The Budget has sharpened the push to make India a global electronics manufacturing hub by sharply raising outlay under the Electronics Components Manufacturing Scheme (ECMS) and removing a key tax hurdle that had deterred foreign companies such as Apple from supplying machinery to their Indian contract manufacturers.
It has nearly doubled the ECMS allocation to Rs 40,000 crore from Rs 22,919 crore, citing strong early response and investment commitments that have already exceeded initial targets. The scheme supports domestic production of components such as printed circuit boards, lithium-ion cells, camera modules and telecom sub-assemblies.
Tax Hurdle Removed
Alongside the higher outlay, another major announcement is a tax clarification which allows foreign companies to provide capital equipment to Indian contract manufacturers for up to five years without triggering income tax liability.
The move removes the risk that ownership of machinery could be treated as a business connection in India, a concern that had earlier forced contract manufacturers to bear the cost of expensive equipment themselves.
The clarification applies to units operating in customs-bonded zones and will remain in force until 2030-31. Income arising from supplying machinery or tooling to Indian manufacturers will be exempt, provided the output is meant for export.
Benefiting Global Giants
The change is expected to benefit global electronics companies expanding in India, including Apple, which has steadily increased iPhone production in the country.
The combined push through ECMS and tax certainty would accelerate scale-up, reduce costs for manufacturers and strengthen India’s position in global electronics supply chains.
The ECMS has already attracted over Rs 54,000 crore in investment and generated more than 50,000 direct jobs, with companies such as Tata, Foxconn and Dixon expanding into higher-value components.