India Steps Up Chip Self-Reliance With Semiconductor Mission 2.0

The Union Budget 2026-27 marks a major inflection point in India’s technology and industrial strategy with the announcement of India Semiconductor Mission (ISM) 2.0. The new phase signals a decisive policy shift toward deepening domestic semiconductor capabilities, recognising chips as foundational to modern digital, industrial, and strategic systems.

ISM 2.0 builds upon the progress achieved under the first phase while recalibrating India’s semiconductor programme to address evolving global competition, supply-chain risks, and the need for advanced manufacturing and design leadership.

What India Semiconductor Mission 2.0 Focuses On

From Ecosystem Creation to Ecosystem Consolidation

Under ISM 2.0, the government aims to move beyond capacity creation toward full-stack semiconductor self-reliance. The mission will focus on:

• Manufacturing semiconductor equipment and materials domestically

• Designing full-stack Indian semiconductor intellectual property (IP)

• Strengthening domestic and global semiconductor supply chains

A budgetary provision of ₹1,000 crore has been made for FY 2026-27, with a strong emphasis on industry-led research and training centres to drive innovation and create a future-ready workforce.

Semiconductors: A Strategic Economic Backbone

Why Chips Matter

Semiconductors power nearly every modern system, including computers, smartphones, telecom networks, automobiles, defence platforms, and artificial intelligence applications. India’s renewed push reflects the growing recognition that a secure and reliable semiconductor supply is critical for economic stability, national security, and digital growth.

As highlighted in the Economic Survey 2025-26, microprocessors underpin energy networks, financial markets, hospitals, transport systems, satellites, and manufacturing units—often invisibly, but indispensably.

Progress Made Under India Semiconductor Mission 1.0

Foundation Laid Since 2021

The groundwork for India’s semiconductor expansion was laid with the approval of India Semiconductor Mission 1.0 by the Union Cabinet in December 2021. The programme was supported by an incentive framework of ₹76,000 crore, offering fiscal support of up to 50 per cent for:

• Silicon fabrication plants

• Compound semiconductor facilities

• Assembly, testing, marking and packaging units

• Chip design initiatives

As of December 2025, 10 projects worth ₹1.60 trillion had been approved across six states, covering silicon fabs, silicon carbide fabs, advanced and memory packaging units, and specialised testing infrastructure.

India’s Semiconductor Market Growth Outlook

Market Size Expected to Cross $100 Billion

According to industry estimates:

• India’s semiconductor market stood at $38 billion in 2023

• It grew to $45–50 billion in 2024-25

• It is projected to reach $100–110 billion by 2030

This growth is anchored in the Make in India and Make for the World vision, positioning India both as a manufacturing hub and a global supplier.

Roadmap for Advanced Manufacturing

From Domestic Demand to Global Leadership

By 2029, India is expected to design and manufacture chips meeting 70–75 per cent of domestic demand. Under ISM 2.0, the focus shifts to advanced manufacturing, with a roadmap targeting 3-nanometre and 2-nanometre technology nodes.

By 2035, India aims to be among the top semiconductor nations globally, supported by indigenous manufacturing, packaging, and design capabilities.

Modified Semiconductor Programme for 2026-27

₹8,000 Crore Outlay to Accelerate Investment

For 2026-27, the Modified Programme for Development of Semiconductor and Display Manufacturing Ecosystem in India has a total financial outlay of ₹8,000 crore. The programme aims to:

• Accelerate capital investment

• Generate high-quality employment

• Expand fabrication, packaging, and design capabilities

Projected Outcomes for 2026-27

• Employment generated: 1,500 persons

Modified Scheme for Compound Semiconductors, Silicon Photonics, Sensors, Discrete Fabs and ATMP/OSAT

• Units supported: 9

• Investment during the year: ₹11,000 crore

• Employment generated: 3,000 persons

Design Linked Incentive (DLI) Scheme

• Design companies supported: 30

• Semiconductor IP cores developed: 10

• Design manpower employed: 200 persons

Strengthening Chip Design and Innovation

Design Linked Incentive Scheme Impact

Since its launch in December 2021, the Design Linked Incentive Scheme has helped transition India from capacity creation to technological depth.

Key achievements include:

• 24 semiconductor design startups supported

• Nearly ₹430 crore raised in venture capital funding

• 2.25 crore EDA tool hours utilised on the national chip design platform

• 67,000 students and 1,000+ startup engineers actively engaged

In academia and startups:

• 122 academic designs taped out, with 56 chips fabricated at 180 nm at SCL Mohali

• 16 startup tape-outs, resulting in six chips fabricated, including at 12 nm

• 75 patents filed by academic institutions and 10 by startups

The next phase targets enabling at least 50 fabless semiconductor companies.

Indigenous Microprocessor Development

DHRUV64 and India’s Processor Ecosystem

A key milestone is the launch of DHRUV64, a fully indigenous 64-bit microprocessor developed by C-DAC under the Microprocessor Development Programme (MDP).

DHRUV64 supports applications across:

• 5G infrastructure

• Automotive electronics

• Industrial automation

• Consumer electronics

• Internet of Things (IoT)

India currently consumes nearly 20 per cent of global microprocessor output, making indigenous processor capability strategically critical.

DHRUV64 builds on processors such as SHAKTI, AJIT, VIKRAM, and THEJAS, developed under the Digital India RISC-V (DIR-V) Programme, alongside upcoming DHANUSH and DHANUSH+ SoC variants.

Building a Skilled Semiconductor Workforce

Talent as the Core Enabler

India’s semiconductor strategy places equal emphasis on people and infrastructure.

Key Skill Development Initiatives

• Chips to Start-up Programme:

  • EDA tools across 397 universities and startups

  • 56 chips designed and fabricated at SCL Mohali

• AICTE Academic Programmes:

  • BTech in Electronics Engineering (VLSI focus)

  • Diploma in IC manufacturing

  • Minor degree in VLSI and semiconductor technology

• SMART Lab at NIELIT Calicut:

  • Target: 1 lakh engineers

  • Already trained: 62,000+ engineers

• Lam Research Industry Partnership:

  • Focus on nanofabrication and ATMP skills

  • Target: 60,000 professionals over 10 years

• FutureSkills PRIME Programme:

  • Joint initiative of MeitY and NASSCOM

  • Focus on skilling and reskilling in semiconductors and emerging tech

Conclusion: A Strategic Leap Toward Semiconductor Sovereignty

India Semiconductor Mission 2.0 represents a decisive shift from ecosystem creation to global integration and consolidation. With enhanced budgetary support in 2026-27, the mission accelerates manufacturing, deepens design excellence, and builds advanced skills across the semiconductor value chain.

By strengthening domestic capacity and positioning India as a trusted global partner, ISM 2.0 anchors semiconductors as a strategic national capability—central to economic resilience, digital infrastructure, and long-term technological sovereignty.