India’s Semiconductor 2.0: Building a Global Semiconductor Ecosystem
In July 2026, the Union Cabinet chaired by the Prime Minister approved the Semicon 2.0 for the development of India's semiconductor design and manufacturing ecosystem, with a total budget outlay of Rs. 1,27,500 crore (approximately 13.3 billion USD).
With this, India could account for nearly 10 percent of the global semiconductor industry market in the coming years and is expected to play a much bigger role in the global semiconductor value chain, Union Minister for Electronics and Information Technology Ashwini Vaishnaw said while addressing a press briefing in New Delhi today.
Mr. Vaishnaw added that the focus of the Government is towards making the country firmly embedded in the global semiconductor value chain, from wafer fabrication to chip production. After releasing the notifications for all six pillars of the Semicon India Programme 2.0, Mr. Vaishnaw noted that there is confidence among global semiconductor industry stakeholders that India is the right destination for major investments in the coming decades.
The Minister underlined that the speed at which projects have moved from approval to ground-breaking and then to commercial production in Semicon 1.0 has been particularly noted by the industry.
Further, it was noted that India’s talent pool, policy certainty and ease of working have contributed to the industry’s growing interest in making India a base for semiconductor manufacturing and design. He added that the country’s objective is to become an indispensable part of the global semiconductor supply chain, with global industries increasingly depending on India for production and design.
The Minister emphasised that developing the entire ecosystem in the country will be foundational for sustained growth of India’s semiconductor industry over the next 50 years.
Recognising the requirement for sustained and long-term support to the semiconductor sector in India and also to build on the momentum generated under Semicon 1.0, Semicon 2.0 aims to further the Government's commitment towards putting India on the semiconductor map of the world.
Semicon 2.0 is aimed to holistically build the semiconductor ecosystem on the following six pillars:
First pillar: Design
Semicon 2.0 will build upon the initial success in chip design. With 105 startups already developing chips, the focus is on deepening the design ecosystem. Further, building blocks have been identified for the development of strategic and commercial products. Under Semicon 2.0, the aim is to develop IPs, designs of chips and systems with this approach. The work under Semicon 2.0 will place India as a key semiconductor chip design IP country.
Second pillar: Machines and materials
Companies involved in the manufacturing and R&D of machines and the manufacturing of materials, chemicals and gases that are essential for manufacturing semiconductors will be incentivized. This will lay the foundation for the sustainable growth of the semiconductor industry. This will also help in developing the precision manufacturing industry in India.
Third pillar: Setting up more fabs
With the first fab scheduled to be commissioned in 2028, the world is showing greater confidence in India’s semiconductor strategy. Efforts will be made to attract more manufacturers to come to India and set up fabs to manufacture chips. This will include silicon fabs, compound semiconductor fabs, discrete component fabs, display fabs, etc.
Fourth pillar: Further strengthening the ATMP/OSAT industry
With the success of ATMP units, the world is now looking at India as an alternative location for setting up ATMP/OSAT units. These will be actively encouraged with a focus on getting some of the most advanced ATMP technologies to India.
Fifth pillar: Research & Development
The semiconductor journey has started with 28nm-110nm as the node. Now, the focus will be on developing more advanced nodes and other advanced technologies in collaboration with leading R&D centres within and outside India.
Sixth pillar: Talent development
With 315 universities training students on complex chip design using the latest EDA tools, around 68,000 students have already been trained. It will be developed further and deepen the level of training while in college. Further, the industry will be actively engaged in deepening the clean room, fab construction and other ecosystem training as well.
Further, Semicon 2.0 will support economic growth across all sectors, strengthen national security through enhanced supply chain resilience, and help establish technological leadership in critical sectors. The approach of building the complete ecosystem will catalyse semiconductor design and manufacturing in India.
Progress of ISM 1.0
Manufacturing: So far, twelve (12) manufacturing units have been approved with a cumulative investment of over Rs. 1.64 Lakh Crore. These include one Silicon fab, one Silicon Carbide fab, an integrated Gallium Nitride Micro LED Display Fab and nine (9) packaging units expected to cater to chip requirements of sectors such as consumer appliances, industrial electronics, automobiles, power electronics, telecommunications, aerospace, etc.
Out of the 12 approved proposals, three companies, Micron, Kaynes and CG Semi, have started commercial production and one more is expected to start in 2026.
Design: Twenty-four (24) semiconductor design projects from start-ups and MSMEs have been approved for financial support, while 105 start-ups/MSMEs have been granted access to industry-standard Electronic Design Automation (EDA) tools.
These companies are engaged in designing chips and SoCs for a range of strategic and commercial applications, including satellite communications, drones, surveillance cameras, Internet of Things (IoT) devices, LED drivers, AI systems, telecom equipment, and smart meters.
These companies are at different stages of design and development and will enter the deployment stage after successful prototyping.
Source: https://www.ism.gov.in/schemes/semicon2.0/index
Sukanya Natarajan(she/her)
Director- Advocacy and Government Relations
India and Southeast Asia