India needs with global potential to maximize impact.

4. Export Incentives

• Boosting Global Competitiveness: To position India as a leading exporter of electronics and semiconductors, targeted export incentives are necessary.
• Proposal:
• • Introduce 2% Additional Incentives and tax benefits for exports of semiconductor and electronics products that meet value addition norms , particularly in high-demand categories.
  • Simplify export procedures and provide logistical support for global market access.
  • Establish dedicated trade agreements to secure markets for Indian electronics and semiconductor products, ensuring steady growth in export revenue.

These measures will accelerate India’s transformation into a leading electronics and semiconductor hub, fostering innovation, creating jobs, driving economic self-reliance, and expanding India’s presence in global markets.

(The author is Ashok Chandak, President of IESA, and the views expressed in this article are his own)