Introduction India’s electronics manufacturing sector is now growing faster than ever. In the Union Budget 2026–27, the government increased funding for the Electronics Components Manufacturing Scheme (ECMS) to ₹40,000 crore, showing a strong commitment to boost local production. Over the last decade, India has made huge progress—electronics production has grown nearly six times, and the sector has created around 25 lakh jobs. It has become an important source of employment and economic growth. India is also exporting more electronics and becoming a bigger part of global supply chains. Government policies and initiatives have helped strengthen domestic manufacturing, attract global companies, and expand exports. The ECMS aims to take this further by building a strong ecosystem for manufacturing electronic components within the country. The larger goal is ambitious: to create a $500 billion electronics manufacturing industry by 2030–31, making India a global technology leader while generating more jobs and opportunities at home. Sectoral Outlook: Electronics as India’s Leading Export Category India’s electronics sector has grown very quickly in recent years. According to the Economic Survey 2025–26, electronics have become India’s third-largest and fastest-growing export category in 2024–25. Just a few years ago (in 2021–22), it was in seventh place—so the rise has been quite rapid. In the first half of 2025–26 alone, electronics exports reached about USD 22.2 billion, showing strong momentum. If this continues, electronics could soon become India’s second-largest export sector. Production has also increased massively. It has grown from about ₹1.9 lakh crore in 2014–15 to ₹11.3 lakh crore in 2024–25—around six times higher. Exports have grown even faster, rising from ₹38,000 crore to ₹3.27 lakh crore, which is more than eight times growth. This expansion has also created a lot of jobs around 25 lakh people have been employed in electronics manufacturing over the past decade. Overview of ECMS The Electronics Components Manufacturing Scheme (ECMS) was launched on April 8, 2025 with a budget of about ₹22,919 crore (around USD 2.7 billion). It will run for six years, with an extra one-year preparation period if needed. The main goal of the scheme is to build a strong and self-reliant electronics manufacturing ecosystem in India. It aims to attract both Indian and global companies, increase local production of components, and make India an important player in the global electronics market. It also works alongside the India Semiconductor Mission (ISM) to strengthen the overall electronics and semiconductor sector. Through this scheme, the government wants more electronic components, sub-parts, and raw materials to be made within India, instead of relying heavily on imports. This will help India become part of global supply chains. By December 2025, the response to the scheme has been very strong: Approved Applications under ECMS Since it was launched, the Electronics Components Manufacturing Scheme (ECMS) has received a very positive response from companies across India. So far, 46 applications have been approved across 11 states. These approved projects together involve: The companies selected under the scheme will manufacture a wide range of important electronic components. These include things like printed circuit boards (PCBs), camera modules, connectors, oscillators, optical transceivers, and enclosures used in mobile phones, IT hardware, and other electronic devices. The approvals have been disbursed in three tranches, each contributing significantly to production capacity and job creation: Tranche Number of Projects Approval Date Investment (₹ crore) Projected Production (₹ crore) Direct Employment First 7 27 October 2025 5,532 36,559 5,100 Second 17 17 November 2025 7,172 65,111 11,808 Third 22 2 January 2026 41,863 2,58,152 33,791 These approvals demonstrate the scheme’s ability to attract substantial investment while supporting large-scale employment generation and the production of electronic components across the country. Projected Outcomes for FY 2026–27 ECMS is expected to deliver tangible outcomes during FY 2026–27, reflecting the scale up of approved projects and sustained industry participation. Investments made under the scheme are projected to translate into higher production capacity and steady job creation across the electronics component manufacturing ecosystem. Outcome Indicator Expected Outcome by end of FY 2026–27 Investment ₹11,156 crore Production ₹29,024 crore Employment generation 19,240 jobs Conclusion The Electronics Components Manufacturing Scheme (ECMS) has become a central pillar of India’s strategy to strengthen its electronics manufacturing sector. Recognising its importance, the government significantly increased its allocation to ₹40,000 crore in the Union Budget 2026–27, signalling a clear and strong commitment to expanding domestic manufacturing capabilities. The scheme has already started delivering tangible results by attracting substantial investments, boosting production levels, and creating large-scale employment opportunities. It is also helping build a robust ecosystem for electronic components within the country, which is crucial for reducing dependence on imports. By encouraging local value addition and integrating Indian manufacturers into global value chains, ECMS is positioning India as a reliable and competitive destination for advanced electronics manufacturing. Over time, this is expected to enhance technological capabilities, improve export performance, and strengthen India’s role in the global electronics industry.
Building Champion MSMEs for a Global India
Key Takeaways Union Budget 2026–27 Places MSMEs at the Centre of Growth MSMEs are very important for India’s growth and development. They help create jobs, especially in rural and backward areas, which reduces unemployment and poverty. There are more than 7.47 crore MSMEs in India, employing over 32.82 crore people, making them the second-largest source of employment after agriculture. They also contribute a lot to the economy—about 35.4% in manufacturing, 48.58% in exports, and 31.1% to GDP. The Union Budget 2026–27 focuses on helping the poor and disadvantaged and sets three main goals: to boost economic growth, meet people’s aspirations, and ensure equal opportunities and resources for all sections of society. To achieve this, the Budget proposes a three-step plan for MSMEs—providing financial support (equity), improving access to funds (liquidity), and offering better professional and managerial support—so that MSMEs can grow stronger and become leaders in the economy. Budget Reforms and Strategic Initiatives for MSME Sector The Ministry of Micro, Small & Medium Enterprises aims to build a strong and active MSME sector by supporting its growth. It mainly helps states promote entrepreneurship, create jobs, and improve the competitiveness of small businesses. Over the years, the government has steadily increased the budget for this Ministry, with a long-term focus on improving MSMEs through skill development and entrepreneurship. In the Union Budget 2026–27, several steps have been introduced to strengthen MSMEs by improving financial support, encouraging innovation, and making rules simpler, so they can compete better in India and globally. Under the first “Kartavya,” the government has introduced a three-part plan to help MSMEs grow into strong and successful businesses. The Budget also includes a tax-related reform to help MSMEs access global markets. It removes the ₹10 lakh limit per consignment on courier exports, which will make it easier for small businesses, artisans, and start-ups to sell products internationally through e-commerce. It will also improve the handling of returned or rejected goods using better technology for tracking. Powering MSMEs: Policies Turning Potential into Performance Coclusion Over the years, the MSME sector has become one of the strongest pillars of the Indian economy. It creates a large number of jobs with relatively low investment and plays an important role in developing rural and backward areas. By promoting industrial growth in these regions, MSMEs help reduce regional inequalities and support inclusive economic development. They also act as important support units for large industries, strengthening the overall industrial system. Today, MSMEs are central to India’s growth story. With their wide presence, adaptability, and strength, they are well-positioned to benefit from the growing focus on manufacturing and increasing global trade. The sector is gradually becoming more formal, innovative, and export-oriented, helping India integrate better into global value chains.
India’s Rare Earth Strategy
Key Takeaways Introduction India is making strong efforts to become self-reliant in critical materials by building its own system for producing Rare Earth Permanent Magnets (REPMs). These are high-performance magnets that are essential for modern technologies like electric vehicles, wind turbines, electronics, aerospace, and defence systems. To support this goal, the government approved a ₹7,280 crore scheme in November 2025 to develop a production capacity of 6,000 tonnes per annum. This plan covers the entire process—from extracting rare-earth materials to manufacturing finished magnets. Along with this, the Union Budget 2026–27 has proposed setting up Dedicated Rare Earth Corridors in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu. These corridors will help boost mining, processing, research, and manufacturing activities in this sector. All these steps are in line with India’s larger goals of becoming self-reliant (Atmanirbhar Bharat), achieving Net Zero emissions by 2070, and building a developed nation by 2047 (Viksit Bharat). Strategic Importance and Resource Potential Rare Earth Permanent Magnets are extremely important because they are used in many advanced and future technologies. They play a key role in clean energy systems like wind turbines and electric vehicles, making them crucial for India’s transition to green energy. They are also essential in defence equipment, electronics, and space technologies, which makes them important for national security and technological independence. India has significant reserves of rare-earth elements, especially in coastal sands and mineral-rich regions. This gives the country a strong opportunity to develop its own supply chain instead of depending on imports. By using these resources wisely and building domestic manufacturing capacity, India can reduce its dependence on other countries, strengthen its economy, and become an important player in the global market for advanced materials. India’s Resource Base India has a strong base of rare-earth resources, which can support the development of industries like Rare Earth Permanent Magnet (REPM) manufacturing. The country has around 13.15 million tonnes of monazite deposits, which contain about 7.23 million tonnes of rare-earth oxides (REO). These resources are spread across several states such as Odisha, Kerala, Andhra Pradesh, Tamil Nadu, West Bengal, Gujarat, Maharashtra, and Jharkhand, mainly found in coastal sands, red (teri) sands, and inland alluvial regions. In addition, about 1.29 million tonnes of REO resources have been identified in hard-rock areas of Gujarat and Rajasthan. The Geological Survey of India (GSI) has further strengthened this resource base by identifying 482.6 million tonnes of rare-earth ore across 34 exploration projects. Altogether, these findings show that India has a strong raw material foundation to build a complete REPM manufacturing ecosystem. However, despite having such rich resources, India’s domestic production of permanent magnets is still at an early stage. At present, the country depends heavily on imports—mainly from China—which account for nearly 60–80% of the value and 85–90% of the quantity of demand between 2022 and 2025. With the demand for these magnets expected to double by 2030 due to the rapid growth of electric vehicles, renewable energy, electronics, and defence sectors, it has become very important for India to invest more in this sector. Expanding domestic production will help reduce dependence on imports and ensure long-term self-reliance in these critical materials. Budget Push for Rare Earth Manufacturing and Corridors The Union Budget 2026–27 focuses strongly on making India self-reliant in critical materials. It supports the recently approved Rare Earth Permanent Magnet (REPM) Manufacturing Scheme and introduces new corridor-based initiatives. Together, these steps aim to build strong domestic capabilities, reduce dependence on imports, and help India become a global leader in advanced materials. REPM Manufacturing Scheme To boost self-reliance in critical materials, the government approved a major scheme for Rare Earth Permanent Magnets (REPMs) on 26th November 2025. This scheme provides financial support and incentives to develop a complete domestic manufacturing ecosystem. Union Budget 2026–27: Rare Earth Corridors To support the REPM scheme, the Union Budget 2026–27 has announced Dedicated Rare Earth Corridors in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu. These corridors will focus on the entire value chain—mining, processing, research, and manufacturing—by using the mineral-rich resources of these states. This initiative is expected to strengthen local economies, improve research and development, and help India become more integrated into global advanced materials value chains. These corridors also build on the existing presence of IREL (India) Limited in Odisha and Kerala. IREL (India) Limited, earlier known as Indian Rare Earths Limited, has been functioning under the Department of Atomic Energy since 1963. It has a processing capacity of 10 lakh tonnes per year and produces important minerals like ilmenite, rutile, zircon, sillimanite, and garnet. IREL also operates a Rare Earth Extraction Plant in Odisha and a Rare Earth Refining Unit at Aluva in Kerala. These facilities match well with the new corridor plan. By linking IREL’s existing infrastructure with these corridors, the government aims to increase domestic rare earth production, promote advanced manufacturing, and speed up India’s move towards self-reliance and clean energy. Rare Earth Development Aligned with National Goals ndia’s recent policy measures reflect how rare earth development is being aligned with broader national priorities. The focus is not only on industrial growth but also on clean energy, defence, and strategic resource security. Strengthening Global Mineral Partnerships India’s rare earth and critical minerals strategy is not limited to domestic reforms; it is closely tied to international cooperation to build resilient supply chains. Multilateral Platforms Role of Khanij Bidesh India Limited (KABIL) Conclusion India’s rare earth strategy is moving decisively toward self-reliance by combining strong domestic resource potential with targeted policy and financial support. The ₹7,280 crore REPM Manufacturing Scheme and the Union Budget 2026–27 announcement of Dedicated Rare Earth Corridors together create an integrated framework for mining, processing, research, and manufacturing. These measures reduce import dependence, strengthen clean energy and defence supply chains, and align with national priorities of Atmanirbhar Bharat, Net Zero 2070, and Viksit Bharat @2047. Complementary international partnerships and institutional reforms further ensure resilient access to critical minerals. With coordinated domestic and global initiatives, India is positioning itself as a reliable and competitive player in advanced materials value
Union Budget 2026–27
Why in News? The Union Minister of Finance and Corporate Affairs presented the Union Budget 2026–27 in Parliament, marking the first Budget prepared in the newly inaugurated Kartavya Bhawan. The Three Kartavyas What are the Key Highlights of the Union Budget 2026-27? First Kartavya: Accelerate & Sustain Economic Growth Second Kartavya: Fulfill Aspirations & Build Capacity The Budget highlights the growing importance of the “Orange Economy” by supporting creative industries. It proposes setting up Animation, Visual Effects, Gaming and Comics (AVGC) Content Creator Labs in 15,000 secondary schools and 500 colleges through the Indian Institute of Creative Technologies in Mumbai, helping students develop skills in creative and digital fields. To strengthen the tourism and hospitality sector, the government plans to establish a National Institute of Hospitality by upgrading the existing National Council for Hotel Management and Catering Technology, which will help bridge the gap between academic learning and industry needs. In the sports sector, the Budget expands the existing Khelo India programme into a full-fledged Khelo India Mission. This mission will focus on identifying and nurturing talent, improving coaching capacity, integrating sports science, promoting competitive leagues, and expanding sports infrastructure across the country. To boost India’s position in global healthcare services, the government has also proposed setting up five Regional Medical Hubs in partnership with the private sector. These hubs will support medical value tourism by offering integrated services such as AYUSH centres, diagnostics, post-treatment care, and rehabilitation. Additionally, to encourage greater participation of girls in science, technology, engineering, and mathematics (STEM), the government plans to establish one girls’ hostel in every district. This will be supported through Viability Gap Funding (VGF) or capital assistance, making it easier for girls to access quality education in STEM fields. Third Kartavya: Sabka Saath, Sabka Vikas The Budget introduces several initiatives aimed at improving agriculture, social empowerment, healthcare, and regional development. To transform agriculture, the government will launch Bharat-VISTAAR (Virtually Integrated System to Access Agricultural Resources), a multilingual AI-based platform that will combine AgriStack and ICAR data to provide personalized advice to farmers. Building on the success of the “Lakhpati Didis,” community-owned retail outlets called SHE Marts (Self-Help Entrepreneur Marts) will be established within cluster federations to strengthen women-led entrepreneurship and local economies. In the healthcare sector, the government has reaffirmed its commitment to mental health by announcing the establishment of NIMHANS-2 and upgrading institutes in Ranchi and Tezpur into Regional Apex Institutions. For regional development, especially in the North-East under the Purvodaya focus, a special scheme will be launched to develop Buddhist Circuits across states like Arunachal Pradesh, Sikkim, Assam, Manipur, Mizoram, and Tripura to promote tourism and cultural heritage. Additionally, an East Coast Industrial Corridor will be developed with a key node at Durgapur in West Bengal, along with the creation of five tourism destinations in five Purvodaya states. The Budget also emphasizes inclusive growth by supporting differently-abled individuals (Divyangjan) through targeted welfare efforts, including schemes like Divyang Sahara Yojana, to enhance their empowerment and participation in society. What are the Key Highlights of the Tax Reforms under Union Budget 2026-27? The Budget introduces major reforms in taxation and business regulations to simplify the system and encourage investment. A new Income Tax Act, 2025 will replace the old 1961 law from 1st April 2026, making tax rules simpler and easier to understand, while tax slabs for FY 2026–27 remain unchanged to ensure stability. Tax Collected at Source (TCS) on overseas tour packages and remittances for education and medical purposes under LRS has been reduced to a uniform 2% without any threshold. To remove confusion, TDS on manpower services is fixed at 1% for individuals/HUFs and 2% for others. The government has also decriminalized cases like not maintaining books of accounts and failure to pay TDS where payments are made in kind. Customs duty on goods imported for personal use has been reduced from 20% to 10%, and full exemption has been provided on 17 cancer drugs and medicines or foods for seven rare diseases. At the same time, Securities Transaction Tax (STT) has been slightly increased in some segments (from 0.1% to 0.15%) to reduce excessive speculation in stock markets. Non-residents paying tax on a presumptive basis will now be exempt from Minimum Alternate Tax (MAT). To improve tax administration, a joint committee of the Ministry of Corporate Affairs and the Central Board of Direct Taxes will align Income Computation and Disclosure Standards (ICDS) with Indian Accounting Standards (IndAS), removing the need for separate ICDS accounting from 2027–28 and simplifying compliance rules. The Budget also grants immunity from prosecution for non-disclosure of foreign assets below ₹20 lakh (with retrospective effect from 1st October 2024). Another key change is that share buybacks will now be taxed as capital gains in the hands of shareholders instead of companies. To promote investment and industry, foreign companies running global cloud services through Indian data centers will get a tax holiday till 2047, and tax holidays in IFSC (GIFT City) for offshore banking units have been extended from 10 to 20 years. Customs duty exemptions are also provided on capital goods for processing critical minerals like lithium and cobalt and for manufacturing lithium-ion cells. In the IT sector, the Safe Harbour threshold has been increased to ₹2,000 crore with a unified category for software development and KPO services. The Budget also focuses on boosting exports and ease of doing business. Duty-free import limits for inputs in marine, leather, and textile sectors have been increased to enhance export competitiveness. In aviation and defence, duty exemptions are provided for parts and components used in aircraft manufacturing and maintenance (MRO). Trade processes will be simplified through a single digital window for cargo clearance, instant clearance for non-compliant goods, rollout of the Customs Integrated System (CIS), and greater use of AI-based container scanning. Additionally, fish caught in the Exclusive Economic Zone (EEZ) or on the high seas will be duty-free, duty-free baggage allowances have been revised, and honest taxpayers will benefit from easier dispute settlement with reduced penalties. Macroeconomic Fundamentals Highlighted in Union
India Semiconductor Mission 2.0
Introduction The Union Budget 2026–27 marked a decisive moment for India’s technology ambitions with the announcement of India Semiconductor Mission 2.0. The new phase signals a clear policy push to deepen domestic semiconductor capabilities at a time when chips underpin every critical digital and industrial system. ISM 2.0 will focus on producing semiconductor equipment and materials in India, designing full stack Indian semiconductor intellectual property, and fortifying both domestic and global supply chains. A provision of Rs. 1,000 crore has been made for ISM 2.0 for FY 2026–27, with a strong emphasis on industry led research and training centres to drive technology development and create a future ready skilled workforce. Semiconductors are the backbone of modern electronics, powering computers, mobile devices, telecommunications, automobiles, defence systems and artificial intelligence. India has made steady progress in consolidating earlier investments into a full-stack value chain of its semiconductor ecosystem under ISM 1.0, expanding design capabilities and advancing fabrication, assembly and testing infrastructure across the country. This momentum reflects the broader vision of Aatmanirbhar Bharat and India’s transition from policy formulation to production readiness. Building on these gains, ISM 2.0 seeks to consolidate India’s position as a reliable and competitive participant in the global semiconductor network. Sectoral Outlook: India’s Semiconductor Ecosystem India is gradually becoming an important player in the global semiconductor industry. Increasing investments, growing manufacturing capacity, and events like SEMICON India 2025 show that global companies are gaining confidence in India’s potential. The domestic semiconductor market is expanding quickly—from about $38 billion in 2023 to around $45–50 billion in 2024–25, and it is expected to reach $100–110 billion by 2030. This growth is driven by the vision of “Make in India” and “Make for the World,” aiming to make India both a manufacturing hub and a global supplier. The base for this progress was set with India Semiconductor Mission (ISM) 1.0, approved in December 2021, with a support package of ₹76,000 crore. This scheme provides up to 50% financial support for semiconductor units like chip fabrication plants, packaging units, and design facilities. By December 2025, 10 major projects worth ₹1.60 lakh crore had already been approved across six states, covering areas like silicon fabrication, advanced packaging, and testing. These efforts are helping build a strong and self-reliant semiconductor ecosystem in India. Looking ahead, India is expected to be able to design and manufacture chips for about 70–75% of its domestic needs by 2029. The next phase, Semicon 2.0, will focus on more advanced technologies, aiming to produce cutting-edge chips like 3 nm and 2 nm nodes. By 2035, India aims to become one of the top semiconductor countries in the world. These semiconductor facilities will help meet the rising demand for chips in important sectors like consumer electronics, automobiles, telecom, industrial equipment, aerospace, and power systems. Importantly, many of the approved projects are using home-grown (indigenous) technologies for assembling, testing, and packaging chips. This shows that India is not just manufacturing, but also building its own technological capabilities. As a result, India is becoming less dependent on foreign technologies and strengthening its position in the global semiconductor supply chain. Anticipated Impact of Semiconductor Programme in 2026–27 India has updated its semiconductor strategy to keep up with increasing global competition, as only a few countries currently dominate advanced chip technology. Since many of these countries are offering strong incentives to attract investments, India has also adjusted its approach to remain competitive. The revised programme focuses on providing better financial support for key areas like semiconductor manufacturing, display fabrication, and chip design. For the year 2026–27, the government has allocated ₹8,000 crore under this scheme. The aim is to speed up investments, create high-quality jobs, and strengthen India’s capabilities in areas such as chip fabrication, packaging, and design, helping the country build a more self-reliant and competitive semiconductor ecosystem. Projected Targets under ISM for 2026–27 Scheme Key Indicator Projected Target Modified Scheme for Semiconductor Fabs (1 Fab to be supported) Investment during the year ₹4,000 crore Employment generated 1,500 persons Modified Scheme for Compound Semiconductors, Silicon Photonics, Sensors, Discrete Fabs and ATMP/OSAT (9 units to be supported) Investment by units during the year ₹11,000 crore Employment generated by supported units 3,000 persons Design Linked Incentive (DLI) Scheme (30 design companies to be supported) Semiconductor IP cores to be developed 10 Semiconductor design manpower employed 200 persons Why the India Semiconductor Mission Matters? emiconductors have become critical to the functioning of modern economies. Though rarely visible in everyday life, microprocessors quietly power systems that keep societies running. As highlighted in the Economic Survey 2025–26, they form the backbone of energy networks, financial markets and telecommunications. They enable manufacturing units, hospitals, transport systems and satellites. A reliable supply of semiconductors is therefore essential for economic stability and continuity across sectors. Recent global disruptions have underscored this dependence. The COVID-19 pandemic exposed serious weaknesses in semiconductor supply chains, with shortages affecting more than 169 industries worldwide. Production delays and rising costs followed, slowing economic activity across countries. These shocks revealed the risks of relying on a narrow set of suppliers. Today, the semiconductor industry is dominated by a few countries, including Taiwan, South Korea, Japan, China and the United States. Taiwan alone produces over 60 per cent of the world’s semiconductors and nearly 90 per cent of the most advanced chips, leaving global supply chains vulnerable to external shocks and geopolitical tensions. In response, major economies are recalibrating their strategies. The United States, the European Union, Japan and South Korea have launched national initiatives to strengthen domestic chip manufacturing and diversify supply chains. India is positioning itself within this global shift as a trusted and reliable partner. The India Semiconductor Mission responds directly to this moment. By building domestic capacity across design, manufacturing and innovation, ISM represents a critical step towards self-sufficiency and technological sovereignty, while strengthening India’s role in a more resilient global semiconductor ecosystem. At the core of this strategy lies a strong focus on semiconductor design and talent development, which together form the foundation of technological self-reliance. Conclusion India Semiconductor Mission (ISM)
India as a Global Hub for Cloud and AI Infrastructure
Key Takeways Introduction The Union Budget 2026–27 has introduced an important policy to make India a global centre for digital infrastructure. The government recognizes that technologies like cloud computing, AI data centres, and advanced electronics are becoming key drivers of economic growth. To attract global companies, the government has announced a tax holiday till 2047 for foreign cloud service providers that set up and operate data centres in India. This gives companies long-term financial certainty and encourages them to invest in India. Around the world, data centres are becoming a major area of investment. According to UNCTAD, they made up more than 20% of global greenfield investments in 2025, with over USD 270 billion in planned projects. This shows how countries are competing to attract digital infrastructure, especially due to the rising demand for AI and data-driven services. In this situation, India’s policy aims to bring more investment into the country, strengthen its digital economy, and make it an important part of global digital supply chains, supporting the long-term goal of becoming a developed nation (Viksit Bharat by 2047). Why This Policy Was Introduced? Data centres and cloud infrastructure need very high initial investment and take a long time to become fully operational. Especially for AI-based data centres, companies have to spend heavily on advanced computing systems, electricity supply, cooling systems, and skilled workers. As the global demand for AI computing power is increasing quickly, many countries are trying to attract these investments. In this situation, India’s decision to give a tax holiday till 2047 provides long-term certainty to companies. This makes India more attractive for global cloud providers and helps ensure that important digital infrastructure is built and located within the country. Understanding the Tax Holiday Provision The Budget proposes that a foreign company providing cloud services globally, while utilizing data centre services located in India, will be eligible for a tax holiday extending up to 2047. Under this framework: The exemption applies from Tax Year 2026–27 to Tax Year 2046–47, providing a stable, predictable tax environment for global cloud players investing in India’s data centre infrastructure. Defined Eligibility Framework The exemption is available to foreign companies providing cloud services under a structured framework. A foreign cloud service provider may avail the tax holiday where: Tax Treatment of Domestic Operations Under the proposed framework, profits arising from domestic economic activities will remain taxable as in the case of any other domestic company. These include: Further, where the Indian data centre is a related entity of the foreign company (operating as a cost-plus centre), a safe harbour margin of 15 percent on cost has been proposed. Linkage with Broader Technology Ecosystem Initiatives The tax holiday for data centres is part of a bigger plan in Budget 2026–27 to strengthen India’s overall technology and digital ecosystem. The government is working on different areas—from semiconductors and electronics to IT services and digital infrastructure. India Semiconductor Mission (ISM) 2.0 The government has launched ISM 2.0 to build strong semiconductor capabilities in India. It focuses on: For this, ₹1,000 crore has been allocated in 2026–27. The goal is to support industries like data centres and advanced computing, which depend on semiconductors. Electronics Components Manufacturing Scheme (ECMS) The budget has increased funding for this scheme from ₹22,000 crore to ₹40,000 crore. IT Services Reforms India’s IT sector is a major export earner (over USD 220 billion). To support it, the government has proposed: Overall: These steps aim to make India a strong, self-reliant, and globally competitive technology hub, supporting everything from chip manufacturing to IT services and digital infrastructure. India’s Expanding Cloud and Digital Infrastructure Base India’s cloud and data centre ecosystem is expanding in line with the country’s digital transformation and growing use of AI-enabled applications across sectors. Under the Digital India initiative, the national cloud infrastructure GI Cloud (MeghRaj) has been established to meet government cloud requirements. MeghRaj provides secure, scalable, and elastic cloud facilities for delivery of e-Governance services through the National Informatics Centre (NIC). National Data Centres operate with layered security frameworks supported by empanelled providers meeting international security standards. Industry estimates indicate that India’s cloud data centre capacity has reached around 1,280 MW and is projected to grow four to five times by 2030, reflecting rising demand for digital and AI infrastructure. Expanding AI and Cloud Data Centre Infrastructure Data centres, especially AI-focused facilities, form the backbone of modern digital infrastructure. Investments of nearly USD 70 billion are already underway in India’s data centre sector, with an additional USD 90 billion in announced projects, highlighting the scale of expansion. The proposed tax framework extending to 2047 provides long-term policy visibility for such capital-intensive investments. The tax holiday for foreign cloud providers complements broader technology initiatives announced in Budget 2026–27, including India Semiconductor Mission 2.0 and enhanced allocation for the Electronics Components Manufacturing Scheme, complementing digital infrastructure expansion. Together, these measures strengthen both digital infrastructure and electronics manufacturing capacity. Global Policy Momentum in AI Data Centre Infrastructure Across the world, governments are actively supporting the growth of AI data centres and digital infrastructure because they are now seen as essential for economic and technological development. In the United States, a Presidential order has been issued to speed up the building of large AI data centres. It focuses on: These projects are very large in scale—some require over 100 megawatts of power, showing how massive AI infrastructure has become. In China, companies are also rapidly expanding their AI and cloud infrastructure. They are investing heavily in: This shows that countries see digital infrastructure as the foundation for AI growth and future technologies. In this global competition, India’s policy of offering a long-term tax holiday for data centres gives companies confidence and stability to invest. It helps India attract big investments, build its own digital infrastructure, and become an important player in the global digital economy. Conclusion The tax holiday announced in the Union Budget 2026–27 gives long-term policy stability to global companies investing in cloud services and AI data centres in India, with benefits extending till 2047. Since building data centres requires huge investments and takes time, this kind of long-term clarity helps companies
Travelling Across the Industrial Corridors of India
Key Takeaways Introduction Industrial corridors have become an important strategy for strengthening India’s industrial growth. They help reduce production costs, improve connectivity to markets, and integrate Indian industries with global supply chains. To promote this model, the Government of India, along with State Governments, is developing planned industrial zones with strong transport links such as roads, railways, and ports. This approach is part of the National Industrial Corridor Development Programme (NICDP), which aims to build modern manufacturing hubs with multimodal connectivity and ready-to-use infrastructure for industries. Supporting this vision, the Union Budget 2026–27 announced the development of an integrated East Coast Industrial Corridor, including a well-connected industrial node at Durgapur. These initiatives are creating new greenfield industrial regions designed to attract investment and compete with leading global manufacturing hubs. What are Industrial Corridors and why do they matter? Industrial corridors are planned development zones that connect major economic centres through strong transport networks such as roads, railways, ports, and airports. These corridors aim to create areas where industries can grow quickly and operate efficiently. Their key features include: Why Industrial Corridors Are Important? Industrial corridors help transform regional economies by creating efficient and competitive industrial environments. Their importance includes: Strategic Government Interventions for Industrial Corridor Development As India works towards building modern and well-connected industrial corridors, several government initiatives are helping create a strong foundation for sustainable and competitive industrial growth. National Industrial Corridor Development Programme (NICDP) Under this programme, the Government of India is developing multiple industrial corridor projects across the country. These corridors are planned using the PM GatiShakti framework, which ensures better coordination and multimodal connectivity between major economic and industrial zones. At present, projects are being implemented across 11 industrial corridors. The development of these corridors follows a sustainability-focused approach, aiming to create low-carbon and environmentally friendly industrial cities. Key features of this approach include: Through these measures, the programme aims to build modern, sustainable, and globally competitive industrial regions in India. S. No. Name of the Corridor Major Projects / Nodes 1 Delhi–Mumbai Industrial Corridor (DMIC) Dholera Special Investment Region (Gujarat); Shendra Bidkin Industrial Area (Maharashtra); Integrated Industrial Township – Greater Noida (Uttar Pradesh); Integrated Industrial Township – Vikram Udyogpuri (Madhya Pradesh); Multi Modal Logistics Hub & Multi Modal Transport Hub – Dadri/Greater Noida (Uttar Pradesh); Integrated Multi-Modal Logistics Hub – Nangal Chaudhary (Haryana); Dighi Port Industrial Area (Maharashtra); Multi-Modal Logistics Park – Sanand (Gujarat); Jodhpur–Pali–Marwar Industrial Area (Rajasthan); Khushkhera–Bhiwadi–Neemrana Industrial Area (Rajasthan) 2 Chennai–Bengaluru Industrial Corridor (CBIC) Krishnapatnam Industrial Area (Andhra Pradesh); Tumakuru Industrial Area (Karnataka); Ponneri Industrial Area (Tamil Nadu) 3 Amritsar–Kolkata Industrial Corridor (AKIC) Raghunathpur Industrial Park (West Bengal); Hisar Integrated Manufacturing Cluster – IMC (Haryana); Prag Khurpia IMC (Uttarakhand); Rajpura–Patiala IMC (Punjab); Node near Kanpur for IMC (Uttar Pradesh); Bokaro Node (Jharkhand); IMC at Gaya (Bihar) 4 Vizag–Chennai Industrial Corridor (VCIC) Koparthy Industrial Area; Visakhapatnam Industrial Area; Chittoor Industrial Area (all in Andhra Pradesh) 5 Bengaluru–Mumbai Industrial Corridor (BMIC) Dharwad Node (Karnataka); Satara Node (Maharashtra) 6 Extension of CBIC to Kochi via Coimbatore (ECKC) Palakkad Industrial Area (Kerala); Dharmapuri–Salem Industrial Area (Tamil Nadu) 7 Hyderabad–Nagpur Industrial Corridor (HNIC) Zaheerabad Phase-1 (Telangana) 8 Hyderabad–Warangal Industrial Corridor (HWIC) Hyderabad Phase-1 (Telangana) 9 Hyderabad–Bengaluru Industrial Corridor (HBIC) Orvakal Industrial Area (Andhra Pradesh) 10 Odisha Economic Corridor (OEC) Gopalpur–Bhubaneswar–Kalinganagar Node; Paradip–Kendrapada–Dhamra–Subernarekha Node (Odisha) 11 Delhi–Nagpur Industrial Corridor (DNIC) — Current Status of some projects across Industrial Corridors Name of the Corridor Completed Projects Description Investments Delhi–Mumbai Industrial Corridor (DMIC) Dholera Special Investment Region (DSIR), Gujarat India’s first semiconductor city and the largest DMIC node (920 sq. km). Developed by Dholera Industrial City Development Limited (DICDL). Well connected through NH-8 and Dedicated Freight Corridors with large scalable land parcels for industries. About 22.54 sq. km activation area is nearly complete with full trunk infrastructure. Phase-I cities including DSIR, SBIA, IIT-GN and IIT-VUL have allotted 350 industrial plots, attracting ₹2.02 lakh crore investments in sectors like electronics, renewables, pharma and EVs. Delhi–Mumbai Industrial Corridor (DMIC) Shendra-Bidkin Industrial Area (SBIA), Maharashtra A greenfield smart industrial city in Chhatrapati Sambhajinagar with world-class infrastructure and plug-and-play facilities. Well connected to Aurangabad Airport and the Golden Quadrilateral. Focus sectors include EVs, automotive, aerospace and electronics. Potential to attract ₹67,815 crore investment and generate 55,000+ jobs. Delhi–Mumbai Industrial Corridor (DMIC) Integrated Industrial Township – Greater Noida (IIT-GN), Uttar Pradesh Spread over 747 acres southeast of Greater Noida. Connected to the Eastern Peripheral Expressway and Delhi-Howrah Railway Line. Close to Boraki transit hub and Dadri logistics hub, with access to IGI Airport, Jewar Airport and Hindon Airport. Part of the ₹2.02 lakh crore investments attracted by Phase-I DMIC cities. Delhi–Mumbai Industrial Corridor (DMIC) Integrated Industrial Township – Vikram Udyogpuri (IIT-VUL), Madhya Pradesh Spread over 1,100 acres in Ujjain, forming a key node of the DMIC and supporting the Pithampur-Dhar-Mhow investment region. Located near SH-18 and the Ujjain-Dewas railway line with strong infrastructure such as roads, power, water supply and sewage treatment plants. Included in the ₹2.02 lakh crore investments attracted by Phase-I DMIC nodes. Name of the Corridor Projects Nearing Completion Chennai–Bengaluru Industrial Corridor (CBIC) Tumakuru Industrial Area (Karnataka); Krishnapatnam Industrial Area (Andhra Pradesh) Delhi–Mumbai Industrial Corridor (DMIC) Integrated Multi-Modal Logistics Hub (IMLH) – Nangal Chaudhary (Haryana); Multi-Modal Logistics Hub & Multi-Modal Transport Hub – Dadri, Greater Noida (Uttar Pradesh) Introduction of 12 additional Projects As per the Budget 2024-25 announcement, 12 projects under the National Industrial Corridor Development Programme were approved by the Government of India in August 2024 with a total project cost of ₹28,602 crore. These industrial smart cities are envisioned to develop globally benchmarked manufacturing and investment hubs, featuring plug-and-play facilities, smart city planning, and a walk-to-work ecosystem. They aim to create best-in-class, future-ready infrastructure designed ahead of demand. National Industrial Corridor Development Corporation Limited (NICDC) The National Industrial Corridor Development Corporation Limited (NICDC), earlier known as the Delhi–Mumbai Industrial Corridor Development Corporation (DMICDC), was established in January 2008 by the Government of India. Its main role is to plan, coordinate, and implement the National Industrial Corridor Development Programme (NICDP). NICDC
RBI Proposes Relief for Small Digital Fraud Victims
Context: The Reserve Bank of India (RBI) has proposed a new measure to provide quick financial relief to victims of small digital frauds. Under the proposal, customers who lose money in online frauds may receive compensation within five days of reporting the incident. Background: Growth of Digital Payments and Fraud Risks in India Existing RBI Framework on Customer Liability Additional Safety Measures for Digital Payments Related Consumer Protection Reforms by RBI Significance for India’s Digital Economy The proposed compensation framework for digital fraud is important for several reasons: For a country like India, which aims to become a global leader in digital public infrastructure, maintaining and protecting users’ confidence in digital payment systems is extremely important. Challenges and Implementation Concerns
National Green Hydrogen Mission
Why in News? The Government of India has announced standards for green ammonia and green methanol to promote trade and production of green hydrogen derivatives under the National Green Hydrogen Mission. Introduction The National Green Hydrogen Mission aims to build a strong environment in India for the production, use, and development of green hydrogen technologies. Its main goal is to promote clean energy, reduce dependence on imported fossil fuels, and move the country towards a more sustainable and self-reliant energy system. Green hydrogen is produced by splitting water into hydrogen and oxygen through a process called electrolysis. When this process uses electricity generated from renewable sources such as solar or wind power, the hydrogen produced is considered “green” because it does not release carbon emissions. Due to its clean nature and ability to store energy, green hydrogen is increasingly seen as an important solution for reducing emissions in sectors like industry, transport, and power. India has strong potential to lead in this field because of its vast renewable energy capacity and its growing focus on addressing climate change. By promoting the production and use of green hydrogen, the mission seeks to make India a global hub for green hydrogen production and export while supporting the country’s long-term transition to a low-carbon economy. National Green Hydrogen Mission In January 2023, the Union Cabinet of India approved the National Green Hydrogen Mission, which marked an important step toward achieving the country’s sustainable energy goals and climate commitments. Expected Outcomes by 2030: Expected Outcomes by 2030: Expected Outcomes by 2030: National Green Hydrogen Mission Implementation The mission aims to roll out in stages, initially targeting existing hydrogen-utilizing sectors for Green Hydrogen deployment and ecosystem development, then expanding to new economic sectors, with each phase’s key focus areas outlined. National Green Hydrogen Mission Benefits and Goals The National Green Hydrogen Mission (NGHM) aims to make India a global hub for the production, use, and export of green hydrogen and its derivatives. Some of the important benefits and goals of the mission are as follows: The overall aim of the National Green Hydrogen Mission is to make India self-reliant (Aatmanirbhar) in clean energy while also contributing to and inspiring the global transition towards sustainable energy. National Green Hydrogen Mission Challenges The National Green Hydrogen Mission in India faces several challenges that need to be addressed for its successful implementation. Some of the key obstacles include: FAQ’s Q1. What is the National Green Hydrogen Mission?The National Green Hydrogen Mission is a government initiative launched by India to promote the production, use, and export of green hydrogen. The mission focuses on developing a strong ecosystem for green hydrogen technologies so that clean energy can be widely adopted. It also aims to reduce dependence on fossil fuels and support India’s transition toward a low-carbon and sustainable energy system. Q2. What is the objective of the mission?The main objective of the mission is to make India a global hub for the production, utilization, and export of green hydrogen and its derivatives. It also aims to strengthen energy security, reduce carbon emissions, encourage domestic manufacturing of related technologies, and support the country’s long-term climate goals. Q3. What are the key targets and benefits of the mission?The mission aims to achieve a green hydrogen production capacity of at least 5 million metric tonnes per year by 2030 and add around 125 GW of renewable energy capacity. It is also expected to attract large investments, create lakhs of employment opportunities, reduce fossil fuel imports, and significantly cut greenhouse gas emissions, thereby contributing to a cleaner and more sustainable economy. Q4. What are the Strategic Interventions for Green Hydrogen Transition (SIGHT)?SIGHT is a major programme under the National Green Hydrogen Mission that provides financial incentives to promote the domestic manufacturing of electrolysers and the production of green hydrogen. The goal is to encourage industries to invest in green hydrogen technologies, reduce production costs, and help build a strong green hydrogen ecosystem in India.
Export Promotion Mission
What is the Export Promotion Mission (EPM)? What is the Status of India’s Export Industry? What are India’s Major Initiatives to Promote Exports? Initiative Purpose / Key Features PM Gati Shakti National Master Plan Integrates infrastructure planning across sectors to improve multimodal connectivity and reduce logistics time and costs. National Logistics Policy (NLP) Aims to lower logistics costs in India by promoting multimodal transport systems and digital logistics platforms. Credit Guarantee Scheme for Exporters (CGSE) Provides a 100% government guarantee to exporters, including MSMEs, to improve access to credit, boost liquidity, and enhance global competitiveness. Remission of Duties and Taxes on Exported Products (RoDTEP) Refunds embedded taxes and duties that are not covered under GST, thereby improving the price competitiveness of Indian exports. Rebate of State and Central Taxes and Levies (RoSCTL) Offers rebates on state and central taxes specifically for the textile and apparel export sector. Production Linked Incentive (PLI) Schemes Encourages large-scale manufacturing and exports in sectors such as electronics, pharmaceuticals, textiles, drones, and others. TIES (Trade Infrastructure for Export Scheme) Supports the development of export-related infrastructure such as testing laboratories, inland container depots (ICDs), cold storage facilities, and border haats. Free Trade Agreements (FTAs) Improves market access and reduces tariffs through trade agreements with countries and regions such as UAE, Australia, and EFTA. Districts as Export Hubs (DEH) Promotes district-level products by supporting branding, capacity building, and logistics improvements to expand export potential. MSME Lean & ZED Schemes Helps MSMEs improve quality, reduce waste, and adopt global production and sustainability standards. Conclusion The Export Promotion Mission (EPM) establishes a unified and technology-driven system aimed at strengthening India’s overall export ecosystem. By bringing together various export-support initiatives under a single framework, it helps streamline policies, improve coordination among institutions, and make support mechanisms more accessible to exporters. The mission also uses digital platforms to ensure faster processing, greater transparency, and more efficient delivery of services. In addition, complementary measures taken by the Reserve Bank of India (RBI) and the availability of credit guarantee schemes help improve access to finance and reduce liquidity challenges faced by exporters, especially MSMEs. Together, these initiatives enhance the stability and resilience of India’s export sector while strengthening the country’s position and competitiveness in global trade. FAQ’s Q. What is the Export Promotion Mission (EPM)? EPM is a six-year, digitally enabled mission (outlay â‚ą25,060 crore for FY2025–26 to FY2030–31) that consolidates export support through Niryat Protsahan and Niryat Disha to boost MSME and labour-intensive exports. Q. What are Niryat Protsahan and Niryat Disha? Niryat Protsahan provides affordable trade finance (interest subvention, factoring, collateral support); Niryat Disha offers quality/compliance aid, branding, trade-fair support, warehousing and district-level logistics facilitation. Q. How does the Credit Guarantee Scheme for Exporters (CGSE) support exporters? CGSE expands export credit by up to Rs 20,000 crore with 100% government guarantee (via NCGTC), enabling collateral-free loans and additional working capital for eligible exporters, especially MSMEs.
