India’s ₹1.27 Lakh Crore Semicon 2.0 Scheme for Chip Ecosystem
By Business Desk
India launches ₹1.27 lakh crore Semicon 2.0 scheme on July 15, 2026, with a six-pillar strategy to build a robust domestic semiconductor ecosystem from design to fabrication.
The Indian government has officially launched its ambitious Semicon 2.0 scheme, allocating ₹1.27 lakh crore to establish a comprehensive semiconductor ecosystem within the nation. Approved by the Union Cabinet on July 15, 2026, this initiative implements a strategic six-pillar approach to boost self-reliance and global competitiveness.
The core of Semicon 2.0 rests on six distinct pillars, each addressing a critical aspect of the semiconductor value chain. These strategic areas aim to nurture a complete domestic industry from design to production.
The scheme focuses on semiconductor chip design, fostering indigenous IP cores, chips, System-on-Chips (SoCs), and modules. It also targets semiconductor equipment and materials, encompassing necessary equipment, chemicals, gases, and other consumables for chip production.
Fabrication is a key pillar, supporting silicon, compound semiconductor, display, and other specialized fabs. Additionally, the plan includes ATMP and OSAT facilities, covering both advanced and conventional semiconductor packaging technologies.
Innovation is driven through dedicated research and development efforts within the sector. Finally, talent development aims to train one lakh semiconductor design engineers over the next five years, ensuring a skilled workforce for the evolving industry.
Fiscal Support Mechanisms
Semicon 2.0 offers significant fiscal support to various types of manufacturing facilities. This financial backing is designed to incentivize investment and growth across the industry segments.
Silicon semiconductor fabs will receive 40% fiscal support on their eligible capital expenditure. Compound semiconductor fabs, display fabs, and other specialized fabs are allocated 35% support.
Advanced packaging projects, including ATMP and OSAT, also qualify for 35% support. Conventional packaging projects are eligible for 25% fiscal assistance on their capital expenditure.
Indian-owned startups and companies engaged in commercial chip design will receive support through grants, equity co-investment, or royalty financing mechanisms.
Integrating into the Global Value Chain
Electronics and Information Technology Minister Ashwini Vaishnaw highlighted the scheme’s objective to integrate India into the global semiconductor value chain. The government aims for India’s share of the global market to reach nearly 10% in the coming years, signaling a significant economic ambition.
A focused strategy will prioritize specific chip categories vital for future technology. These include compute, memory, RF, power, networking, and sensors, with an expert team tasked to identify precise chips for indigenous development.
The initiative also actively promotes domestic suppliers for semiconductor equipment and materials. This encourages major manufacturers to establish their supply chains directly within India, fostering local production capabilities.
Building on Semicon 1.0 Foundations
Semicon 2.0 builds upon the achievements of its predecessor, Semicon 1.0, which successfully trained 85,000 engineers in four years, surpassing its original targets. The new scheme aims to train an additional one lakh design engineers, further expanding the talent pool.
Three facilities established under Semicon 1.0 have already commenced commercial production. These include Micron’s ATMP plant, Kaynes Semicon, and CG Semi’s OSAT facility, all contributing to global confidence in India’s semiconductor capabilities.
The government maintains a rigorous evaluation process for all new project proposals. This approach emphasizes quality over mere quantity, ensuring that only robust and viable projects receive support.