The Union Cabinet has approved Semicon 2.0 with a ₹1.27 lakh crore outlay to strengthen India's semiconductor ecosystem. Learn about its objectives, key features, investment plans, benefits, and how it will boost chip manufacturing, innovation, and technological self-reliance.
The Union Cabinet approved the Semiconductor 2.0 Programme, which is expected to cost a total of ₹1,27,500 crore. In order to accelerate the growth of India's semiconductor design, manufacturing, research, and innovation ecosystem. The project aims to establish India as a major participant in the global semiconductor value chain, boost domestic chip production, and reduce dependence on import. The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the Semicon 2.0 Programme with a substantial outlay of ₹1,27,500 crore (approximately $13.2 billion). Building on the success of the India Semiconductor Mission (ISM) 1.0, the new phase aims to transform India into a global semiconductor powerhouse by developing a comprehensive, end-to-end semiconductor ecosystem. Beyond promoting chip fabrication, Semicon 2.0 focuses on semiconductor design, manufacturing equipment and materials, advanced packaging, research and development, talent creation, and resilient supply chains. The initiative marks a significant step towards achieving technological self-reliance, enhancing digital infrastructure and positioning India as a trusted partner in the global semiconductor industry.
India Semiconductor Mission (ISM) 1.0
The India Semiconductor Mission (ISM) 1.0 is the Government of India's flagship initiative to establish a comprehensive semiconductor and display manufacturing ecosystem. Launched in 2021 under the Ministry of Electronics and Information Technology (MeitY), the mission provides up to 50% financial support under a ₹76,000 crore incentive package for semiconductor fabrication plants (fabs), compound semiconductor facilities, Assembly, Testing, Marking and Packaging (ATMP) units, Outsourced Semiconductor Assembly and Test (OSAT) facilities, and semiconductor design companies. Under ISM 1.0, the government has approved 12 semiconductor manufacturing projects with an estimated investment pipeline of around ₹1.64 lakh crore, covering advanced packaging facilities, memory packaging units, silicon manufacturing plants, silicon carbide factories, and specialized assembly and testing infrastructure. Marking a major milestone in India's semiconductor journey, Prime Minister of India Narendra Modi is set to inaugurate India's first semiconductor manufacturing facility, highlighting the country's progress toward building a self-reliant and globally competitive semiconductor ecosystem.
India Semiconductor Mission (ISM) 2.0
The next stage of India's semiconductor plan, India Semiconductor Mission 2.0, was announced in the Union Budget 2026-2027. ISM 2.0 wants to increase domestic manufacturing capabilities, promote local semiconductor technologies, and integrate India into global semiconductor supply chains, while the first phase focuses on developing the ecosystem. Establishing end-to-end Indian semiconductor intellectual property (IP), developing robust local and global supply chains, and manufacturing semiconductor equipment and materials in India are the program's primary goals.
Understanding the Six Pillars of India's Semicon 2.0 Programme
India's Semicon 2.0 Programme is a landmark government initiative with a budgetary outlay of ₹1,27,500 crore, aimed at building a globally competitive and self-reliant semiconductor ecosystem. Expanding on the achievements of the first phase, the programme moves beyond basic chip assembly to develop a complete end-to-end semiconductor value chain, including chip design, fabrication, advanced packaging, testing, research and development, manufacturing equipment, and a skilled workforce. It is a significant step toward positioning India as a global semiconductor manufacturing and innovation hub. Let’s take a look at the Six Pillars of India's Semicon 2.0 Programme:-
1. Strengthening Semiconductor Design (Chip Design)
The first pillar aims to increase India's capability for semiconductor design by promoting chip intellectual property (IP), system design, and innovation. The Government of India aims to make India a global center for semiconductor design, building on the success of about 105 chip design companies.
2. Manufacturing Equipment and Materials (Machines and Materials)
The second pillar is to promote domestic manufacturing and research of industrial gases, chemicals, specialty materials, and semiconductor equipment. Creating a robust environment for semiconductor production involves the development of these supporting sectors.
3. Expanding Semiconductor Fabrication Capacity (Setting Up More Fabs)
The third pillar India will draw multinational semiconductor makers to set up fabrication facilities across the country. The scope includes display fabrication facilities, silicon fabs, compound semiconductor fabs, and discrete component manufacturing processes.
4. Strengthening the ATMP-OSAT Ecosystem (ATMP and OSAT)
The fourth pillar promotes advanced assembly, Testing, Marking, and Packaging (ATMP) and Outsourced Semiconductor Assembly and Test (OSAT) facilities. Increasing backend manufacturing will boost India's competitiveness in the global semiconductor production market and promote domestic value addition.
5. Advancing Research and Development
The fifth pillar aims to exceed current 28-110 nanometer technology nodes. It will be able to compete in cutting-edge semiconductor technology with more research and innovation. By investing in cutting-edge semiconductor process technologies and next-generation chip production.
6. Talent Development
India's goals for semiconductors continue to revolve around the development of human capital. Nearly 68,000 students have received advanced chip design instruction from about 315 colleges using current Electronic Design Automation (EDA) tools. To generate a highly qualified semiconductor workforce, ISM 2.0 seeks to significantly enhance industry-oriented education and skill development.
Why are Semiconductors Strategically Important?
Semiconductors are the backbone of modern technology, powering almost every electronic device we use today. They regulate the flow of electricity in smartphones, computers, automobiles, medical equipment, consumer electronics, and communication systems. As these chips are critical to industrial growth, economic development, and national security, countries consider semiconductors to be strategic assets. Any disruption in the global semiconductor supply chain can severely impact manufacturing, digital infrastructure, and defense preparedness. India's Semiconductor Leap reflects the country's commitment to achieving technological self-reliance by building a robust domestic semiconductor ecosystem, reducing import dependence, and positioning India as a global hub for chip design and manufacturing. Let’s take a look at why Semiconductors are Strategically Important:-
1. Foundation of the Digital Economy
Modern electronics and technology like computers, smartphones, automobiles, artificial intelligence, cloud computing, and the Internet of Things (IoT) depend on semiconductors.
2. National Security
Military equipment, satellite systems, cyber infrastructure, secure communications, surveillance technologies, and strategic military applications all depend on semiconductor chips.
3. Industrial Competitiveness
Advanced semiconductor manufacturing countries benefit from improved industrial productivity, technological leadership, and better placing in global value chains. ISM 2.0 positions semiconductors as a strategic national capacity that is essential to technological sovereignty, digital infrastructure, and economic resilience by increasing support for manufacturing, design, and advanced skills.
4. Technological Sovereignty
Under the Atmanirbhar Bharat objective, domestic semiconductor production strengthens supply chain resilience, reduces dependency on foreign suppliers, and increases India's scientific autonomy.
Indigenous Microprocessors and Core Semiconductor Technologies
India's semiconductor mission aims to reduce dependence on imported chips by promoting indigenous innovation. A major milestone in this effort is DHRUV 64, India's first fully indigenous 64-bit, 1.0 GHz dual-core microprocessor developed by C-DAC using the RISC-V architecture. It is designed for applications such as 5G equipment, IoT devices, and industrial systems, strengthening India's journey towards technological self-reliance. Applications in telecommunications, healthcare, transportation, manufacturing, protection, and space technology are made possible by microprocessors, which are the foundation of modern digital infrastructure. As part of its desire of becoming independent in semiconductors, India invested much in the development of its own analyzing technologies. The launch of DHRUV64, a completely domestic 64-bit microprocessor developed by the Centre for Development of Advanced Computing (C-DAC) under the Microprocessor Development Programme (MDP), is an important milestone. The processor showcases India's increasing ability in cutting-edge semiconductor design and domestic computer technology.
Challenges Before India's Semiconductor Industry
India's semiconductor industry faces major challenges, including the high cost of setting up fabrication plants, limited manufacturing infrastructure, a shortage of skilled talent, and heavy dependence on imported chips and technology. Despite significant policy initiatives, India semiconductor industry continues to require greater investment in advanced manufacturing, research and development, and workforce development to compete globally. Strengthening domestic production, fostering innovation, and building a resilient semiconductor ecosystem are essential for achieving semiconductor self-reliance and reducing dependence on imports. Let’s take a look at challenges before India's semiconductor industry:-
1. High Capital Requirements
Financing is a key difficulty because semiconductor manufacturing plants require expanded project gestation periods and investments reaching billions of dollars. Developing indigenous microprocessors and core semiconductor technologies requires enormous investment. A modern semiconductor fabrication plant (fab) can cost up to $15 billion and takes several years to become operational. Moreover, continuous investment is needed to upgrade manufacturing equipment and keep pace with rapidly evolving semiconductor technologies.
2. Technology-Intensive Manufacturing
The semiconductor industry evolves rapidly, demanding continuous technological upgrades, research, and innovation to remain globally competitive. Indigenous microprocessors and core semiconductor technologies are the foundation of digital sovereignty and advanced manufacturing. India is rapidly transforming from a semiconductor-consuming nation into a global hub for indigenous chip design, innovation, and advanced semiconductor manufacturing.
3. Dependence on Imported Equipment
For specialized equipment and modern semiconductor manufacturing equipment, India is still dependent on foreign vendors. India currently depends on imports for 90–95% of its semiconductor chips, creating significant economic and strategic vulnerabilities. To reduce this dependence, the government is promoting indigenous microprocessor development through the India Semiconductor Mission (ISM), which supports domestic chip manufacturing, design capabilities, and a skilled semiconductor workforce.
4. Infrastructure Requirements
Ultra-pure water, constant electricity, and a highly reliable logistics infrastructure are all necessary for semiconductor production. Developing indigenous microprocessors requires substantial investment in advanced manufacturing, research, and digital infrastructure. Through initiatives such as Semicon 2.0 and the India Semiconductor Mission (ISM), the government is providing financial support to accelerate the development of homegrown semiconductor technologies, including processors like DHRUV64.
5. Skill Gaps
The industry requires a highly qualified workforce with training in chip design, fabrication techniques, and semiconductor engineering. India has to manufacture its own semiconductor chips if it is to become technically independent. However, a shortage of skilled semiconductor professionals remains a key challenge. To address this, the government, through Semicon 2.0 and the India Semiconductor Mission (ISM), is investing in skill development, research, and workforce training to build a strong domestic talent pool.
Conclusion
The approval of Semicon 2.0 marks a transformative step in India's journey towards becoming a global semiconductor powerhouse. With a substantial investment of ₹1,27,500 crore, the programme aims to build a complete semiconductor ecosystem by strengthening chip design, fabrication, advanced packaging, research and development, manufacturing infrastructure, and skilled manpower. By reducing dependence on imported chips and promoting indigenous technologies such as DHRUV64, Semicon 2.0 supports the vision of Atmanirbhar Bharat and enhances India's technological and strategic capabilities. If implemented effectively, the initiative has the potential to position India as a trusted global hub for semiconductor innovation, manufacturing, and supply chains while driving economic growth, digital transformation, and national security. A major change from ecosystem creation to ecosystem consolidation and global integration is represented by India Semiconductor Mission 2.0.