Semiconductor Industry Seeks Higher PLI Allocations in Budget 2025

With the Union Budget 2025-26 approaching, market analysts and industry leaders in the semiconductor sector are anticipating a substantial allocation that could propel India towards self-sufficiency in chip manufacturing. The goal is to establish multiple semiconductor fabrication plants across the country.

In the FY24 budget, the semiconductor industry received a significant allocation of ₹6,903 crore. Experts are optimistic that the government will substantially increase the funding in the Union Budget 2025-26.

Stakeholders in the market are hopeful that the Production-Linked Incentive (PLI) scheme could be expanded to cover IoT, wearables, and AI-driven devices. Additionally, increased investment in research and development for semiconductor manufacturing would be seen as a positive move.

A recent report from brokerage firm Asit C Mehta recommended lowering import duties on essential components to reduce production costs, providing manufacturers with an added advantage.

"We expect a sustained emphasis on strengthening semiconductor and display manufacturing. This includes expanding semiconductor fabrication units, upgrading infrastructure, and enhancing India's role in global supply chains," stated Avneet Singh Marwah, CEO of Super Plastronics, a XXX.

He further highlighted that tax cuts on electronic components and raw materials, along with exemptions on key minerals such as lithium, copper, and rare earth elements, would improve India's global competitiveness.

In the same vein, Krishna Vij, Vice President at TeamLease Digital, emphasized that with over $20 billion in domestic investments, it is imperative for the budget to allocate significant resources towards advancing the semiconductor ecosystem, fostering innovation, and promoting self-sufficiency.

"The expected tax reforms, particularly a streamlined framework under Section 44, will make India an attractive hub for global semiconductor firms, strengthening both domestic manufacturing and international competitiveness," Vij added.

The Indian government introduced the India Semiconductor Mission in December 2021, unveiling a ₹76,000-crore incentive program that provides a 50% capital expenditure subsidy for setting up semiconductor plants.

Currently, major publicly traded companies in this space include Tata Elxsi, BHEL, CG Power, and Tata Technologies. Any favorable announcements for the semiconductor sector in the upcoming budget could trigger a significant surge in these stocks.