India's Cabinet Approves ₹1.27 Lakh Crore for Semicon 2.0 Initiative

New Delhi, India Jul 15, 2026 ALN: The Union Cabinet of India, under the leadership of Prime Minister Narendra Modi, has recently approved a significant initiative known as Semicon 2.0. This program is set to have a substantial budget outlay of ₹1,27,500 crore, which is aimed at bolstering the semiconductor design and manufacturing ecosystem within the country. The initiative also seeks to provide long-term policy support to the semiconductor sector, which is increasingly recognized as a critical component of modern economies.

The approval of Semicon 2.0 comes at a time when the global semiconductor industry is experiencing unprecedented demand and transformation, driven by advancements in technology and the proliferation of digital devices. Semiconductors are essential components in a wide array of products, from smartphones and computers to industrial machinery and automotive systems. The COVID-19 pandemic further highlighted the vulnerabilities in global supply chains, underscoring the need for countries, including India, to enhance their domestic semiconductor capabilities.

Semicon 2.0 builds upon the momentum generated by its predecessor, Semicon 1.0, which aimed to lay the groundwork for India's semiconductor ambitions. The new initiative sets out a comprehensive and holistic approach to establish India as a major global hub for semiconductor design, manufacturing, and innovation. The government has outlined six key pillars that will form the foundation of this initiative, each aimed at addressing specific challenges and opportunities within the semiconductor ecosystem.

• Chip Design: One of the primary focuses of Semicon 2.0 is to strengthen India's chip design ecosystem. This involves creating intellectual property (IP) and developing chip designs and complete systems that cater to both strategic and commercial applications. By enhancing the capabilities in chip design, India aims to foster innovation and reduce reliance on foreign technology.
• Domestic Manufacturing: The initiative emphasizes the importance of promoting domestic manufacturing of semiconductor equipment, materials, chemicals, and specialty gases that are essential for chip production. This is crucial for building a sustainable semiconductor supply chain and ensuring that India can meet its own demands without being overly reliant on imports.
• Fabrication Capacity: Expanding semiconductor fabrication capacity is another key objective of Semicon 2.0. The government plans to attract global semiconductor manufacturers to establish fabrication facilities in India. This is particularly important as the first semiconductor fabrication plant is expected to be commissioned by 2028, marking a significant milestone in India's semiconductor journey.
• Packaging Industry: The initiative also aims to strengthen India's Assembly, Testing, Marking, and Packaging (ATMP) and Outsourced Semiconductor Assembly and Test (OSAT) industry. By attracting more advanced semiconductor packaging technologies, India seeks to position itself as a viable alternative for global semiconductor packaging needs.
• Research and Development: Advancing semiconductor research and development is a critical component of Semicon 2.0. The government intends to support the development of more advanced semiconductor nodes and next-generation technologies in collaboration with leading research institutions. This focus on R&D is vital for ensuring that India remains competitive in a rapidly evolving global semiconductor landscape.
• Talent Development: Finally, the initiative places a strong emphasis on talent development. With 315 universities already training students in advanced chip design, the training ecosystem will be further expanded under Semicon 2.0. This is essential for creating a skilled workforce that can support the growing semiconductor industry in India.

The government envisions that Semicon 2.0 will not only enhance India's position in the global semiconductor market but also support economic growth across multiple sectors. By fostering a resilient semiconductor supply chain, the initiative is expected to strengthen national security and enhance India's technological capabilities in critical industries such as telecommunications, consumer electronics, and automotive.

Highlighting the progress made under the India Semiconductor Mission (ISM) 1.0, the government has reported that 12 semiconductor manufacturing projects have been approved, with a cumulative investment exceeding ₹1.64 lakh crore. These projects encompass a range of facilities, including silicon fabrication plants, silicon carbide fabrication units, and multiple semiconductor packaging units. The anticipated output from these facilities is expected to cater to various sectors, thereby contributing to the overall growth of the Indian economy.

Among the approved manufacturing projects, notable companies such as Micron, Kaynes, and CG Semi have already commenced commercial production, with another unit expected to begin production later this year. This early progress indicates a positive trajectory for the semiconductor manufacturing landscape in India, and it sets the stage for future growth and investment.

On the design front, the government has approved 24 semiconductor design projects from startups and micro, small, and medium enterprises (MSMEs) for financial support. Furthermore, 105 startups and MSMEs have gained access to Electronic Design Automation (EDA) tools, which are essential for developing chips and Systems-on-Chip (SoCs) for various applications, including satellite communications, drones, and artificial intelligence systems. These initiatives are crucial for nurturing innovation and entrepreneurship within the semiconductor sector.

Overall, Semicon 2.0 represents a long-term commitment by the Indian government to establish the country as a global semiconductor powerhouse. By focusing on strengthening domestic capabilities across design, manufacturing, research, innovation, and skilled workforce development, the initiative aims to create a robust semiconductor ecosystem that can compete on the world stage.

The implications of this initiative are far-reaching. As India strengthens its semiconductor capabilities, it could potentially reduce its dependency on foreign semiconductor imports, which have been a significant concern for the country. By fostering a self-sufficient semiconductor industry, India can enhance its economic resilience and security, especially in times of geopolitical tensions and global supply chain disruptions.

In conclusion, Semicon 2.0 is a pivotal step towards realizing India's ambitions in the semiconductor sector. As the government rolls out this initiative, it will be essential to monitor its progress and impact on both the domestic economy and the global semiconductor landscape. The success of this initiative could position India as a key player in the global semiconductor supply chain, with implications for technological advancement and economic growth for years to come.