Cabinet Approves Rs 1.27 Lakh Crore for India Semiconductor Mission 2.0

The Union Cabinet has greenlit the second phase of the India Semiconductor Mission (ISM 2.0) with a massive allocation of Rs 1.27 lakh crore. The six-year initiative will focus on bolstering the supply chain for semiconductor manufacturing, offering subsidies to companies producing essential materials like gases and chemicals. This marks a strategic pivot to strengthen India’s position in the global chip ecosystem.

Aims to Boost Domestic Chip Ecosystem

ISM 2.0 expands on its predecessor by introducing subsidies for research, development, and talent cultivation in the semiconductor sector. The initiative aligns with India’s broader goal of embedding itself into the global chip supply chain and enhancing domestic value addition in electronics manufacturing. By 2029, India aims to design and manufacture chips for 70-75% of its domestic needs, with aspirations to become a leading global semiconductor hub by 2035.

Lessons from ISM 1.0

Launched in 2021, ISM 1.0 laid the groundwork for India’s semiconductor ecosystem with a focus on fabrication, packaging, and design. The first phase attracted investments worth Rs 1.64 lakh crore and led to the approval of 12 chip plants across states like Gujarat, Assam, and Andhra Pradesh. These facilities include India’s first commercial-grade chip fabrication plant by Tata Electronics in Gujarat and assembly and testing plants by Micron Technology and others.

Notable Projects Under ISM

• Tata Electronics (Gujarat): India’s first commercial chip fab, developed with Taiwan’s PSMC, is under construction in Dholera at a cost of Rs 91,000 crore. It will have a monthly capacity of 50,000 wafers.
• Micron Technology (Gujarat): This assembly and testing plant, operational since February, marked a milestone in ISM 1.0.
• Tata Electronics (Assam): A Rs 27,000 crore facility in Jagiroad will produce 48 million chips daily for sectors like automotive and telecommunications.
• HCL-Foxconn (Uttar Pradesh): A Rs 3,700 crore OSAT facility near Noida International Airport is set to begin operations by 2028.

Shift in Subsidy Focus

Under ISM 2.0, the government plans to recalibrate its subsidy structure, reducing incentives for assembly and testing plants while prioritizing the ancillary industries supporting chip manufacturing. This shift reflects lessons learned from ISM 1.0, where subsidies were increased to 50% for certain projects, such as Micron’s Gujarat plant.

Why It Matters

Semiconductors are critical to modern technology, powering everything from consumer electronics to defense systems. Amid global supply chain disruptions and geopolitical tensions, India’s push to establish a robust semiconductor industry is both an economic and strategic imperative. The mission aims to reduce reliance on imports, create high-value jobs, and position India as a key player in the global chip market.

With ISM 2.0, India is doubling down on its semiconductor ambitions, signaling its intent to become a global leader in this high-stakes industry.

Source: Indian Express