Cabinet Approves Massive Rs 1.9 Trillion Electronics and Chip Manufacturing Schemes

The Union Cabinet, led by Prime Minister Narendra Modi, approved two major industrial schemes on July 15, 2026, to solidify India's position as a global electronics production hub. The new Mobile Phone Manufacturing Scheme (MPMS) carries an outlay of Rs 62,500 crore, replacing the previous PLI-LSEM program. This five-year initiative offers incentives ranging from 2.25% to 5% on sales, with a specific 3% bonus for Indian firms that invest in indigenous R&D and design. The government projects cumulative production worth Rs 39 lakh crore and the creation of 60,000 direct jobs by 2031.

Simultaneously, the Cabinet sanctioned Semiconductor Mission 2.0 (ISM 2.0) with an outlay of Rs 1.27 lakh crore over six years. This phase is designed to address the entire supply chain, including the production of industrial gases, chemicals, and advanced packaging technologies. By offering a 40% subsidy for silicon fabs and 35% for specialized packaging, the government aims to localize chip design for 75% of domestic applications by 2029. This effort builds upon the foundational success of the 2021 ISM, which saw 12 projects—including Tata Electronics’ Dholera fab and Micron's Gujarat plant—receive approval.

These policies focus on deep-tech self-reliance and boosting domestic value addition. By providing financial incentives for ancillary industries, the government intends to attract international players to set up advanced manufacturing facilities. The dual schemes are part of a long-term goal to establish India as a dominant force in the global semiconductor landscape by 2035, effectively utilizing manufacturing policy to drive industrial growth and technological integration across the country.