India's Finance Ministry has approved a ₹1.25 lakh crore expenditure proposal for the India Semiconductor Mission 2.0, aiming to enhance domestic semiconductor manufacturing, design, and supply chains amid growing global tech tensions.
- ₹1.25 lakh crore outlay approved by Finance Ministry's expenditure committee
- ISM 2.0 aims to support semiconductor equipment, materials, and design
- Focus on reducing import dependence and boosting local supply chains
What happened
Under the initial India Semiconductor Mission launched in 2021, the government approved 12 projects cumulatively committing around ₹1.64 lakh crore in investments. ISM 2.0 is designed to expand beyond fabrication and assembly to support semiconductor equipment manufacturing, specialty chemicals, industrial gases, and other core raw materials needed for domestic chip production.
Why it matters
India’s push for ISM 2.0 comes amid rising geopolitical tensions and fragmentation in global technology supply chains. By developing a robust local semiconductor ecosystem, India aims to reduce its heavy reliance on imports while positioning itself as a trusted global semiconductor manufacturing hub.
Unlike ISM 1.0, which focused primarily on attracting fabrication and chip packaging investments, the new phase will emphasize a complete value chain approach. This includes stronger support for domestic design companies, production of chipmaking equipment and materials, and fostering research and talent development through collaboration with universities and industry.
What to watch next
The detailed contours of ISM 2.0 remain to be officially announced, but expectations include a possible reduction in capital expenditure subsidies for assembly and testing facilities and greater incentives linked to semiconductor design fundraising. Additionally, there will be support for producing gases, chemicals, and raw materials critical for chip manufacturing.
Industry stakeholders are calling for ISM 2.0 to address broader structural challenges such as access to patient capital, development of indigenous electronic design automation (EDA) tools, and fostering a home-grown semiconductor equipment sector. The government’s role as an early adopter of homegrown technologies could also be key to accelerating the commercialization of Indian semiconductor innovations.