Budget 2026 raises MeitY allocation to ₹21,633 crore, shifts focus to AI and semiconductor push

The Ministry of Electronics and Information Technology (MeitY) has been allocated ₹21,632.96 crore for FY2026–27, up from ₹20,232.95 crore in the previous Budget Estimates, signalling a sharper policy push toward artificial intelligence, semiconductors and electronics manufacturing.

While Finance Minister Nirmala Sitharaman raised MeitY’s overall outlay, the composition of the allocation reflects a clear shift toward emerging and strategic technologies. According to Budget 2026 documents, central sector schemes and projects account for ₹17,768.55 crore of the total allocation, with significant increases directed at semiconductor manufacturing, the IndiaAI Mission and electronics components production.

The Modified Semiconductor and Display Manufacturing Programme saw its allocation nearly double to ₹8,000 crore from ₹4,300 crore last year, underlining the government’s focus on building domestic chip fabrication and display capabilities. The IndiaAI Mission was allotted ₹1,000 crore, reinforcing the Centre’s commitment to scaling AI infrastructure and applications.

The Electronics Components Manufacturing Scheme also received a sharp boost, with funding rising to ₹1,500 crore, a move aimed at strengthening domestic supply chains for critical hardware and reducing import dependence.

In contrast, spending on large-scale electronics manufacturing under the Production Linked Incentive (PLI) scheme was reduced, suggesting a recalibration of priorities within the broader electronics manufacturing strategy.

The Digital India programme received a higher allocation as well, driven largely by increased funding for cybersecurity initiatives and capacity-building projects.

During her Budget speech, Sitharaman announced the launch of the India Semiconductor Mission (ISM) 2.0, marking the next phase of the government’s semiconductor strategy. She said the new phase would build on progress made under ISM 1.0, which focused on establishing chip fabrication and assembly capabilities, while expanding incentives for electronics component manufacturing.