India Eyes $20 Bn Push For Semiconductor Mission 2.0

When India unveiled its grand semiconductor mission back in 2021, the announcement was met with cautious optimism. For a country heavily dependent on chip imports, the ambition of building fabs and creating an indigenous supply chain sounded like a moonshot. Fast forward to 2025, and the conversation has shifted from if to how fast. Now, the Centre is reportedly preparing to take the mission into its next big phase — India Semiconductor Mission (ISM) 2.0 — with a proposed $20 Bn (INR 1.7 Lakh Cr) package.

According to a Mint report, the Ministry of Electronics and Information Technology (MeitY) has already sent its proposal to the finance ministry. If all goes as planned, the finance ministry is expected to clear the proposal by October 2025, and the Union Cabinet could give it the green signal before the year closes.

A Bigger, Bolder Semiconductor Push

The planned ISM 2.0 is not just about manufacturing chips; it’s about building a complete semiconductor ecosystem from the ground up. This includes:

• India’s first display fabrication facility (fab)

• Incentives for chip design patents

• Subsidies for sensor suppliers to strengthen the supply chain

• Support for OSAT (Outsourced Semiconductor Assembly and Test) units

• Investments in capital equipment and materials, crucial for covering the entire semiconductor value chain

One of the standout elements of ISM 2.0 is the government’s decision to allocate INR 5,000 Cr towards design-linked incentives (DLI) — more than three times the INR 1,500 Cr earmarked during the first phase. This reflects a clear recognition: design innovation is just as critical as manufacturing muscle if India wants to compete globally in the chip race.

Looking Back: What ISM 1.0 Achieved

The India Semiconductor Mission (ISM), launched in 2021, came with a total outlay of INR 76,000 Cr. Its focus was on setting up fabs, OSAT units, and semiconductor testing labs. Of this, INR 65,000 Cr went towards building chip manufacturing and packaging facilities. Another INR 10,000 Cr was dedicated to modernising the semiconductor lab at Mohali, while INR 1,000 Cr supported the DLI scheme.

Some of the flagship projects already approved under ISM include:

• Tata Electronics’ fab facility in Gujarat’s Dholera

• An OSAT unit in Assam’s Morigaon

• Micron’s ATMP (Assembly, Testing, Marking, and Packaging) facility in Gujarat’s Sanand

Just last month, the Union Cabinet also approved four new semiconductor projects worth INR 4,584 Cr across Odisha, Andhra Pradesh, and Punjab, signalling growing momentum.

A Symbol Of Progress: ISRO’s Vikram Processor

India’s semiconductor journey is not only about attracting global giants but also about building indigenous capabilities. A proud milestone came earlier this month at Semicon India 2025, when ISRO unveiled Vikram, a 32-bit space-grade processor — the first of its kind designed and developed in India. The processor is a symbolic leap, proving that India’s talent pool can design chips for some of the most demanding use cases, such as space missions.

Why ISM 2.0 Matters Now

The semiconductor industry is projected to be a trillion-dollar global market by 2030, and India doesn’t want to remain just a consumer. With geopolitical realignments pushing countries to diversify supply chains away from China and Taiwan, the timing is critical.

India’s bet on semiconductors is also tied to its digital ambitions: from 5G rollouts and AI-driven industries to electric vehicles and defence applications, chips are the backbone of future technologies. Without local capability, India risks being a passive player in a global tech economy where resilience and self-reliance matter more than ever.

Of course, challenges remain. Setting up fabs is notoriously capital-intensive and technologically complex. Building a skilled workforce, securing raw materials, and ensuring steady R&D pipelines will be as crucial as financial incentives. But the government’s proposed $20 Bn push under ISM 2.0 signals a long-term commitment to overcoming these hurdles.

If the plan takes off, India could not only reduce its import dependence but also position itself as a credible alternative hub in the global semiconductor supply chain. For the country’s startup ecosystem, this could open massive new opportunities in chip design, supply chain innovation, sensor manufacturing, and deep-tech R&D.