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NEW DELHI: The Union Cabinet has approved two landmark initiatives to strengthen India’s electronics and semiconductor ecosystem: the India Semiconductor Mission 2.0 with an outlay of ₹1,27,500 crore and the Mobile Phone Manufacturing Scheme (MPMS) with ₹62,500 crore.
This initiative aims to deepen and expand the country’s semiconductor design, manufacturing, and supply chain capabilities, building directly on the foundation laid by the first phase.
These measures reflect the government’s continued commitment to building a resilient domestic value chain in critical technologies.
Comprehensive Semiconductor Ecosystem Under Semicon 2.0
Semicon 2.0 adopts a comprehensive approach structured around six key pillars to create a robust, end-to-end semiconductor ecosystem:
• Chip Design: Building on early successes with over 105 startups already active, the program will emphasize development of intellectual property (IP), chip designs, and complete systems for both strategic and commercial needs.
• Machines and Materials: Incentives will target companies engaged in manufacturing and R&D of semiconductor equipment, as well as critical materials, chemicals, and gases, fostering a sustainable domestic supply base and boosting precision manufacturing.
• Fabrication Facilities: With the first fab expected to come online in 2028, efforts will intensify to attract additional silicon, compound semiconductor, discrete component, and display fabs.
• Advanced Packaging (ATMP/OSAT): Building on initial successes, the scheme will encourage more advanced assembly, testing, marking, and packaging units.
• Research & Development: Shifting focus toward more advanced technology nodes beyond the current 28nm-110nm range through collaborations with global and domestic R&D centers.
• Talent Development: Expanding training programs that have already reached around 68,000 students across 315 universities, with deeper industry engagement in areas like cleanroom operations and fab construction.
Union Minister for Electronics and Information Technology Ashwini Vaishnaw highlighted that the new scheme covers the entire value chain of the semiconductor ecosystem, with expectations of attracting around ₹4 lakh crore in investments and generating ₹2 lakh crore in semiconductor production during the scheme period.
Building on ISM 1.0 Momentum
The first phase of the India Semiconductor Mission had already approved 12 manufacturing units with a cumulative investment exceeding ₹1.64 lakh crore.
These include one silicon fab, one silicon carbide fab, an integrated gallium nitride micro-LED display fab, and nine packaging units serving diverse sectors such as automobiles, power electronics, telecom, and aerospace.
Notable progress includes three companies: Micron, Kaynes, and CG Semi, commencing commercial production, with another unit slated to begin operations in 2026.
On the design front, 24 projects from startups and MSMEs received financial support, while 105 entities gained access to industry-standard Electronic Design Automation tools for applications ranging from IoT and AI to defense and smart infrastructure.
Boost to Mobile Phone Manufacturing
In parallel, the Cabinet cleared the Mobile Phone Manufacturing Scheme (MPMS) with a ₹62,500 crore budgetary outlay, to be implemented from FY 2026–27 to FY 2030–31.
This successor to the earlier Production Linked Incentive scheme for large-scale electronics aims to scale up production, deepen domestic value addition, strengthen supply chains, and enhance global competitiveness.
The scheme will provide incentives to manufacturers based on eligible sales of mobile phones made in India, with a strong emphasis on local sourcing, R&D, and support for Indian brands. It follows the success of previous PLI initiatives that significantly boosted mobile manufacturing and exports.
Strategic Significance
By addressing upstream segments like raw materials and equipment, Semicon 2.0 shifts India’s strategy from primarily attracting large fabs to creating a self-sustaining, resilient ecosystem. This is expected to reduce dependence on imports, support growth across multiple industries, and strengthen national security through secure supply chains for critical technologies.
The timing aligns with global semiconductor demand projected to rise sharply, driven by artificial intelligence, 5G/6G, electric vehicles, and consumer electronics. Industry observers see this as a transformative move that could position India as a significant player in the global semiconductor map, potentially generating substantial employment and fostering innovation in allied sectors.
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