52% INCREASE IN THE BUDGET 2024 ALLOCATION FOR MEITY

Key Highlights

Substantial Increase in MeitY Allocation: The Union Budget 2024-25 has allocated Rs 21,936.9 crore to the Ministry of Electronics and Information Technology (MeitY), a 52% increase from the previous year’s revised estimate of Rs 14,421.25 crore. This significant boost aims to foster innovation, enhance technological self-reliance, and establish India as a key player in the global semiconductor supply chain.
Major Investment in Semiconductor and Display Manufacturing: The allocation for the Modified Programme for Development of Semiconductors and Display Manufacturing Ecosystem in India has soared by 355%, reaching Rs 6,903 crore, up from Rs 1,503.36 crore in 2023-24. The primary focus is on the “Modified Scheme for setting up of Compound Semiconductors/Silicon Photonics/Sensors Fab/Discrete Semiconductors Fab and Semiconductor Assembly, Testing, Marking and Packaging (ATMP)/Outsourced Semiconductor Assembly and Test (OSAT) facilities,” which has received Rs 4,203 crore.
Boost to IndiaAI Mission and Production-Linked Incentive Schemes: Rs 551.75 crore has been allocated to the IndiaAI mission, aimed at enhancing the country’s AI infrastructure through initiatives like the IndiaAI Compute Capacity and IndiaAI Innovation Centre. The production-linked incentive (PLI) scheme for large-scale electronics manufacturing has increased from Rs 4,489 crore to Rs 6,125 crore, reflecting the government’s commitment to encouraging domestic production and reducing import dependency.

In an impressive move, the Union Budget for 2024-25, released on July 23^rd, 2024 has significantly increased the allocation for the Ministry of Electronics and Information Technology (MeitY) by 52%, bringing the total to Rs 21,936.9 crore. This is a substantial rise from the revised estimate of Rs 14,421.25 crore for 2023-24. This increase aims to increase innovation, enhance India’s technological self-reliance, and establish the country as a key player in the global semiconductor supply chain.

Significant Increase for Semiconductor and Display Manufacturing

One of the most notable changes in this budget is the massive 355% increase in the allocation for the Modified Program for Development of Semiconductors and Display Manufacturing Ecosystem in India. This program has seen its funding jump from Rs 1,503.36 crore in 2023-24 to Rs 6,903 crore in 2024-25. The lion’s share, Rs 4,203 crore, has been earmarked for the “Modified Scheme for setting up of Compound Semiconductors/Silicon Photonics/Sensors Fab/Discrete Semiconductors Fab and Semiconductor Assembly, Testing, Marking and Packaging (ATMP)/Outsourced Semiconductor Assembly and Test (OSAT) facilities in India.”

Support for Semiconductor and Electronics Manufacturing

The increased budget also reflects the government’s commitment to incentive schemes for semiconductors and large-scale electronics manufacturing and IT hardware. This includes significant concessions for major companies like Micron and Tata Electronics, encouraging them to set up facilities in India. These efforts are expected to attract global investments and create high-tech jobs, further boosting India’s position in the global technology landscape.

Boosting the IndiaAI Mission

The government has allocated Rs 551.75 crore to the IndiaAI mission, aimed at strengthening the country’s AI infrastructure. This mission, which received over Rs 10,300 crore from the previous NDA cabinet for a span of five years, includes pivotal initiatives such as the IndiaAI Compute Capacity, IndiaAI Innovation Centre (IAIC), and the IndiaAI Datasets Platform. One of the key components of this mission is the deployment of over 10,000 Graphics Processing Units (GPUs) through strategic public-private collaborations, establishing a scalable AI computing infrastructure.

Other Allocations and Omissions

While the budget has seen a substantial increase in many areas, certain schemes have not been allocated funds for the second consecutive year. Notably, the Pradhan Mantri Gramin Digital Saksharta Abhiyan (PMGDISHA), a rural digital literacy scheme, has not received any funding. Similarly, no funds have been allocated for the promotion of digital payments, which had Rs 1,500 crore allocated last year, with a revised estimate of Rs 584 crore for 2023-24.

Focus on Production-Linked Incentive Schemes

The Production-Linked Incentive (PLI) scheme for large-scale electronics manufacturing has seen an increase in its outlay from Rs 4,489 crore in the revised estimates to Rs 6,125 crore for FY25. This reflects the government’s ongoing commitment to boosting electronics manufacturing within the country, encouraging domestic production, and reducing reliance on imports.

Enhanced Role for MeitY

The substantial increase in MeitY’s budget highlights the government’s strategic focus on bolstering India’s electronics and IT infrastructure. As Munira Loliwala, VP-Strategy and Growth at TeamLease Digital, aptly puts it, “The increased funding will foster innovation, support the establishment of advanced manufacturing facilities, and reduce reliance on imports. It will also attract global investments, create high-tech jobs, and position India as a key player in the global semiconductor supply chain, ultimately enhancing the country’s technological self-reliance and competitiveness.”

Conclusion

The Union Budget 2024-25 has set the stage for significant advancements in India’s electronics and IT sectors. With increased allocations for semiconductor manufacturing, AI infrastructure, and production-linked incentives, the government is clearly focused on making India a technological powerhouse. These strategic investments are expected to drive innovation, attract global investments, and create a robust and self-reliant technological ecosystem in the country.

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