Funding Policy Compared –
Europe and India

Strategic Brief: Government Support for Electronics Manufacturing – Europe and India Compared

Purpose, Benefits, and Success of the Respective Funding Approaches in Europe and India

This Strategic Brief by EMS Strategy Group (Dirk Kaussen, Rev. 1.0, September 5, 2026) compares government support policies for semiconductor and electronics manufacturing in the EU (Chips Act) and India (PLI Schemes & ISM / Semicon 2.0).

Publisher: EMS Strategy Group

1. Europe’s Funding Approach – Ambition Without Sufficient Impact

• The EU Chips Act aims for a 20% global market share by 2030 but falls significantly behind expectations according to the European Court of Auditors (Special Report 12/2025).
• The European Commission directly controls only around 5% (€4.5B) of the expected total €86B investment; the majority depends on Member States and private investors.
• The 20% target is considered largely aspirational; analysts recommend shifting focus toward niche leadership ("Indispensability") rather than total self-sufficiency.

2. India’s Funding Approach – Direct Incentives, Measurable Results

• India links funding directly to demonstrated increases in production, investment, and exports through Production Linked Incentive (PLI) Schemes.
• As of March 2026, over INR 2.40 lakh crore in investments were triggered, while cumulative exports rose from INR 4 to 15.2 lakh crore.
• The India Semiconductor Mission (ISM) expanded in July 2026 via Semicon 2.0 (INR 1,27,500 Cr budget) to target upstream supply chains, specialty chemicals, and indigenous IP design.

3. Direct Comparison of Funding Frameworks

• Control Level: Complex multi-level architecture in the EU vs. centralized control and swift national execution in India.
• Disbursement Logic: Pre-competitive research funding and national state-aid approval (EU) vs. performance-linked disbursements post-production (India).
• Transparency: Inconsistent across Member States in Europe vs. regularly published central metrics on investment, employment, and exports in India.

4. Implications for OEMs and EMS Companies

• When evaluating new production locations, look beyond nominal subsidy figures to check central steering and disbursement timelines.
• Account for pre-financing needs when investing in India, as PLI funds are released only after verified production performance.
• Regularly reassess both policy frameworks to leverage complementary strengths across global supply chain strategies.

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