Cabinet approves Semicon 2.0 with Rs. 1.27 lakh crore outlay for semiconductor ecosystem

The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved Semicon 2.0, the next phase of India’s semiconductor initiative, with a total budget outlay of Rs. 1,27,500 crore. The programme aims to strengthen India’s semiconductor design and manufacturing ecosystem through long-term policy support while building on the progress made under Semicon 1.0.

According to the government, the initiative is designed to support the complete semiconductor value chain, covering chip design, manufacturing, advanced packaging, research, equipment, materials, and talent development.

Semicon 2.0: Six focus areas

Semiconductor design

Semicon 2.0 will expand India’s chip design ecosystem by supporting the development of semiconductor intellectual property (IP), chip designs, and system-level products for strategic and commercial applications. The government said building blocks have been identified for developing these products. The programme builds on the progress made by more than 105 startups that have already begun developing semiconductor chips and aims to strengthen India’s semiconductor chip design IP ecosystem.

Machines, materials and manufacturing

The scheme will incentivize companies involved in the manufacturing and research and development of semiconductor manufacturing equipment, as well as the production of materials, chemicals, and gases required for chip manufacturing. It also aims to attract additional investments for setting up silicon fabs, compound semiconductor fabs, discrete component fabs, and display fabs. India’s first semiconductor fabrication plant is expected to be commissioned in 2028.

ATMP, OSAT and R&D

Semicon 2.0 will encourage investments in Assembly, Testing, Marking and Packaging (ATMP) and Outsourced Semiconductor Assembly and Test (OSAT) facilities, with a focus on bringing advanced packaging technologies to India. The programme will also support research into advanced semiconductor process nodes beyond the current 28nm to 110nm range through collaborations with research institutions in India and abroad.

Talent development

The initiative will further strengthen semiconductor workforce development. According to the government, 315 universities are using industry-standard Electronic Design Automation (EDA) tools for chip design training, with around 68,000 students trained so far. Future efforts will deepen training for students during college and expand industry-led training in cleanroom operations, fab construction, and other semiconductor ecosystem skills.

Progress under Semicon 1.0

The government said 12 semiconductor manufacturing projects have been approved under Semicon 1.0, with cumulative investments exceeding Rs. 1.64 lakh crore. These include:

• One silicon fab
• One silicon carbide fab
• One integrated gallium nitride (GaN) Micro LED display fab
• Nine semiconductor packaging units

These facilities are expected to support sectors including consumer appliances, industrial electronics, automobiles, power electronics, telecommunications, and aerospace.

Among the approved projects, Micron, Kaynes, and CG Semi have already started commercial production, while one more manufacturing unit is expected to begin production in 2026.

On the design side, 24 semiconductor design projects from startups and MSMEs have been approved for financial support, while 105 startups and MSMEs have been provided access to industry-standard EDA tools.

The supported companies are developing chips and systems-on-chip (SoCs) for applications such as:

• Satellite communications
• Drones
• Surveillance cameras
• Internet of Things (IoT) devices
• LED drivers
• AI systems
• Telecom equipment
• Smart meters

According to the government, these projects are at different stages of design and development and will move to deployment after successful prototyping.

Outlook

According to the government, Semicon 2.0 is expected to support economic growth across sectors, strengthen national security through improved supply chain resilience, and enhance technological capabilities in critical sectors.

The programme is also intended to strengthen India’s semiconductor ecosystem by supporting chip design, manufacturing, advanced packaging, research, equipment, materials, and talent development.