India Budget 2026 Push For Electronics Manufacturing Growth
India’s electronics manufacturing sector has intensified its pre-budget advocacy ahead of the Union Budget 2026, seeking targeted cuts in customs duties and structural tax incentives aimed at lowering input costs and boosting domestic production capacity. Industry bodies are urging the government to recalibrate tariff structures that they say currently disadvantage Indian manufacturers relative to global peers, with wider implications for jobs, exports and supply-chain resilience as the country pursues deeper industrial self-reliance.
Electronics manufacturers argue that high levies on key components — including microphones, connectors and printed circuit boards — raise production costs and undermine India’s competitiveness, even as exports continue to grow. They want basic customs duty cuts on specific sub-assemblies, rationalisation of inverted duty structures where parts face higher tax than finished products, and relief on capital equipment — a step they say would help attract investment in advanced manufacturing and battery production. In formal pre-budget submissions, major trade associations such as the India Cellular and Electronics Association (ICEA) and the Manufacturers’ Association for Information Technology (MAIT) have also called for simpler customs classification systems and operational reforms to reduce friction in bonded warehousing and logistics. Industry strategists say these steps are essential to maintaining momentum from schemes like the Production-Linked Incentive (PLI) programmes and the Electronics Components Manufacturing Scheme (ECMS), which together have catalysed investment and increased domestic value addition in recent years.
The debate over tariff rationalisation reflects a broader policy challenge: India has made notable strides in assembling and exporting mobile phones and consumer electronics, yet critical components and capital goods are still largely imported, limiting deep supply-chain localisation. Rationalising duties on these inputs could reduce reliance on imports, support upstream manufacturing and create better alignment with global production hubs — a strategic priority as geopolitical uncertainties and supply-chain realignments reshape manufacturing flows worldwide. From an urban economic perspective, the drive for duty reforms resonates with the aspirations of cities and industrial districts that are emerging as manufacturing hubs. Deepening electronics manufacturing beyond assembly into sub-systems and components can spur local job creation, strengthen supporting industries, and improve infrastructure utilisation in manufacturing corridors across states such as Tamil Nadu, Karnataka and Uttar Pradesh. Analysts note that policy clarity and administrative efficiency will be crucial to translate budgetary intentions into long-term industrial investment.
Experts also highlight potential export benefits. India’s electronics exports recently crossed notable milestones, with the sector showing robust growth as global brands diversify production footprints. However, cost disadvantages linked to high component duties could dampen export competitiveness unless the budget implements calibrated tax reductions that align with international norms. Environmental and sustainability considerations intersect with this agenda as well. Localising manufacturing reduces freight-related carbon emissions and supports circular economy strategies, including modular design and repair infrastructure. Urban planners emphasise that integrating sustainability criteria into manufacturing incentives could reinforce decarbonisation goals while supporting industrial expansion.
The upcoming budget will test policymakers’ willingness to balance revenue imperatives with long-term industrial strategy. If the government responds to calls for duty rationalisation and operational reforms, India could strengthen its positioning as a global electronics hub — enhancing jobs, exports and sustainable industrial growth.
