For those aligned with the semiconductor and electronics businesses, the expectation of the unveiling of the next-level policy has probably happened a little late. Industry insiders will tell you it was expected to be part of this year's budgetary announcement in a full-fledged form. However, it was merely announced. But on 7 July, when the Union cabinet met, the policy dubbed ISM 2.0 (Indian Semiconductor Mission) was finally unveiled and it is filled with promises galore. It intends to give a hard push to create a competitive ecosystem for semiconductor designing and production in the world, by adding to the base created by the first version announced in 2021 with a government-backed outlay of Rs76,000 crore.
Semiconductor criticality for India’s growth is not a secret for anyone. A country which has become a major global market for electronic products and automobiles can’t sustain its growth journey if it does not have some kind of control over chip supplies. Industry veterans, however, will tell you that this again has not been a sector that has been supported by prompt foresight of policymakers in the past. On the policy front, there have been many flip-flops, which included aligning semiconductor development more with India’s space programme, as against anticipating larger usage for regular items. In the same breath, the old-timers will also tell you that, in the past, when some leading global chip-makers have shown their interest in setting up a manufacturing base here, response to them has been lukewarm, forcing them to look at other Asian countries. Not surprisingly, some of those countries are commanding the global supply chain of semiconductors today.
But relying on that good adage: ‘better late than never’, the country in recent years has made preliminary moves in putting India on the global semiconductor map. In that context, the India Semiconductor Mission, with the preliminary and now modified version, marks the expression and execution of that intent. “The Cabinet has approved Semi-con 2.0 with an outlay of Rs1,27,500 crore, reaffirming our long-term commitment to making India a global centre for semiconductor design, manufacturing and innovation,” Prime Minister Narendra Modi affirmed, while tweeting on the new policy. “Powered by our youth, Semi-con 2.0 will strengthen every aspect of the semiconductor ecosystem. Semi-con 2.0 will attract greater investment, create high-value opportunities for our youth, strengthen supply chains and advance technological self-reliance in critical sectors”.
Key features
Apart from the sheer size of the package (in terms of financial outlay announced by the government), a major highlight of the policy is its structural design, wherein the government seems to be focusing on micro-elements. “Semi-con 2.0 will have six pillars,” informs Ashwini Vaishnav, minister for electronics & information technology. “The first pillar will be the design of chips. We will be self-reliant in the production of indigenous chips by the end of this programme”.
According to a detailed government release, the first pillar will tend to deepen the chip designing system and develop IPs, where the potential shown by over 100 start-ups (mostly stemming after the implementation of the preliminary policy) will also be harnessed. The second pillar will focus on incentivising the support sections which contribute machinery and tools to semiconductor manufacturing. Meanwhile, the first mission has laid the foundation for unveiling India’s first fab in 2028. Now, a key objective of the policy would be to attract more global manufacturers to set up fabs in India. Another major area of focus under the new policy would be to strengthen OSAT (outsourced semiconductor assembly and test) units.
These kinds of backend facilities indulge in post-fabrication processes and contribute to assembling and packaging of the wafers. India, like any other beginner in the semiconductor business, has made its mark in this segment. Now, the emphasis would be on getting some of the most advanced ATMP technologies to India. Another key objective will be to expand the R&D drive and, for this, talent development will be a key pursuit. The release maintains that after the first policy paper, about 68,000 students of 315 universities have been trained to work on complex chip design and now this pool will immensely contribute to taking the journey to the next level. The next spell, which the policy will usher in, also promises to pave the way for deeper engagement with the industry for further talent development and R&D.
Meanwhile, the government has also issued the report card on the performance of the first policy paper. According to the performance sheet, the country has approved 12 manufacturing units with a cumulative investment of over Rs1.64 lakh crore. These comprise three fab and nine packaging units expected to cater to chip requirements of sectors such as consumer appliances, industrial electronics, automobiles, power electronics, telecommunications, aerospace, etc. On the design side, 24 semiconductor design projects from start-ups and MSMEs have been approved for financial support. Of the 12 approved manufacturing units, three of them have started pilot production.
“Going by the industry buzz, 4-5 remaining units will get to the production stage before the end of the current fiscal,” informs Krishna Moorthy, director, HIPSPL, 3dGS & former president, IESA (Indian Electronics & Semi-Conductor Association). So, in a way, action is becoming visible. HIPSPL’s name also figures in the list of 12 approved projects during the first phase. “The entire drive is picking up the speed and, in that context, the new policy is meant to accelerate the mission,” Moorthy adds. “If the key objective of the first scheme was to mark a beginning with OSATs, this time the target is broader and bigger: to create a comprehensive ecosystem”.
Expanding the ambit
The continuation theory reverberates across the industry and among the players, who are positioning themselves in this segment, where the story seems to have moved beyond the starting point. “ISM 2.0 is a defining milestone in India’s journey towards global semiconductor leadership,” says Hitesh Garg, India Country Manager, NXP Semiconductors. “By expanding support across the entire value chain – from manufacturing and advanced packaging to critical materials and design – this initiative builds a foundation for long-term competitiveness”.
Going by the industry buzz, 4-5 remaining units will get to the production stage before the end of the current fiscal
Suresh Babu Katta, founder & CEO, Nano-powered Technologies, based in Telangana, speaks no differently. “Semi-con 2.0 is a significant catalyst for India’s semiconductor ecosystem, reinforcing the country’s long-term ambition to build a globally competitive industry. For design-led specialists across this value chain like us, the policy opens the door to stronger business opportunities and deeper participation in the sector’s growth. With this momentum, India is well positioned to emerge as a meaningful force in advanced chip design on the global stage,” adds Katta.
While the enthusiasm of the stakeholders from the industry is on the expected lines, reports are emerging from outside India that suggest that, even if it does not figure in the list of top 10 countries in semiconductor capabilities and scale currently, the initiatives of recent years have ensured that the world has started taking note of its efforts. And this is translating into decision-making of leading global players, aligning with those who have taken the lead. Tata Electronics, which is setting up the country’s first semiconductor fab at a reported investment of $11 billion in Dholera (Gujarat), has signed MoUs with a host of global majors involved in different segments of the semiconductor business. These include ASML, the Dutch manufacturer of semiconductor lithography machines, as well as Tokyo Electron, Merck Electronics, ROHM and Intel.
Further, new facility openings in the semiconductor business are becoming a regular feature – in early July, CG Semi, a joint venture among CG Power & Industrial Solutions of the Murugappa group, Japan's Renesas Electronics, and Thailand's Stars Micro-electronics, announced the commencement of commercial production at its G1 Outsourced Semiconductor Assembly and Test facility in Sanand, Gujarat. The G1 facility, inaugurated in August 2025, has a peak capacity of up to 300 million units per year.
As seen in an industry estimate, India's semiconductor market is expected to more than double, growing in the range of $100-110 billion by 2030. The market was estimated to be in the $45-50 billion range in 2024-25, which marked a hefty growth from $38 billion in 2023. From the demand side (particularly electronics and automobiles), the push for a higher growth trajectory is expected to continue unabated in normal circumstances. This is likely to create more scenes on the stage.
After the announcement of the Semi-con 2.0, more reports have started surfacing on the possible new deals in the sector. Japanese firm Mitsubishi is reportedly looking to set up a unit in Bengal, while leading global LED manufacturer Seoul Semiconductor is negotiating with three states to set up a large-scale manufacturing unit in India. “There will be more activities in the coming months and years,” Moorthy underlines. “But while India tends to develop its own semiconductor capability, it will have to ensure that it sustains the supply chain for the critical components it needs today from countries like Taiwan, Japan and Korea. Hopefully, this dependence will consistently reduce and we will see a change by the end of this decade.” Meanwhile, within stock market circles, a popular advisory theory these days is to keep an eye on the scrips of semiconductor companies – indicative of which way the wind is blowing.