Union Budget 2026: How Amber Enterprises Gains from the ₹40,000 Crore Electronics Push

As India moves toward the ambitious goals of Viksit Bharat, the Union Budget 2026 has emerged as a pivotal catalyst for the electronics and consumer durables sector. For Amber Enterprises India Ltd, a dominant player in the Room Air Conditioner (RAC) and Electronics Manufacturing Services (EMS) space, the budget provides a clear roadmap for its ongoing transition from a cooling-focused OEM to a diversified electronics powerhouse.

Finance Minister Nirmala Sitharaman’s announcements regarding the Electronics Components Manufacturing Scheme (ECMS) and customs duty rationalization directly address the structural needs of companies like Amber. While the company has faced recent quarterly volatility, the long-term policy framework established in this budget offers significant support for its capital-intensive expansion plans.

The ₹40,000 Crore Electronics Manufacturing Boost

The most significant takeaway for Amber Enterprises is the massive expansion of the Electronics Components Manufacturing Scheme. Originally launched in April 2025 with an outlay of ₹22,919 crore, the Union Budget 2026 has nearly doubled this allocation to ₹40,000 crore. This move is designed to deepen value addition within India, moving beyond simple assembly to the manufacturing of complex components.

Amber, through its subsidiaries like IL JIN Electronics and Shogini, is heavily invested in Printed Circuit Board (PCB) manufacturing. The increased outlay provides a more robust incentive structure for Amber’s new multi-layer PCB facility at Hosur and its strategic investments in electronic control units. This policy support is expected to help Amber achieve its target of 35-40% annual growth in the electronics segment.

Customs Duty Rationalization and Logistics Efficiency

To support domestic manufacturing, the budget has introduced several customs duty reforms that benefit the consumer durables ecosystem. A key highlight is the exemption of basic customs duty on specified parts used in the manufacture of microwave ovens. As Amber expands its product portfolio beyond air conditioners into other white goods, these duty exemptions will lower input costs and improve margins.

Furthermore, the introduction of a safe harbor for component warehousing in bonded warehouses at a profit margin of 2% is a game-changer for Just-in-Time (JIT) logistics. For a company like Amber, which manages a complex supply chain of electronic components, this reduces the tax burden on imported parts and enhances operational liquidity.

Strengthening the RAC Ecosystem through Infrastructure

While Amber is diversifying, its core remains the Room Air Conditioner (RAC) market, where it holds a 24% market share. The Union Budget 2026’s focus on Tier 2 and Tier 3 cities through the City Economic Regions (CER) initiative, with an allocation of ₹5,000 crore per region, is expected to drive urbanisation and disposable income in these markets.

As penetration for ACs remains under 10% in India, the budget’s push for infrastructure and middle-class housing will likely spur demand for cooling solutions. The government’s continued support for the PLI scheme for white goods, which has already seen investment commitments exceeding ₹10,000 crore, ensures that Amber’s manufacturing scale remains competitive against global imports.

Financial Impact: MAT Reduction and Capex Momentum

The budget has proposed a reduction in the Minimum Alternate Tax (MAT) from 15% to 14%. For a company like Amber, which is in a high-growth, high-capex phase, this reduction provides incremental relief in cash outflows. Additionally, the massive ₹12.2 lakh crore central capital expenditure outlay for FY27 will continue to drive industrial demand for Amber’s railway and defense air conditioning segments.

Strategic Localisation and the Jewar Investment

Amber’s recent announcement of a ₹6,785 crore investment near the Jewar Airport (YEIDA land) for two manufacturing units aligns perfectly with the budget’s "Atmanirbhar Bharat" vision. The budget’s emphasis on creating "Champion MSMEs" and supporting large-scale manufacturing through the "Reform Express" ensures that Amber’s massive local investment will be met with a supportive regulatory environment.

This localisation strategy is critical as the company seeks to reduce its dependence on the volatile RAC cycle. By manufacturing critical components like compressors, motors, and heat exchangers domestically, Amber is insulating itself from global supply chain disruptions and currency fluctuations, a theme heavily emphasized in the Finance Minister's speech.

Market Sentiment and Long-term Outlook

Despite a reported net loss of ₹32.86 crore in the September 2025 quarter due to weak seasonal demand and inventory overhang, the market outlook for Amber remains constructive. Analysts suggest that the Budget 2026 provisions provide the necessary "slow-burn" reforms that will yield results as the company’s new electronics ventures stabilize.

Conclusion

Union Budget 2026 acts as a bridge for Amber Enterprises, helping it cross the gap between being a seasonal cooling player and a year-round electronics manufacturer. The doubling of the electronics component outlay and the rationalization of import duties are direct wins for the company’s diversification strategy. While short-term financial pressures exist due to heavy front-loaded capex, the policy environment is now more favorable than ever for Amber to scale its electronics and component ecosystem. Investors will likely focus on the execution of the Jewar project and the ramp-up of the electronics segment as the primary drivers of future re-rating.