In a major boost to India's domestic chip manufacturing ambitions, India Semiconductor Mission (ISM) 2.0 received an ambitious allocation in the Union
Budget 2026–27. The initiative aims to manufacture semiconductor equipment, develop indigenous intellectual property, and strengthen supply chains at a time when chips underpin every critical digital and industrial system globally. With an allocation of Rs 1,000 crore for FY 2026–27, ISM 2.0 places strong emphasis on industry-led research and workforce training. The ISM 2.0 will focus on producing semiconductor equipment and materials within India, designing full-stack Indian semiconductor intellectual property, and fortifying both domestic and global semiconductor supply chains. By 2029, India is expected to achieve the capability to design and manufacture chips required for nearly 70-75 per cent of domestic applications, PTI reported. Advancing on this foundation, the next phase under Semicon 2.0 will focus on advanced manufacturing, with a clearly defined roadmap to achieve 3-nanometre and 2-nanometre technology nodes. These facilities are expected to meet the growing chip requirements of key sectors such as consumer appliances, industrial electronics, automobiles, telecommunications, aerospace, and power electronics. Notably, several approved proposals are leveraging indigenous technologies for the assembly, testing, and packaging of semiconductor chips.
Why this could be big for India
Semiconductors are the backbone of modern electronics, powering computers, mobile devices, telecommunications, automobiles, defence systems and artificial intelligence. By 2035, India aims to be among the top semiconductor nations globally.
India has made steady progress in consolidating earlier investments into a full-stack value chain of its semiconductor ecosystem under ISM 1.0, expanding design capabilities and advancing fabrication, assembly and testing infrastructure across the country. According to industry estimates, the size of the Indian semiconductor market was about USD 38 Bn in 2023, USD 45-USD 50 Bn in 2024-2025, and is expected to reach USD 100-USD 110 Bn by 2030.
The foundation of this growth was laid with the approval of India Semiconductor Mission 1.0 by the Union Cabinet in December 2021. The Mission is supported by an incentive framework of Rs 76,000 crore, offering fiscal support of up to 50 per cent for silicon fabs, compound semiconductor facilities, assembly and testing units, and chip design.
Now the programme has been recalibrated in response to intensifying global competition and the concentration of advanced chip technologies among a limited number of players. Several countries with established semiconductor ecosystems are offering aggressive incentives, making it necessary for India to refine its approach and focus on strengthening financial support for investments across the industry.
As of December 2025, 10 projects totalling Rs 1.60 lakh crore have been approved across 6 states. These include silicon fabrication units, silicon carbide fabs, advanced and memory packaging facilities, and specialised assembly and testing infrastructure.
(With PTI inputs)
