Budget 2026 Bets Big on Deep-Tech: New ISM 2.0 and Electronics Component Schemes to Deepen Local Value Addition
- ByStartupStory | February 1, 2026
Union Budget 2026-27: A ₹70,000 Crore Catalyst for Startups, MSMEs, and Tech Manufacturing
The Union Budget 2026-27 has introduced a robust framework of financial outlays and regulatory reforms designed to supercharge India’s entrepreneurial core. By focusing on high-growth verticals like Biopharma, Semiconductors, and the “Orange Economy,” the government is positioning startups and MSMEs as the primary engines of the nation’s 2030 economic goals.
The ₹30,000 Crore Triple-Fund Strategy
To resolve long-standing capital access issues, the Finance Minister proposed three distinct outlays of ₹10,000 crore each, targeting different stages of business maturity:
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Fund of Funds for Startups (FFS): A fresh ₹10,000 crore has been allocated to support early- and growth-stage ventures through SEBI-registered venture and alternative investment funds.
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MSME Growth and Resilience Fund: This ₹10,000 crore corpus is designed to help small firms manage global trade pressures and economic shocks, particularly for manufacturing and export-linked startups.
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Biopharma Shakti: A dedicated ₹10,000 crore program to bolster domestic biopharma manufacturing, funding everything from foundational research to large-scale production facilities.
Powering the Electronics and Semiconductor Era
Recognizing the strategic importance of hardware, the Budget nearly doubles the support for electronics manufacturing:
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Electronic Component Manufacturing Scheme (ECMS): The allocation has been increased to ₹40,000 crore, a massive jump from the initial ₹22,919 crore approved last year.
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India Semiconductor Mission (ISM) 2.0: With Phase 1 funds nearly exhausted, the government has officially rolled out the second phase to maintain momentum in building a domestic chip ecosystem.
Tax Holidays and the Creator Economy
The Budget also looks toward the digital future with specific incentives for cloud infrastructure and talent development:
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Cloud Infrastructure Tax Break: Foreign cloud service providers operating globally using Indian data centers will receive a tax holiday until 2047.
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The 2 Million Jobs Mission: To meet talent demand in the AVGC (Animation, Visual Effects, Gaming, and Comics) sector, the Indian Institute of Creative Technologies, Mumbai, will set up creator labs across 15,000 schools and 500 colleges. This initiative aims to create 2 million jobs by 2030.
Key Highlights at a Glance
| Sector | Key Measure | Financial Outlay |
| Startups | Fund of Funds (FFS) | ₹10,000 Crore |
| MSMEs | Growth & Resilience Fund | ₹10,000 Crore |
| Electronics | ECMS (Component Mfg) | ₹40,000 Crore |
| Biopharma | Biopharma Shakti Program | ₹10,000 Crore |
| Cloud Tech | Tax Holiday for Providers | Valid until 2047 |
Impact on the Startup Story Ecosystem
For the founders and investors who follow Startup Story, this budget signals a shift from purely service-led growth to a “Deep-Tech and Manufacturing First” approach. With the doubling of electronics outlays and the new biopharma program, 2026 is set to be the year of the asset-backed startup.
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