ICEA Welcomes Budget 2026–27’s Continued Focus on Manufacturing, Flags Key Structural Gaps

New Delhi | February 01st, 2026: India Cellular and Electronics Association (ICEA) said that Union Budget 2026–27 adopts a steady and largely inclusive approach, reinforcing India’s manufacturing and technology ecosystem through policy continuity, scale, and targeted reforms.

The sustained focus on electronics manufacturing, the launch of India Semiconductor Mission (ISM) 2.0, and the significant expansion of the Electronics Component Manufacturing Scheme (ECMS) reaffirm the government’s long-term commitment to building resilient domestic supply chains and strengthening India’s position in global value chains.

ICEA also welcomed the announcement of a tax holiday till 2047 for foreign companies offering global cloud services using India-based data centres, describing it as a forward-looking measure that provides long-term policy certainty, anchors global digital infrastructure in India, and enhances the country’s credibility as a trusted hub for data, cloud, and AI-led services. Long term predictability as provided in this measure will be a sure win for our nation.

Additional measures such as the five-year income tax exemption for foreign suppliers of capital equipment in bonded zones, the Safe Harbour framework for non-resident component warehousing, customs decriminalisation, and extended validity of advance rulings are expected to improve ease of doing business, reduce compliance friction, and strengthen investor confidence.

However, ICEA noted that there are a few unfinished businesses. Inverted duty structures across capital equipment, display assemblies, inductors, FPCA, MICs, receivers, speakers, and specialised inputs continue to impact cost competitiveness. Partial progress on MOOWR reforms, limited clarity on tax-neutral VMI models, and residual uncertainty around Permanent Establishment (PE) exposure for foreign-owned capital equipment remain constraints to faster scale-up.

Commenting on the Budget, Mr. Pankaj Mohindroo, Chairman, ICEA, said: “Budget 2026–27 reinforces the government’s commitment to manufacturing-led growth, particularly in electronics and semiconductors, through continuity, scale, and targeted reforms. Measures such as the expansion of ECMS, support for ISM 2.0, and long-term incentives for cloud and data infrastructure send a strong signal of strategic intent and policy stability. 

“At the same time, key structural issues, especially inverted duty structures, unfinished MOOWR reforms, and tax-related uncertainties, need timely resolution to ensure cost competitiveness and speed of execution,” Mr. Mohindroo added.

ICEA Chairman further stated that the exponential growth in mobile manufacturing has clearly demonstrated what bold and consistent policy measures can achieve. “To replicate this success across sectors and move towards 25% of GDP through manufacturing, the National Manufacturing Mission is a need of the nation, enabling the ecosystem to truly fire on all cylinders,” he said.

ICEA reiterated its commitment to working closely with the government and stakeholders to support policy implementation and accelerate India’s journey towards becoming a globally competitive electronics manufacturing hub.