Budget 2026: BCD cut, ₹40,000 cr ECMS lifts EMS

Why Budget 2026 matters for electronics manufacturing

Union Budget 2026-27 sharpened India’s push to deepen domestic electronics manufacturing by combining a larger incentive pool with extended customs-duty relief on critical inputs. The centre expanded the Electronics Component Manufacturing Scheme (ECMS) to a net outlay of ₹40,000 crore, signalling a move beyond assembly-led growth. The Finance Bill, 2026 also extended concessional and zero customs duties on vital imported components for consumer electronics by two years, through March 2028. Together, these measures provide cost visibility for manufacturers planning large capital expenditure and localisation programmes.

Markets responded quickly, with several listed electronics manufacturing services (EMS) companies moving higher after the announcements. The rally reflected investor expectations that lower duties and higher incentives could improve demand conditions and operating margins for firms supplying components such as PCBs, camera modules and advanced packaging.

ECMS outlay raised to ₹40,000 crore

The finance minister announced a sharp increase in the allocation for ECMS to ₹40,000 crore, highlighting the government’s intent to strengthen the electronics manufacturing ecosystem. The production-linked incentive plan for electronics components will see the outlay increase from ₹22,900 crore earlier. The Budget commentary also framed ECMS as a tool to shift the sector from assembly-only activity toward deeper value addition.

Finance Minister Nirmala Sitharaman said the Electronics Component Manufacturing Scheme, launched in 2025, has already attracted investment commitments twice its original target. The government’s decision to scale the scheme up aims to accelerate localisation across key component categories that feed into smartphones, laptops and other consumer electronics.

Import-duty changes: BCD cut to 15% and exemptions to FY28

Budget 2026 reduced Basic Customs Duty (BCD) on mobile phones, PCBs and chargers from 20% to 15%. In addition, duty exemptions were extended to FY28 for critical inputs, and the Finance Bill, 2026 extended concessional and zero customs duties on vital imported components through March 2028.

The extension was described as broad-based, applying across 102 out of 124 product categories. The policy intent is to reduce uncertainty on input costs and encourage manufacturers to make multi-year sourcing and investment decisions. The article also notes that duty exemptions on semiconductor, display, solar equipment and consumer electronics extend through FY28, giving a three-year cost-certainty horizon.

India Semiconductor Mission 2.0 and the new incentive tranche

Budget 2026-27 also announced a second tranche of incentives under the India Semiconductor Mission (ISM), five years after the first ₹76,000-crore programme. The stated goal is to deepen domestic chip and electronics manufacturing and strengthen semiconductor supply chains.

Alongside ISM 2.0, the Budget’s electronics package was positioned as support for Indian stack IP-based semiconductors, reflecting a push to build capability across the value chain rather than remaining dependent on imported components.

Tax and compliance measures for contract manufacturers

The finance minister also announced tax exemptions for India’s contract manufacturers if they partner with foreign brands to import high-end equipment for manufacturing devices such as smartphones, laptops and other electronic appliances. Industry stakeholders said electronics firms are set to benefit from a five-year tax exemption afforded to contract manufacturers of electronics upon localising equipment and tools.

Separately, the Centre deferred the payment window from 15 to 30 days for customs duty for authorised economic operators and eligible manufacturer-importers such as Dixon Technologies. As noted by an industry voice cited in the article, the longer window is expected to provide working-capital relief for compliant supply chains.

Company strategies: where listed EMS names fit in

The Budget measures arrived as several companies pursue component-led expansion plans under policy support.

• Kaynes Technology has secured approvals for multi-layer and HDI (High-Density Interconnect) PCBs, camera modules, and copper-clad laminates. The positioning described in the article is as a backend supplier for fab-level packaging.
• Amber Enterprises is leveraging a 10% import duty on AC components (excluding indoor and outdoor units) to deepen backward integration into power-electronics modules. The article also notes this can encourage domestic OEMs to source transformers, inverters and power-modules locally.
• Dixon Technologies and Syrma SGS are expanding into optical transceivers and flexible PCBs, creating exposure to 5G and IoT hardware.

Immediate market reaction: EMS stocks move higher

Shares of multiple listed EMS firms rose after the Budget announcements.

One set of reported moves said shares of Syrma SGS, Amber Enterprises and Kaynes Technology rose 6%, 8.1% and 4.6%, respectively, on Sunday, while Dixon’s shares declined 1.5% until press time. Another market update noted Amber Enterprises climbed as much as 6.6% intraday, while Dixon advanced 5.6%, and Kaynes gained as much as 5.2%.

Additional reported price points included Dixon climbing as much as 5.4% to ₹11,008.85 on the BSE, Kaynes rising 5.2% to ₹3,656.15, PG Electroplast advancing 3.5% to ₹566.55, and Syrma SGS Technology and Amber Enterprises each jumping 6.7% to ₹812.10 and ₹6,095.10, respectively.

Key numbers at a glance

Market impact: costs, localisation and execution risk

Lower BCD from 20% to 15% directly reduces landed costs of imported inputs and can improve cost-of-goods-sold for EMS firms, based on the article’s framing. At the same time, extending duty exemptions through FY28 can reduce planning risk for multi-year investment cycles, particularly for projects tied to components and advanced packaging.

The article flags that domestic demand for PCBs, camera modules and advanced packaging is expected to grow more than 20% year-on-year as import duties fall and subsidies rise. It also notes that companies with approved ECMS projects stand to benefit from a 15-25% EBITDA uplift over the next three years, while reminding investors to weigh margin upside against execution risk and global supply-chain volatility.

What to watch next

The Budget package creates a clearer policy runway for manufacturers building local capacity in components and electronics sub-systems. Investors will likely track how quickly ECMS-funded projects translate into commercial production, and whether duty stability through FY28 leads to accelerated localisation of tools and equipment under the five-year tax exemption framework.

Near-term, the market’s response shows expectations are already being priced into EMS names. The next set of data points will come from company disclosures on project timelines, approvals translating into capex, and the pace of new customer programmes aligned to the updated duty and incentive structure.