New Delhi: The Union Cabinet, headed by Prime Minister Narendra Modi, has officially approved the India Semiconductor Mission (ISM) 2.0 as the government looks to strengthen India’s position in the semiconductor value chain. ISM 2.0 comes with a budgetary allocation of ₹1,27,500 crore, with a wider scope that offers enhanced financial incentives offering equipment manufacturing, specialised raw materials, talent development and in-house research and development (R&D).
Under ISM 1.0, the government managed to attract investments for 12 semiconductor fabrication plants across the country, with three- Micron, Kaynes, and CG Power- already commencing operations. Under a financial outlay of ₹76,000 crore, the government is funding 50% of the project cost tied to milestone achievements. This is unlike the PLI scheme, where the government offered incentives based on the units sold.
At the Semicon India event in September 2025, the government had said it had used almost 97% of the funds allocated under the ISM 1.0, while it has been simultaneously encouraging India’s strengths in semiconductor design with the DLI scheme.
With the ISM 2.0, the government is looking to push global semiconductor manufacturers to move beyond fabs into materials manufacturing (including chemicals and gases crucial for semiconductors), semiconductor packaging, domestic research and development and skills management in the sector.
“Going forward, the first focus will be on design companies and startups that can take products to market. The second will be building the full ecosystem — from equipment to materials and testing—and the third will be deepening the talent base,” IT Minister Ashwani Vaishnaw had said, as the government aims to gradually move up the semiconductor value chain.
