India's Expanded Semiconductor Vision
The Central government has formally announced Semicon 2.0, a substantial program valued at ₹1,27,500 crore, designed to propel India's semiconductor industry forward. This ambitious scheme aims to cultivate a comprehensive domestic ecosystem, moving beyond mere chip fabrication to encompass indigenous design, intellectual property development, equipment manufacturing, advanced packaging, critical materials production, extensive research and development, and talent creation.
This notification follows the Union Cabinet's approval of the India Semiconductor Mission 2.0 outlay on July 15, 2026. The Ministry of Electronics and Information Technology (MeitY) has meticulously detailed the eligibility criteria and incentive structures, which are categorized across six key pillars and ten distinct segments of the semiconductor value chain.
Broader Scope and Eligibility
Unlike its initial phase, Semicon 2.0 significantly widens its net for participants. The updated program now supports a diverse array of entities, including nascent chip-design startups, Micro, Small, and Medium Enterprises (MSMEs), dedicated semiconductor fabs, packaging specialists, manufacturers of materials and equipment, research organizations, and educational training institutions. This broader inclusion is set to foster a more integrated and self-reliant industry.
Incentives for Commercial Chip Design
- For commercial chip design, Indian companies — defined as those owned or controlled by Indian citizens or Overseas Citizens of India (OCIs), including startups and MSMEs — are eligible for support.
- Startups can access seed funding, equity co-investment, or other forms of catalytic support, capped at 50% of the project cost up to ₹15 crore. Larger companies may benefit from royalty financing or equity co-investment models.
Support for Fabrication Units (Fabs)
- Silicon Wafer Fabs: The government will provide 40% of the eligible capital expenditure. Applicants must propose a 300-mm wafer facility with a minimum capacity of 40,000 wafer starts per month. Prerequisites include possession of production-grade licensed technology, a minimum investment of ₹20,000 crore, and at least ₹7,500 crore in revenue during one of the preceding three financial years. Notably, this support is slightly lower than the 50% offered in the first phase.
- Compound Semiconductor, Photonics, Sensor/MEMS, and Discrete Semiconductor Fabs: These projects are eligible for 35% of eligible capex. They require a minimum investment of ₹500 crore, minimum revenue of ₹200 crore, and a capacity of at least 500 wafer starts per month.
- Display Fabs: Projects involving cutting-edge display technologies such as OLED, Micro LED, and LCD will also receive 35% support, subject to specific technology-driven criteria.
Advanced Packaging, Equipment, and Materials
- ATMP/OSAT Facilities: Semicon 2.0 offers incentives for advanced and conventional Assembly, Testing, Marking, and Packaging (ATMP) or Outsourced Semiconductor Assembly and Test (OSAT) facilities. Advanced packaging will receive 35% of capex support, while conventional packaging will get 25%. Eligible applicants need a minimum capex of ₹1,000 crore and ₹200 crore in revenue.
- Equipment and Materials Companies: Companies in these sectors are also encouraged to participate. Specific thresholds apply, including ₹300 crore capex and ₹120 crore revenue for semiconductor equipment R&D and manufacturing. Semiconductor-grade raw material projects require ₹50 crore capex and ₹20 crore revenue, while test and characterization facilities need ₹100 crore and ₹40 crore, respectively. Equipment manufacturers will also benefit from a Production Linked Incentive (PLI) scheme, offering 2% to 10% of the value of domestically sourced bills of materials for five years from FY29, capped at 50% of eligible capex.
Fostering Research and Talent
The scheme places a strong emphasis on nurturing innovation and human capital. Eligible chip-design startups and MSMEs can leverage the Design Infrastructure Support framework, which includes access to national Electronic Design Automation (EDA) tools and multi-project wafer fabrication services. They are also eligible for seed funding of up to ₹15 crore, covering 50% of their project costs.
Furthermore, the program allocates up to 75% of project costs for advanced semiconductor research and development (R&D) initiatives. Similar support is extended to talent development projects undertaken by academic institutions, research bodies, laboratories, and domestic training organizations, subject to project-specific conditions.
Early Successes
Under the first phase of India's semiconductor initiatives, 12 projects were approved across six states. Significant progress has already been made, with facilities like Micron's ATMP plant and the OSAT facilities by Kaynes Semicon and CG Semi having commenced commercial production, demonstrating the tangible impact of these strategic investments.