Centre Plans Rs 1.2 Lakh Crore Outlay For ISM 2.0 To Boost Semiconductor Ecosystem

New Delhi, Apr 2 (KNN) The Centre is preparing to significantly scale up its semiconductor ambitions, with the Ministry of Finance clearing a proposed outlay of Rs 1.20 lakh crore for the next phase of the India Semiconductor Mission (ISM 2.0), sources said.

The proposal is expected to be placed before the Union Cabinet for final approval around mid-April.

Shift Towards R&D and Design

Unlike the first phase, ISM 2.0 is set to adopt a more comprehensive, value chain-driven strategy, with a sharper focus on research and development (R&D), chip design and innovation and advanced semiconductor capabilities.

This marks a shift from the largely manufacturing-led incentives under ISM 1.0 to building core technological capabilities within India.

A key highlight of the proposed mission is likely to be incentives for cutting-edge semiconductor nodes, including 3 nm and 2 nm technologies, positioning India closer to the global frontier in chipmaking.

Building on ISM 1.0 Momentum

ISM 2.0 builds on the earlier Rs 76,000 crore allocation under ISM 1.0, which has already approved 10 projects with cumulative investments of Rs 1.6 lakh crore.

The semiconductor push also stems from the government’s USD 10 billion incentive programme launched in 2021, which offered up to 50 percent fiscal support for eligible projects.

Key Industry Investments

Several major players have already committed investments under the semiconductor initiative. Micron Technology has set up a semiconductor assembly facility in Gujarat and Tata Group is developing a semiconductor fabrication plant and a chip packaging unit in Gujarat. 

Foxconn is advancing semiconductor testing and assembly plans and Kaynes Technology has commenced production at its Rs 3,300 crore facility in Sanand.
These developments span fabrication, assembly, testing, and display manufacturing segments.

Towards a Global Semiconductor Hub

The proposed ISM 2.0 aims to deepen India’s integration into the global semiconductor value chain, moving beyond assembly to innovation-led growth.

With rising geopolitical focus on supply chain resilience, the initiative is expected to strengthen India’s position as a strategic destination for semiconductor manufacturing and design.

If approved, ISM 2.0 could mark a significant leap in India’s semiconductor journey, accelerating investments, fostering innovation, and enhancing technological self-reliance in a critical sector.

(KNN Bureau)