The budget allocation for the ministry of electronics and technology (MeitY) increased by 48.16% from the revised estimate (RE) for FY25, primarily focussed on giving a boost to two sectors – electronics manufacturing and manufacturing of semiconductors. MeitY has been allocated ₹26,026.25 crore for FY 26, up from ₹17,566.31 crore (RE FY25). Allocation for the IndiaAI Mission and cyber security projects also increased.

Electronics manufacturing

Finance minister Nirmala Sitharaman, in her budget speech, announced that the basic custom duty (BCD) on Interactive Flat Panel Display (IFPD) will be increased from 10% to 20% and reduced on Open Cell and other components to 5%. The BCD on open cells of LCD/LED TVs will be exempted. The BCD on inputs for camera modules, wired headsets, microphones and receivers, USB cable, fingerprint reader/sensor of cellular mobile phone has also been reduced to zero. The BCD on carrier-grade ethernet switches has been reduced from 20% to 10%.

Pankaj Mohindroo, the chairperson of India Cellular and Electronics Association (ICEA), said that this rationalisation of tariffs on key inputs and components would “create a more competitive cost structure” that allows for greater integration with global value chains.

Sitharaman also proposed a presumptive taxation regime for non-residents who provide services to a resident company that is establishing or operating an electronics manufacturing facility. This means that such non-residents will pay a fixed percentage of their turnover or gross receipts, irrespective of their actual expenses.

Allocation for the production linked incentive (PLI) schemes got a 55.8% fillip from ₹5,777 crore (RE FY250 to ₹9,000 crore. Bulk of it was directed towards the PLI scheme for large scale electronics manufacturing whose allocation went from ₹5,747 crore (RE FY25) to ₹8,885 crore (BE FY26), a 54.6% increase. The allocation for PLI scheme for manufacturing IT hardware almost quadrupled from ₹30 crore (RE FY25) to ₹115 crore (BE FY26).

Semiconductors

To boost the development of semiconductors and display manufacturing ecosystem in India, allocation has been upped by 83.4% from ₹3,816.47 crore (RE FY25) to ₹7,000 crore (BE FY26). In particular, the budget to set up semiconductor fab units in the country has been more than doubled from ₹1,200 crore (RE FY25) to ₹2,499.96 crore (BE FY26).

The funding to set up ATMP (assembly, testing, marking and packaging) and OSAT (outsourced semiconductor assembly and test) units, and facilities to manufacture compound semiconductors, silicon photonics, sensors fab, and other semiconductor-related equipment, was upped by 56% from ₹2,500 crore (RE FY25) to ₹3,900 crore (BE FY26).

The government has increased its allocation for the modernisation of the Semiconductor Laboratory in Mohali from ₹11 crore (RE FY25) to ₹400 crore (BE FY26). It has almost doubled the allocation for the design linked incentive (DLI) scheme from ₹105.46 crore (RE FY25) to ₹200 crore (BE FY26) to focus on promoting indigenous intellectual property related to semiconductors.

IndiaAI Mission sees 11x increase in allocation

The IT ministry allocated ₹2,000 crore to the IndiaAI Mission for FY25, up almost eleven times from the revised budget estimated of ₹173 crore for FY25. In the July budget for FY25, IndiaAI Mission was allocated ₹551.75 crore, 68.65% more than the revised estimate for FY25.

The Centre had approved ₹10,371.92 crore in March 2024 for the IndiaAI Mission, of which 44%, or ₹4,563.36 crore, is earmarked for providing compute capacity of more than 10,000 graphics processing units (GPUs) over a period of five years.

Allocation for cyber security projects increases

The allocation for cyber security projects increased from ₹322 crore (RE FY25) to ₹590 crore (BE FY26), marking an 83.2 % increase.

Allocation for the Computer Emergency Response Team (CERT-In) increased marginally from ₹241 crore (RE FY25) to ₹255 crore (BE FY26), a 5.8% increase. Separately, the department of telecommunications (DoT), more than halved the budget for its own Telecom Cert (T-CERT) from ₹167 crore (RE FY25) to ₹73 crore (BE FY26). The DoT has also allocated ₹10 crore to set up a unified portal to operationalise a lot of the government’s new rules related to rules under the Telecommunications Act, 2023 that have been notified and brought into effect over the last six months.

Allocation for the National Informatics Centre (NIC) under MeitY, which maintains the government’s computer infrastructure, also saw a faint 4% increase from ₹1,538.34 crore (RE FY25) to ₹1,600 crore (BE FY26).

Data Protection Board’s budget increased

The budgetary allocation for Data Protection Board of India (DPB) was increased by 2.5 times to ₹5 crore for FY26. Of this, ₹50 lakh have been allocated towards capital expenditure (which includes fixed assets such as the digital portal in this case) and ₹4.5 crore towards revenue expenditure (which includes salaries, etc.). In the July budget, the government had allocated ₹2 crore to meet the establishment and salary expenses DPB

In order to operationalise the Digital Personal Data Protection Act, 2023, which was notified in the gazette in August 2023, establishing a DPB is crucial. MeitY released draft data protection rules for consultation on January 3, which proposed staggered implementation of the rules with provisions related to the DPB going into effect first.

The rules are expected to be notified by the middle of this year, IT minister Ashwini Vaishnaw had said after the release of draft rules. The government and private companies will be given about 24 months to ensure compliance, the minister and IT secretary S Krishnan had said.

Under the act, the DPB is to function as a digital office as far as possible and will be “digital by design”. It will consist of a chairperson and a number of members to be determined by the central government who will hold the office for two years.