India's Chip Ambition: ₹1.25 Lakh Crore Boost for Semiconductor Mission 2.0

The India Semiconductor Mission (ISM) 2.0 has received a major financial impetus with the Finance Ministry's Expenditure Finance Committee (EFC) clearing a proposal for a substantial outlay of ₹1.25 lakh crore (equivalent to ₹1.25 trillion). This crucial development signals India's intensified commitment to becoming a global hub for semiconductor manufacturing and design. The decision, widely reported across multiple credible news outlets, positions the country for a significant leap in its technological self-reliance. The approved ₹1.25 lakh crore for ISM 2.0 represents a substantial increase compared to the ₹76,000 crore allocated under the first phase of the India Semiconductor Mission (ISM 1.0). This enhanced budgetary support underscores the government's strategic focus on accelerating capital investment and expanding domestic capabilities across the entire semiconductor value chain. Following the EFC's clearance, the proposal is now slated for final approval by the Union Cabinet. Announced in the Union Budget 2026-27, ISM 2.0 aims to deepen India's semiconductor manufacturing capabilities by providing comprehensive support for equipment, materials, indigenous chip designs, and other critical components of the value chain. Union Minister for Electronics and IT, Ashwini Vaishnaw, has previously emphasized that ISM 2.0 will prioritize indigenous chip design, productization, attracting ecosystem partners, and developing a skilled talent pool. The mission is designed to strengthen support for chip manufacturing, design, and skill development, while strategically positioning semiconductors as a key driver for economic resilience, digital infrastructure, and technological self-reliance. Under the new program, the government plans to offer significant fiscal support, potentially up to 50 percent, for various semiconductor-related facilities. This includes silicon fabrication units, compound semiconductor facilities, assembly and testing units, and chip design ventures. Furthermore, the scope of ISM 2.0 is broader than its predecessor, intending to bring Micro, Small, and Medium Enterprises (MSMEs) and ancillary suppliers under the incentive framework. It will also cover the wider semiconductor ecosystem, including capital equipment, specialty chemicals, industrial gases, raw materials, and other essential inputs. A new Design-Linked Incentive (DLI) scheme within the revamped program will facilitate partnerships between foreign companies and Indian firms for semiconductor research and design conducted in India, further bolstering the domestic intellectual property landscape. Progress under ISM 1.0 has already laid a foundational roadmap. As of December 31, 2025, 12 semiconductor manufacturing projects had been approved with an investment pipeline of approximately ₹1.64 lakh crore. These projects include one semiconductor fabrication unit, two compound semiconductor fabrication units, and nine packaging units. On the design front, 24 projects are being supported under the Design Linked Incentive Scheme, 105 companies have been assisted with advanced chip design tools, and 23 design 'tapeouts' have been completed at various foundries, including at advanced nodes, reflecting India's growing capabilities in semiconductor design. India aims to become one of the top semiconductor manufacturing countries worldwide by 2035 and expects the enhanced program to help meet up to 75% of its domestic semiconductor demand by 2030, thereby significantly reducing import dependence and supporting the country's ambitions of becoming a global electronics manufacturing hub. The government views semiconductors as the backbone of modern electronics, powering critical systems across computers, mobile devices, telecommunications, automobiles, defense, and artificial intelligence. The expansion of the India Semiconductor Mission through this significant financial allocation is a clear indication of India's long-term vision to build a resilient and competitive semiconductor industry, moving from policy formulation to production readiness and consolidating its position in the global semiconductor network.

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