Electronics Industry Awaits R&D Support in FY26 Budget

India’s electronics and semiconductor sectors are anticipating several incentives from the upcoming FY26 Union budget, primarily aimed at boosting domestic value addition within a consistently growing industry, according to consultants and stakeholders.

As Finance Minister Nirmala Sitharaman prepares to unveil the budget on 1 February, the electronics retail, manufacturing, and design sectors have made requests for benefits that include adjustments to customs and income tax duties to support local ventures, outright incentivization of electronics component production, backing private research and development (R&D) teams to build products locally, and the establishment of new large ports and metropolitan cities that would boost consumption and enhance India’s logistics and distribution networks.

The decelerating growth rate of the electronics sector and minimal value creation are major concerns. Industry specialists said that with India's electronics manufacturing services (EMS) sector mainly involves product assembly, the amount of the generated revenue that remains within India —which qualifies as domestic value addition—is "around 15%."

Ashok Chandak, president of the industry body India Electronics and Semiconductor Association, stated that the limited value generation is a key cause of concern. “Even as we aim to chart a course to $500 billion in revenue for the local electronics market, the key aim has to be domestic value addition. Even today, the local value generation remains at around 15%—this needs to go up to at least 30%, or more in specific categories of the industry. To do this, a comprehensive component incentivization plan is key,” Chandak said.