The Indian Union Cabinet has given its approval to Semicon 2.0, a comprehensive ₹1.27 lakh crore (approximately $15.2 billion USD) program designed to significantly advance the nation's semiconductor capabilities. This ambitious initiative expands upon the previous India Semiconductor Mission (ISM) 1.0, shifting focus from merely attracting chip fabrication investments to fostering an entire end-to-end ecosystem.
Semicon 2.0 seeks to strengthen India's electronics manufacturing sector, reduce its reliance on imports, and establish the country as a competitive global hub for electronics production. The program complements the recently announced ₹62,500 crore Mobile Phone Manufacturing Scheme (MPMS), signaling a concerted effort to boost domestic value addition across the electronics value chain.
India's Comprehensive Semiconductor Strategy
The new policy outlines six key areas through which it intends to reshape India's semiconductor and broader electronics manufacturing landscape:
1. Moving Beyond Chip Fabrication
While ISM 1.0 primarily targeted investments in semiconductor fabrication plants, Semicon 2.0 adopts a much broader perspective. It aims to support every major segment of the chip ecosystem, acknowledging that a globally competitive semiconductor industry requires more than just manufacturing facilities. This builds on the ₹1.64 lakh crore cumulative investments approved under ISM 1.0, with India's first fabrication plant expected to begin operations by 2028.
2. Boosting Chip Design and Intellectual Property
A crucial element of Semicon 2.0 is the promotion of indigenous chip design and intellectual property (IP) development. India already possesses a strong talent pool of semiconductor design engineers working for international technology firms. The government now seeks to leverage this expertise to drive local innovation, enabling Indian companies to capture higher value within the semiconductor supply chain and decrease reliance on imported technologies.
3. Building a Domestic Supply Chain
The program provides incentives for the domestic manufacturing of essential semiconductor components, including equipment, specialty materials, chemicals, and industrial gases. Developing these upstream industries is critical for enhancing supply-chain resilience, reducing import dependence, and encouraging investments across a wider range of electronics manufacturing segments, not just chip fabrication.
4. Expanding Advanced Packaging Capabilities
Semicon 2.0 places significant emphasis on scaling Outsourced Semiconductor Assembly and Test (OSAT) and Assembly, Testing, Marking and Packaging (ATMP) infrastructure. These segments generally require lower initial investments compared to fabrication plants and can be developed more rapidly. This strategic focus aims to integrate India faster into global semiconductor supply chains while simultaneously creating skilled manufacturing jobs.
5. Investing in Research and Talent
Long-term competitiveness in the semiconductor industry hinges on continuous innovation and a skilled workforce. The policy allocates resources towards advanced semiconductor research and talent development. A robust pipeline of qualified engineers and ongoing R&D investments are essential as semiconductor manufacturing becomes increasingly technology-intensive. Strengthening engineering capabilities will also enhance India's appeal for global partnerships and high-value investments.
6. Supporting the Broader Electronics Ecosystem
Semicon 2.0 works in tandem with the new Mobile Phone Manufacturing Scheme, which incentivizes local sourcing, product design, and research to deepen domestic value addition. Experts note that India's electronics manufacturing industry has already seen substantial growth, expanding nearly five-fold from approximately $30 billion in FY15 to $150 billion in FY26, with domestic value addition increasing from 15% to 23% over the same period.
While the ultimate success of Semicon 2.0 will depend on effective execution, strong industry partnerships, and timely approvals, this program represents India's most comprehensive effort to date to establish a globally competitive semiconductor ecosystem and solidify its position in the global electronics value chain.