India Plans $20 Billion Semiconductor Mission 2.0 to Power Chip Ecosystem

In a major move to accelerate India’s semiconductor journey, the Government of India is considering a $20 billion (₹1.7 lakh crore) incentive package under the upcoming India Semiconductor Mission (ISM) 2.0.

According to a report, the Ministry of Electronics and Information Technology (MeitY) has already submitted a proposal to the finance ministry, which is expected to review and approve it by October 2025. Once cleared, the proposal will move to the Union Cabinet for final approval.

India’s Semiconductor Push Gets Bigger with ISM 2.0

What ISM 2.0 Aims to Achieve

The upgraded ISM 2.0 is expected to provide a comprehensive ecosystem for chip manufacturing in India. The plan includes:

• Establishing India’s first display fabrication facility (fab).

• Expanding incentives for chip design patents.

• Subsidising sensor suppliers to strengthen the semiconductor supply chain.

• Developing Outsourced Semiconductor Assembly and Test (OSAT) units within India.

• Supporting capital equipment and materials to cover the entire semiconductor value chain.

Boost to Chip Design and DLI Scheme

A key highlight of ISM 2.0 will be its increased focus on innovation. The government plans to allocate ₹5,000 crore towards the Design Linked Incentive (DLI) scheme, more than triple the ₹1,500 crore provided under the first phase of ISM.

India Semiconductor Mission: A Recap

Launched in 2021, the India Semiconductor Mission (ISM) was introduced with a ₹76,000 crore outlay to boost domestic chip production. Of this:

• ₹65,000 crore was earmarked for semiconductor fabrication and packaging units.

• ₹10,000 crore for modernising the Semiconductor Lab in Mohali.

• ₹1,000 crore for the DLI scheme.

Major Projects Approved So Far

• Tata Electronics: Fab facility in Dholera, Gujarat and an OSAT unit in Morigaon, Assam.

• Micron: Assembly, Testing, Marking and Packaging (ATMP) facility in Sanand, Gujarat.

• Four new projects worth ₹4,584 crore recently approved in Odisha, Andhra Pradesh, and Punjab.

Recent Milestones in India’s Semiconductor Sector

India’s progress in the semiconductor ecosystem is already evident. At the Semicon India 2025 event, ISRO unveiled Vikram — the country’s first indigenous 32-bit space-grade processor, marking a breakthrough in India’s self-reliance journey in advanced chip design.

The India Semiconductor Mission (ISM) is a government initiative launched in December 2021 with the goal of building a robust semiconductor and display ecosystem in India. It is part of the broader "Programme for the Development of Semiconductors and Display Manufacturing Ecosystem" in the country. The mission aims to transform India into a global hub for electronics manufacturing and design.

 About India Semiconductor Mission (ISM)

Key Objectives of the India Semiconductor Mission

The ISM is an independent business division under the Ministry of Electronics and Information Technology (MeitY) and serves as the nodal agency for implementing various schemes. Its key objectives include:

• Building a Semiconductor and Display Ecosystem: The primary goal is to establish a strong, self-reliant ecosystem for semiconductor and display manufacturing, from design to production.

• Providing Financial Support: The mission offers significant financial incentives to companies investing in semiconductor and display manufacturing and the design ecosystem. This includes fiscal support of up to 50% of the project cost for approved applicants.

• Fostering a Long-Term Strategy: ISM is tasked with formulating a comprehensive, long-term strategy for developing a sustainable semiconductor and display manufacturing ecosystem in consultation with government bodies, industry, and academia.

• Enhancing the Supply Chain: The mission seeks to facilitate a secure and trusted supply chain for semiconductors and displays, including raw materials, specialty chemicals, gases, and manufacturing equipment.

• Promoting Indigenous Design and Intellectual Property (IP): It aims to support the growth of India's semiconductor design industry by providing essential tools and services, promoting indigenous IP generation, and encouraging the transfer of technology.

• Skilling and Talent Development: A crucial aspect of the mission is to build a skilled workforce and talent pipeline to support the semiconductor industry. This is being done through collaborations with academic institutions and specialized training programs.

Schemes Under ISM

The ISM operates through several schemes to achieve its objectives:

• Scheme for Setting up Semiconductor Fabs: Offers up to 50% fiscal support for the cost of setting up semiconductor fabrication plants.

• Scheme for Setting up Display Fabs: Provides up to 50% fiscal support for companies investing in display panel manufacturing.

• Scheme for Compound Semiconductors and ATMP: Offers fiscal support for capital expenditure on establishing facilities for Compound Semiconductors, Silicon Photonics, and Outsourced Semiconductor Assembly and Test (OSAT) units.

• Design Linked Incentive (DLI) Scheme: Provides financial incentives and infrastructure support to semiconductor design startups and companies at various stages of development.

Progress and Key Milestones

Since its launch, the ISM has made significant strides:

• Financial Outlay and Investments: The mission was launched with a total outlay of ₹76,000 crore (approximately $9.1 billion). As of late 2025, it has secured investments of around ₹1.60 lakh crore (approximately $19 billion) across ten approved projects.

• First "Made-in-India" Chip: In September 2025, the first commercially-made chip manufactured in India was presented to the Prime Minister. This chip was packaged at a facility in Sanand, Gujarat, as part of a joint venture between CG Power & Industrial, Japan's Renesas, and Thailand's Stars Micro.

Conclusion

The upcoming $20 billion incentive package under ISM 2.0 highlights India’s ambition to emerge as a global semiconductor powerhouse. By focusing on chip design, fabrication, and testing, the mission seeks to create a self-sufficient semiconductor ecosystem while reducing dependency on imports. If executed effectively, ISM 2.0 could not only attract global tech giants to set up manufacturing in India but also foster homegrown innovation, generate high-value jobs, and integrate India deeper into the global electronics supply chain.