Budget 2026-27: Centre Proposes ISM 2.0, Higher Electronics Outlay, Rare Earth Corridors, And Chemical Parks

Presenting the Union Budget 2026, the Centre announced a renewed push to manufacturing and industrial policy, including a new phase of the semiconductor mission, enhanced support for electronics manufacturing, rare earth processing and domestic chemical production.

On the semiconductor sector, Finance Minister Nirmala Sitharaman said that India's Semiconductor Mission 1.0 had expanded domestic capabilities. “Building on this, we will launch ISM 2.0 to produce equipment and materials, design full stack Indian IP and fortify supply chains,” she said.

She added that the government would focus on industry-led research and training centres to develop technology and a skilled workforce.

On electronics manufacturing, the Finance Minister said the electronics components manufacturing scheme launched last year had received strong investor response. “We propose to increase the outlay to ₹40,000 crore to capitalise on this momentum,” she said.

The Finance Minister also announced support for rare earth manufacturing. Referring to the government's efforts in rare earth permanent magnets, she said, “We now propose to support the mineral-rich states of Odisha, Kerala, Andhra Pradesh and Tamil Nadu to establish dedicated rare earth corridors to promote mining, processing, research and manufacturing.”

To reduce import dependence on chemicals, the Finance Minister said the government would launch a scheme to support states in establishing three dedicated chemical parks.