India Semicon 2.0 Approved with US$13.2Billion Outlay: Key Details

On July 15, 2026, the central government approved Semicon 2.0, allocating INR 1.275 trillion (US$13.23 billion) to strengthen India’s semiconductor ecosystem through support for chip design, advanced packaging, semiconductor equipment, specialty materials, research, and talent development. Building on the India Semiconductor Mission (ISM) launched in 2022, the initiative broadens India’s semiconductor strategy beyond fabrication to develop a more integrated value chain.

The expanded policy framework creates new opportunities for global semiconductor manufacturers, equipment suppliers, engineering firms, technology companies, and investors looking to establish manufacturing, localize supply chains, or participate in India’s growing semiconductor ecosystem.

Semicon 2.0 at a glance

Semicon 2.0 is the second phase of India’s semiconductor development strategy, approved with a budget outlay of INR 1.275 trillion (US$13.23 billion). The 2026 program broadens central government support beyond chip fabrication to strengthen the entire semiconductor ecosystem.

What does Semicon 2.0 mean for businesses?

Unlike the first phase of the ISM, which primarily focused on establishing domestic chip manufacturing capacity, Semicon 2.0 expands policy support across every major segment of the semiconductor value chain.

The second phase intends to stimulate investment in the following:

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1. Semiconductor design and IP development
2. Wafer fabrication facilities
3. Compound semiconductors and display fabs
4. Assembly, testing, marking, packaging (ATMP) and outsourced semiconductor assembly and testing (OSAT) facilities
5. Semiconductor manufacturing equipment
6. Specialty chemicals and industrial gases
7. Semiconductor-grade materials
8. Engineering services
9. Semiconductor research
10. Workforce development

This broader policy scope creates opportunities not only for chip manufacturers but also for suppliers, equipment manufacturers, engineering companies, research organizations, and semiconductor service providers.

Key commercial opportunities under Semicon 2.0

Semiconductor equipment and precision manufacturing

One of the primary changes under Semicon 2.0 is the inclusion of incentives for companies manufacturing semiconductor production equipment, specialty chemicals, industrial gases, and advanced materials.

For international suppliers already serving semiconductor manufacturers in East Asia, Europe, or the United States, India is positioning itself as a new destination for local manufacturing and supply-chain localization.

More semiconductor fabrication projects

India expects its first silicon fabrication plant to become operational in 2028 and is now seeking additional investments in silicon fabs, compound semiconductor fabs, discrete semiconductor manufacturing, and display fabrication.

This creates opportunities for equipment suppliers, EPC contractors, clean-room specialists, semiconductor utilities, and industrial infrastructure developers.

Growth in advanced packaging

India also intends to accelerate investment in ATMP and OSAT facilities.

Advanced packaging has become an increasingly important part of the semiconductor value chain, particularly as global manufacturers seek alternative production locations outside traditional semiconductor hubs.

Businesses supplying packaging equipment, automation systems, inspection technologies, and testing solutions may find new opportunities as India’s packaging ecosystem expands.

Opportunities in semiconductor design

India already possesses one of the world’s largest semiconductor design talent pools.

Semicon 2.0 seeks to move beyond engineering services by encouraging domestic development of semiconductor intellectual property (IP), chip architectures, and system-on-chip (SoC) designs for commercial and strategic applications.

This creates opportunities for fabless semiconductor companies, IP developers, EDA software providers, AI chip designers, automotive semiconductor firms, and embedded systems developers.

Expanding the semiconductor supply chain

As more semiconductor manufacturing facilities become operational across the country, domestic demand is expected to increase for:

1. Specialty chemicals
2. Industrial gases
3. Silicon wafers
4. Substrate materials
5. Electronic-grade manufacturing materials
6. Precision manufacturing equipment
7. Logistics services
8. Testing laboratories
9. Industrial automation.

This broadens investment opportunities beyond semiconductor fabrication itself, particularly for MSMEs and global component suppliers seeking to localize production in India.

How Semicon 2.0 builds on ISM 1.0

The expansion of Semicon 2.0 builds on progress made under the India Semiconductor Mission.

As of July 2026, the central government has approved 12 semiconductor manufacturing projects involving cumulative investments exceeding INR 1.64 trillion (US$17.02 billion), including:

• one silicon fabrication plant
• one silicon carbide fabrication plant
• one integrated gallium nitride (GaN) micro-LED display fabrication facility
• nine semiconductor packaging units

Commercial production has already begun at facilities operated by Micron, Kaynes, and CG Semi, demonstrating the transition from policy announcements to operational semiconductor manufacturing in India.

India’s semiconductor design ecosystem continues to expand

The chip design ecosystem has also advanced under the Design Linked Incentive (DLI) Scheme. The DLI scheme has approved 24 semiconductor design projects, while 105 startups and MSMEs have gained access to industry-standard Electronic Design Automation (EDA) tools.

These companies are developing chips for applications such as the following:

1. Artificial intelligence
2. satellite communications
3. Internet of Things (IoT)
4. Drones
5. Surveillance systems
6. Telecommunications equipment
7. Smart metering.

India’s manufacturing ecosystem supports semiconductor expansion

India’s semiconductor ambitions are driven by initiatives such as the National Policy on Electronics, SPECS, EMC 2.0, the PLI Scheme for Large-Scale Electronics Manufacturing, and the Electronics Components Manufacturing Scheme (ECMS).

According to the central government data, electronics production has increased seven-fold over the past 11 years, electronics exports have grown eleven-fold, and India has become the world’s second-largest mobile phone manufacturer. This existing manufacturing ecosystem provides a foundation for scaling semiconductor production and related industries.

Business outlook

Semicon 2.0 shifts India’s semiconductor policy from supporting individual manufacturing projects to developing an integrated semiconductor ecosystem. For domestic and international businesses, the program expands commercial opportunities well beyond chip fabrication to include semiconductor equipment, advanced materials, packaging, design services, research, and engineering.

As additional fabrication facilities and packaging plants become operational, companies that establish local manufacturing, supply-chain partnerships, technology collaborations, and engineering capabilities are likely to be better positioned to participate in India’s growing semiconductor market and the government’s long-term objective of strengthening domestic value addition and supply-chain resilience.

(US$1 = INR 96.3)

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