India Approves Semicon 2.0 With Rs 1.27 Lakh Crore to Boost Chip Industry

By: Harsh Vardhan

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Updated on: 17-Jul-2026 03:00 PM

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The Union Cabinet has approved the India Semiconductor Mission 2.0 (Semicon 2.0) with a budget of Rs 1,27,500 crore. This move aims to strengthen India's semiconductor design and manufacturing ecosystem. Semicon 2.0 builds on the progress of Semicon 1.0, which launched in December 2021 with an outlay of Rs 76,000 crore. The new phase expands support to the entire semiconductor value chain, including chip design, manufacturing, advanced packaging, research, equipment, materials, and talent development.

Key Highlights

• Union Cabinet approves Semicon 2.0 with Rs 1,27,500 crore budget for semiconductor ecosystem.
• Semicon 1.0 approved 12 manufacturing projects with over Rs 1.64 lakh crore investment.
• Semicon 2.0 expands focus to design, manufacturing, packaging, R&D, and talent development.
• Global companies and governments show interest in India's semiconductor mission.
• India targets 70-75 percent domestic chip production by 2029 and top-tier status by 2035.

Semicon 1.0 Achievements

Semicon 1.0 focused on attracting semiconductor manufacturing through incentives for silicon fabrication plants, packaging units, and chip design. According to government data, 12 semiconductor manufacturing projects with investments exceeding Rs 1.64 lakh crore have been approved under this phase. These include one silicon fab, one silicon carbide fab, one integrated gallium nitride Micro LED display fab, and nine semiconductor packaging units.

The projects support sectors such as consumer appliances, industrial electronics, automobiles, power electronics, telecommunications, and aerospace. Notable developments include Tata's upcoming facility in Dholera, Gujarat, and a partnership with Dutch company ASML to create 300mm wafers in India. Companies like Micron, Kaynes, and CG Semi have started commercial production. On the design side, 24 semiconductor design projects from startups and MSMEs have been approved for financial assistance. Additionally, 105 startups and MSMEs have gained access to Electronic Design Automation tools.

These supported companies are developing chips for satellite communications, drones, surveillance cameras, Internet of Things devices, LED drivers, AI systems, telecom equipment, and smart meters. Talent development has also expanded, with 315 universities using industry-standard EDA tools for chip design training and nearly 68,000 students trained so far.

Semicon 2.0: Expanded Focus and Six Pillars

Semicon 2.0 aims to strengthen India's semiconductor ecosystem across six pillars: design, machines and materials, more fabs, ATMP/OSAT industry, research and development, and talent. The programme will support semiconductor intellectual property, chip designs, and system-level products for both strategic and commercial applications. It will also incentivise companies involved in manufacturing and R&D of semiconductor equipment, materials, chemicals, and gases.

The scheme seeks further investments in silicon fabs, compound semiconductor fabs, discrete component fabs, and display fabs. It encourages investments in Assembly, Testing, Marking and Packaging (ATMP) and Outsourced Semiconductor Assembly and Test (OSAT) facilities. On the R&D front, Semicon 2.0 will support advanced semiconductor process nodes beyond the current 28nm to 110nm range, collaborating with research institutions in India and abroad.

Talent development will deepen, expanding training in cleanroom operations, fab construction, and other semiconductor skills. The government expects to notify the scheme within 20 days. Semicon 2.0 takes a long-term approach, aiming to unlock capital from long-term investors and reduce import dependency by focusing on equipment and materials localisation.

Global Partnerships and Future Outlook

The programme has attracted interest from companies in the US, Europe, Japan, and Singapore. Partnerships include collaborations with the US, EU, Japan, Singapore, the Netherlands, and Germany. Investments have been announced by Applied Materials, AMD, Microchip Technology, Lam Research, and KLA. The government expects Semicon 2.0 to support economic growth across sectors, improve supply chain resilience, and strengthen technological capabilities.

While Semicon 1.0 has shown promising results, the success of Semicon 2.0 will depend on effective policy execution and sustained private sector participation. India aims to meet 70 to 75 percent of its domestic chip requirements through local design and manufacturing by 2029, targeting top-tier semiconductor nation status by 2035.