India Launches Semiconductor Mission 2.0 with Rs 1.27 Lakh Crore Outlay

The Union Cabinet has officially approved the India Semiconductor Mission (ISM) 2.0, backed by a massive budget of Rs 1.27 lakh crore. This policy marks a strategic evolution from the first phase, removing subsidies for land acquisition and technology transfer costs to improve transparency. Instead, state governments will now manage land and infrastructure incentives to encourage local development. Silicon fabrication units will receive a 40% subsidy under the new framework, with even more aggressive incentives of up to 75% available for research and development activities focused on smaller, cutting-edge node sizes.

The updated policy prioritizes chip design, followed by supply chain infrastructure and manufacturing. Unlike the initial phase, which offered uniform 50% capital expenditure subsidies for all fabs, ISM 2.0 uses a tiered structure to ensure high-value sectors receive targeted support. By integrating chip production with the ongoing Mobile Phone Manufacturing Scheme, the government aims to move up the value chain. This shift reflects a deeper focus on developing local talent and R&D capabilities, moving beyond basic assembly to secure the nation's broader electronics ecosystem.

India has set a target to become self-sufficient in chip design and manufacturing for 70-75% of domestic applications by 2029. By 2035, the country aims to establish itself as a premier global semiconductor hub, reducing its reliance on imports for vital household and defense electronics. As the nation mitigates the risks of global geopolitical volatility, the success of these incentives will rely on attracting consistent foreign direct investment and maintaining the momentum of infrastructure construction to meet rising domestic silicon demand.