Cabinet Approves ₹1.27 Lakh Crore Semicon 2.0
New Delhi: The Union Cabinet, chaired by Prime Minister Narendra Modi, has officially approved Semicon 2.0. This comprehensive programme carries a substantial budget outlay of ₹1,27,500 crore. The massive state funding aims to strengthen India's semiconductor ecosystem over a targeted six-year duration.
Furthermore, this revamped policy provides critical, long-term regulatory support to domestic and global tech manufacturers. By building on the initial momentum of Semicon 1.0, India intends to establish itself as a dominant global hub for chip design, fabrication, and packaging innovation.
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The Six Strategic Pillars of Semicon 2.0
According to official briefings, the comprehensive programme organises its structural incentives around six highly integrated core pillars:
1. Elevating Chip Design and IP Creation
Initially, the first mission supported 105 innovative startups that successfully began developing original chips. Consequently, Semicon 2.0 shifts its core focus toward creating high-value domestic intellectual property (IP). The initiative systematically positions India as a primary global source for commercial and strategic chip design IP.
2. Securing Essential Machines and Materials
Crucially, the new scheme extends fiscal support to the chemical supply chain surrounding chip manufacturing. The government will heavily incentivise companies producing specialized machinery, precision materials, rare chemicals, and specialty gases. This measure lays a highly sustainable foundation for local supply chains while accelerating precision engineering capabilities.
3. Expanding Large-Scale Fabrication Facilities
Significantly, global electronics players are showing immense confidence in India's chip strategy. As the nation's first silicon fab prepares to commission operations in 2028, Semicon 2.0 introduces structural capex subsidies. Fabs will receive tailored support:
Semicon 2.0 Direct Capex Subsidy Tiers:
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Silicon Fabrication Plants: 40% fiscal subsidy on eligible capital expenditure.
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Compound Semiconductor & Display Fabs: 35% fiscal subsidy on eligible capex.
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Strategic Target Sectors: Silicon carbide fabs, discrete component fabs, and GaN display facilities.
4. Fortifying Advanced Packaging (ATMP/OSAT)
Building on the initial baseline success of early assembly units, the Centre wants to attract high-end packaging technologies. The scheme offers a 35% fiscal incentive for advanced packaging plants. Parallelly, conventional packaging setups can access a 25% capex subsidy, turning India into a viable alternative global packaging destination.
5. Racing Toward Advanced Node R&D
While domestic ventures began with mature technologies ranging from 28nm to 110nm, the technology horizon must expand. Therefore, the government will fund research into sub-28nm advanced semiconductor nodes. Deep academic collaborations with leading domestic and international research institutes will drive these next-generation innovations.
6. Scaling Up the Specialized Talent Pipeline
Presently, 315 universities across the country actively train engineering students using industry-standard Electronic Design Automation (EDA) tools. To expand this pool beyond the 68,000 professionals already trained, the state will scale up practical skill ecosystems. New curricula will feature intense industry participation covering clean-room operations, complex fab construction, and plant logistics.
Tracking Progress: The India Semiconductor Mission (ISM) Legacy
The government explicitly underscored the immense momentum achieved during the initial phase of the mission. Together, these coordinated interventions successfully insulated India's semiconductor ecosystem from volatile global supply variations.
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Heavy Capital Approvals: Under the first phase, the Centre cleared 12 major manufacturing projects, generating a cumulative investment exceeding ₹1.64 lakh crore.
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Active Production Lines: Out of the approved projects, tech giants like Micron, Kaynes, and CG Semi have already commenced commercial production.
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Widespread Industrial Applications: Local packaging and fabrication plants cater directly to high-demand verticals. These include consumer electronics, automotive power modules, aerospace components, and telecommunications equipment.
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Vibrant Startup Ecosystem: On the design front, 24 targeted projects from startups and MSMEs received direct funding. These entities are actively prototyping specialized Systems-on-Chip (SoCs) for satellite communications, AI servers, smart grids, and commercial drones.
By capturing the entire technology value chain, the Cabinet expects Semicon 2.0 to catalyze an additional ₹4 lakh crore in private investments. Ultimately, these strategic measures will transform India into a resilient, self-reliant global semiconductor powerhouse over the coming decade.
Semicon 1.0 vs. Semicon 2.0 Evolution Policy Metric / Parameter Semicon 1.0 Baseline Accomplishments Semicon 2.0 Reformed Framework (2026) Long-Term Strategic Value Total Fiscal Budget ₹76,000 Crore Initial Outlay ₹1,27,500 Crore Allocated Assures structural, multi-year policy predictability. Silicon Fab Subsidy Uniform 50% Capex Support 40% Targeted Capex Subsidy Optimises fund allocation as global confidence rises. Supply Chain Focus Focused primarily on primary fabs Includes raw materials, gases, and machines Builds a highly resilient domestic supply chain. Advanced Packaging Baseline assembly approvals 35% Advanced / 25% Conventional Capex Secures complex high-end node packaging projects. Design Ecosystem 105 Startups given EDA tools Deep IP & Complete System Creation Establishes India as a leading chip design nation.
