The newly approved budget is considerably larger than the ₹76,000 crore allocated in the first phase and will be operational over the next 10 to 12 years, offering an extended policy timeline for investors and manufacturers.
Union Minister Ashwini Vaishnaw mentioned that ISM 2.0 will be executed over a six-year span and is projected to produce semiconductors valued at around ₹4 lakh crore during this timeframe. He noted that many large corporations have shown interest in the Design Linked Incentive (DLI) scheme, while startups will also be invited to participate actively.
Vaishnaw highlighted that startups are likely to seek grant-based assistance, whereas larger businesses may lean towards a royalty-based incentive structure. He also emphasized the need to develop strategic chips, calling them essential for India’s national safety and security.
On the topic of manufacturing, Vaishnaw stated that Tata Electronics’ semiconductor fabrication facility in Dholera is set to begin commercial production by mid-2026.
From chip fabs to a complete ecosystem
Unlike the initial phase, which primarily concentrated on attracting semiconductor fabrication plants, Outsourced Semiconductor Assembly and Test (OSAT) facilities, and Assembly, Testing, Marking and Packaging (ATMP) units, ISM 2.0 expands the government’s approach to reinforce the entire semiconductor value chain.
This new phase will encourage domestic production of semiconductor equipment, specialty chemicals, silicon wafers, industrial gases, critical raw materials, and advanced packaging technologies, while also supporting semiconductor design firms, equipment suppliers, materials manufacturers, and other upstream and downstream stakeholders.
Building long-term competitiveness
The expanded mission demonstrates the government’s acknowledgment that a globally competitive semiconductor industry demands more than just fabrication capacity. Established chip ecosystems thrive on a robust network of design, materials, equipment, testing, and intellectual property capabilities—areas where India’s domestic presence remains limited.
Launched in December 2021, the India Semiconductor Mission seeks to position India as a reliable global hub for semiconductor manufacturing and design, while diminishing reliance on imports in a sector vital for electronics, automobiles, telecommunications, defense, artificial intelligence, and data centers.
This initiative has already resulted in approvals for several prominent projects, including Tata Electronics’ semiconductor fabrication facility in Dholera, Tata Semiconductor Assembly and Test’s ATMP facility in Assam, Micron Technology’s semiconductor packaging plant in Gujarat, and packaging ventures by CG Power and the CG Power-Renesas collaboration.
