Synopsis

India's semiconductor ambitions are set for a major boost with the Expenditure Finance Committee approving nearly ₹1.20 lakh crore for the second phase of the government's chip programme. This significantly enhanced allocation aims to deepen domestic manufacturing, reduce import reliance, and expand support across the entire semiconductor ecosystem, including design and upstream capabilities.

Listen to this article in summarized format

New Delhi: The Expenditure Finance Committee (EFC) under the finance ministry has approved a spending proposal of about ₹1.20 lakh crore for the second phase of the government's semiconductor programme, people aware of the development told ET.

The budget proposal for India Semiconductor Mission (ISM) 2.0 will now go to the Union cabinet for approval.

The proposed allocation is significantly higher compared with the ₹76,000 crore approved under the first India Semiconductor Mission, signalling the government's push to deepen domestic semiconductor manufacturing and reduce import dependence.

ET Bureau

Budget proposal for India Semiconductor Mission 2.0 will now go to the Union Cabinet for approval

"The EFC has given its nod for the ISM 2.0, and now this will be placed before the next Union cabinet meeting," a senior official told ET.

The initiative is aimed at making India self-reliant in the manufacturing of semiconductors. ISM 2.0, the official said, will be much larger in scope and incentives than the previous one.

The ministry of electronics and information technology (MeitY), the nodal ministry for the mission, had demanded ₹1.50 lakh crore for the programme.

The semiconductor mission 2.0 will expand support beyond chip fabrication and design to cover the wider semiconductor ecosystem, including capital equipment, specialty chemicals, industrial gases, raw materials and other inputs.

This time, the government will also bring micro, small and medium enterprises (MSMEs) and ancillary suppliers under the incentive framework.

The revamped programme will also include a new design-linked incentive (DLI) scheme that will allow foreign companies to partner with Indian firms for semiconductor research and design carried out in India, the people cited earlier said.

Over the coming years, the government expects the revised scheme to help create about 50 deep-tech chip design companies.

The expanded mission comes as countries seek to build resilient semiconductor supply chains amid geopolitical tensions and increasing restrictions on advanced chip technologies.

The broader incentive framework is aimed at developing capabilities across the value chain rather than only attracting fabrication units, officials said.

With ISM 2.0, the Centre is looking to address gaps in upstream manufacturing and strengthen India's position in the global semiconductor ecosystem, while building capacity to meet a larger share of domestic demand.

The first phase of the mission is supported by an incentive framework of ₹76,000 crore, offering fiscal support of up to 50% for silicon fabs, compound semiconductor facilities, assembly and testing units, and chip design.

As of December 2025, 10 projects with a total investment of ₹1.60 lakh crore have been approved across six states.