The electronics and semiconductor industry is hopeful of fiscal incentives in the Union budget to support the growth and competitiveness of the sector.

India Electronics and Semiconductor Association (IESA) has proposed the introduction of additional production linked incentives for electronics manufacturing of 25 per cent in 2025-26 and 30 per cent by 2027 connected to local value addition, with a focus primarily on the mobile phone segment.

The association has proposed $5 billion to be considered for allocation as incentives for the electronics components industry specifically for companies and joint ventures having majority stake by Indian corporates and entrepreneurs.

“There is a need to increase the local value addition for electronics industry from the current 18 per cent to 40 per cent. This will create job opportunities and retain significant economic value domestically,” said Ashok Chandak, president, IESA.

The industry is also in favour of a 2 per cent additional incentive and tax benefit for the export of semiconductor and electronic products that meet value addition norms.

“Targeted export incentives are necessary to position India as an exporter of electronics and semiconductors,” said Chandak.

He added that for electronics and semiconductor industry to thrive, there is also a need for product creation and intellectual property rights development through dedicated research and development for which allocations could be considered on public-private-partnership model, which is separate from generic funding.

The association is also optimistic that the Union budget would extend the production linked incentive scheme for semiconductors beyond the current allocation of ₹76,000 crore (approximately $10 billion) to $20 billion over the next five years.

“The Semicon India program and Indian Semiconductor Mission have delivered on job creation, foreign investment, industrial self reliance and bolstered India’s position in the global semiconductor market,” said Chandok, adding that there is a need to double the allocation to $20 billion to support the next phase of growth and innovation.