India Launches Semicon 2 Scheme with ₹1.27 Trillion Incentive Package

The Indian government has officially entered the next phase of its semiconductor manufacturing strategy with the launch of the "Semicon 2" scheme. The Ministry of Electronics and Information Technology (MeitY) has earmarked an additional ₹1.27 trillion in financial incentives to attract companies to establish fabrication units, as well as outsourced semiconductor assembly and test (OSAT) and assembly, testing, marking, and packaging (ATMP) plants. This significant allocation builds upon the initial ₹76,000 crore scheme, signaling a long-term commitment to building a robust domestic chip ecosystem.

The new phase places a strong emphasis on mature 28-nanometre and above chip markets, which are essential for a wide range of industrial and consumer applications. By focusing on these nodes, India aims to become a reliable node in the global semiconductor supply chain. Companies like CG Power are already scaling their operations, with plans to reach a capacity of 14.5 million chips per day through their upcoming G2 facility, representing a massive investment of approximately ₹760 billion.

To complement the manufacturing incentives, the government has established a ₹1 Lakh Crore Research Development Innovation Fund (RDIF). This fund is designed to support the development of new technologies, ensuring that India not only manufactures chips but also contributes to the design and innovation aspects of the semiconductor industry. This holistic approach is intended to create a self-reliant semiconductor ecosystem that can compete on the global stage while meeting domestic demand.