India has approved Semicon 2.0, a new semiconductor policy with a total budget outlay of ₹1,27,500 crore, aimed at strengthening the country’s chip design and manufacturing ecosystem. The decision was approved by the Union Cabinet, chaired by Prime Minister Narendra Modi, on 15 July 2026.
The new programme builds on the progress made under the first phase of the India Semiconductor Mission (ISM 1.0). While the initial policy focused on establishing semiconductor manufacturing and supporting chip design, Semicon 2.0 expands the government’s long-term strategy by covering the entire semiconductor value chain, from design and research to manufacturing, materials, advanced packaging, and skilled workforce development.
Key Highlights
- Union Cabinet approves Semicon 2.0 with a total budget of ₹1,27,500 crore.
- The programme focuses on six major areas, including chip design, manufacturing, research, materials, packaging, and talent development.
- The government plans to encourage additional semiconductor fabrication plants (fabs) and advanced packaging facilities in India.
- Support will be extended to companies producing semiconductor manufacturing equipment, chemicals, gases, and other essential materials.
- Under ISM 1.0, 12 semiconductor manufacturing projects worth more than ₹1.64 lakh crore have already been approved.
- 105 startups and MSMEs have received access to industry-standard chip design tools, while 68,000 students have been trained in semiconductor design.
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Semicon 2.0 Expands India’s Semiconductor Strategy
Semiconductors are essential components used in smartphones, computers, vehicles, industrial equipment, defence systems, medical devices, and many other electronic products. As global demand for chips continues to increase, countries are investing heavily to secure reliable semiconductor supply chains.
With Semicon 2.0, India aims to strengthen its position across the semiconductor industry rather than focusing only on manufacturing. The programme is designed to support every major stage of chip development, helping create a more complete domestic ecosystem.
The policy is structured around six key pillars that together cover design, production, research, infrastructure, and workforce development.
Six Focus Areas Under Semicon 2.0
Strengthening Chip Design
The government plans to expand India’s semiconductor design capabilities by supporting the development of intellectual property (IP), semiconductor chips, and complete system designs. The initiative builds on the progress made by startups already developing chip technologies and aims to position India as a significant global centre for semiconductor design IP.
Supporting Equipment and Materials
Companies involved in manufacturing semiconductor equipment and producing essential materials, chemicals, and industrial gases will receive incentives. These inputs are critical for semiconductor fabrication, and increasing domestic production could reduce dependence on imports while supporting India’s precision manufacturing sector.
Expanding Semiconductor Manufacturing
India plans to attract additional semiconductor fabrication units, including silicon fabs, compound semiconductor fabs, discrete component fabs, and display fabs. The government’s first semiconductor fabrication plant is currently scheduled to begin operations in 2028, and Semicon 2.0 seeks to build on growing industry interest in establishing manufacturing facilities in the country.
Strengthening Advanced Packaging
The programme will continue supporting Assembly, Testing, Marking and Packaging (ATMP) and Outsourced Semiconductor Assembly and Test (OSAT) facilities. These units play an important role in the semiconductor supply chain by packaging and testing chips before they reach electronic device manufacturers.
Advancing Research and Development
India’s semiconductor manufacturing journey currently focuses on process nodes ranging from 28 nanometres (nm) to 110 nm. Under Semicon 2.0, research efforts will gradually expand toward more advanced semiconductor technologies through collaboration with research institutions in India and abroad.
Developing Skilled Talent
The government will continue expanding semiconductor education and workforce training. According to the announcement, 315 universities are already providing semiconductor design training using industry-standard Electronic Design Automation (EDA) tools, and approximately 68,000 students have completed training so far. Future efforts will also include specialised training in clean-room operations, fabrication plant construction, and other semiconductor manufacturing skills.
Progress Under India Semiconductor Mission (ISM) 1.0
The government highlighted significant progress under the first phase of its semiconductor programme.
On the manufacturing side, 12 semiconductor projects with a combined investment exceeding ₹1.64 lakh crore have received approval. These include:
- One silicon fabrication plant
- One silicon carbide fabrication plant
- One integrated gallium nitride (GaN) Micro LED display fabrication unit
- Nine semiconductor packaging facilities
These facilities are expected to serve industries including consumer electronics, automobiles, industrial electronics, telecommunications, aerospace, and power electronics.
According to the government, Micron, Kaynes, and CG Semi have already started commercial production, while another approved manufacturing unit is expected to begin production in 2026.
On the design side, 24 semiconductor design projects from startups and MSMEs have received financial support. In addition, 105 startups and MSMEs have been granted access to industry-standard EDA software used for professional chip design.
These companies are developing semiconductor chips and systems-on-chip (SoCs) for applications including satellite communications, drones, surveillance systems, Internet of Things (IoT) devices, LED drivers, artificial intelligence systems, telecom equipment, and smart meters. According to the government, these projects are currently at different stages of design and prototyping before moving towards commercial deployment.
Source: Ministry of Electronics & IT
