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Union Budget 2025 - Implications on the Electronics & Semiconductor Sector

Ashok Chandak, President IESA shares his thoughts on the Budget 2025

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CIOL Bureau
New Update
India Budget 2025

The Union Budget 2025-26 presents several indirect benefits for the Electronics System Design & Manufacturing (ESDM) sector, aligning with key recommendations from IESA but has been muted on big announcements. Our focus on startups, R&D, skilling, export support, and continued semiconductor manufacturing incentives has been partially addressed through multiple schemes:

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Pivoting Digital India

  • The budget’s provisions for MSME support , Start Up’s ( 5 yr incorporation and Fund of Fund) Centers of Excellence (CoEs) in skilling and AI, and reduced Basic Customs Duty (BCD) on display panels and lithium-ion batteries will enhance local value addition in EVs and mobile manufacturing, IT Hardware, Export promotion schemes, Tax certainty for electronics manufacturing, establishing national manufacturing mission, Presumptive taxation on electronics manufacturing support, etc will also help step towards India’s position as a global electronics manufacturing hub and Atmanirbhar Bharat.
  • Further the ₹20,000 crore allocated for R&D, along with 10,000 technology fellowships at IITs, will foster innovations and IPR development.
  • Revised IT slabs for the middle class will boost disposable income, thereby driving increased consumption and demand for consumer electronics.

On the positive side, ₹21,945 crore has been allocated for the ESDM sector (under MeitY), which is a significant step compared to last FY. This includes ₹9,000 crore for Electronics PLI, ₹7,000 crore for Semiconductor and display manufacturing, ₹2,000 crore for AI Mission, ₹1,259 crore for R&D, ₹575 crore for skilling, ₹712 crore for MSIPS/EDF/Manufacturing Clusters, etc.

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However, the budget lacks clarity on ISM 2.0 (incentives beyond the $10 billion mark) and does not introduce a major PLI scheme for components or a dedicated product creation initiative as a growth driver. This could potentially slow the pace of value addition in India's electronics ecosystem. We remain Optimistic that these aspects will be addressed through specific policy measures beyond the Budget announcement

AI Mission

The allocation of ₹2,000 crore for the AI Mission is a practical and promising step towards establishing India’s leadership in artificial intelligence. With the GPU program already decided and 10 players shortlisted, we are positioned to make significant advancements. As global discussions on AI dominance intensify, establishing AI supremacy will be crucial for India's strategic interests.

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Our future initiatives in agriculture, finance, healthcare, defense, and more will increasingly rely on robust AI capabilities. Leveraging India's vast talent pool, we must prioritize the development of large language models (LLMs), distributed computing, algorithms, and practical applications. The planned GPU installations and enhanced data center infrastructure will play a pivotal role in realizing these goals.

 

 

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India Budget 2025