Semicon India Programme 2.0: Cabinet Approves Rs 1.27 Lakh Crore Chip Manufacturing Push

  • July 16, 2026
  • Current Affairs

 

Semicon India Programme 2.0: Cabinet Approves Rs 1.27 Lakh Crore Chip Manufacturing Push

Relevance: GS Paper III (Science & Technology, Indian Economy, Infrastructure, Self-Reliance)

Why in the News?

  1. The Union Cabinet approved the Semicon India Programme 2.0 on July 15, 2026, with an outlay of Rs 1.27 lakh crore.
  2. The programme focuses on subsidising the entire semiconductor supply chain — extending well beyond chip fabrication alone.
  3. It aims to attract investment in materials, chemicals, gases, and equipment critical for semiconductor production.
  4. The scheme runs for six years and is expected to attract total investments of Rs 4 lakh crore.
  5. Its core goal is to reduce India's reliance on imported semiconductor chips and build a self-reliant electronics manufacturing ecosystem.

About the India Semiconductor Mission (ISM)

  1. The ISM is a comprehensive government initiative to build a robust semiconductor and display manufacturing ecosystem in India, aiming to make it a global hub for design, manufacturing, and innovation in the sector.
  2. Semiconductors are foundational to modern electronics, from smartphones to defence systems, making supply chain resilience a strategic priority — especially given vulnerabilities exposed during recent global crises.
  3. A thriving semiconductor industry acts as an economic multiplier, creating high-tech jobs and boosting allied sectors.
  4. The mission complements the Mobile Phone Manufacturing Scheme (MPMS), together forming part of a larger Rs 2.19 lakh crore government package.
  5. The long-term vision: India aims to design and manufacture chips for 70-75% of domestic applications by 2029, and become a top global semiconductor nation by 2035.
  6. The ISM, operating under the Ministry of Electronics and Information Technology (MeitY), is the nodal agency implementing this programme.
  7. It aligns with broader national goals such as Digital India, Make in India, and Atmanirbhar Bharat.

From Semicon 1.0 to Semicon 2.0

  1. Semicon India 1.0 (launched December 2021, outlay of Rs 76,000 crore) laid the foundational groundwork and attracted initial investment, focusing on design, fab manufacturing, and ATMP/OSAT (Assembly, Testing, Marking, and Packaging/Outsourced Semiconductor Assembly and Test).
  2. Under 1.0, 12 manufacturing projects were approved, with cumulative investments exceeding Rs 1.64 lakh crore (~$17 billion), and the country's first semiconductor fab is scheduled for commissioning in 2028.
  3. Semicon India 2.0 (approved July 15, 2026, outlay of Rs 1.275 lakh crore, roughly $13.25-14.8 billion) builds on this momentum to create an end-to-end ecosystem with advanced R&D.
  4. It expands focus areas to: chip design, machines and materials, more fabs, ATMP/OSAT, advanced R&D, and talent development.
  5. Incentive structure under 2.0 is more refined: 40% capital expenditure subsidy for silicon fabs, 35% for other fabs, 35% for advanced packaging, and 25% for conventional packaging.

Six Strategic Pillars of Semicon India 2.0

1. Chip Design: Continued support for indigenous intellectual property (IP) creation and encouragement of cutting-edge chip design within India.

2. Machines and Materials: A new focus area subsidising critical supply-chain components — promoting domestic production of specialty gases, chemicals, and equipment, and aiming for self-sufficiency in key raw materials to reduce import dependence.

3. Setting Up More Fabs: Attracting capital for diverse fabrication units — including silicon, compound semiconductor, discrete component, and display fabs — and moving toward advanced technology nodes beyond the current 28nm-110nm range.

4. Strengthening the ATMP/OSAT Industry: Expanding Assembly, Testing, Marking, and Packaging facilities, and enhancing India's role in post-fabrication value chain processes.

5. Research & Development: Shifting focus toward more sophisticated R&D, fostering global collaborations with leading international R&D centres, and building a continuous innovation ecosystem.

6. Talent Development: Scaling up workforce training programmes to meet industry demands; over 68,000 students have already been trained across 315 universities using industry-standard Electronic Design Automation (EDA) tools.

   

Significance

  1. Represents a major scale-up from Semicon 1.0, moving India from foundational investment attraction toward building a complete, self-reliant semiconductor value chain.
  2. Directly supports India's strategic autonomy in a critical technology sector with applications spanning consumer electronics, telecommunications, and defence.
  3. Reinforces India's broader technological sovereignty goals under Atmanirbhar Bharat, Make in India, and Digital India.