Semicon 2.0 Notified: India’s ₹1.27 Lakh Crore Chip Revolution Begins

India has taken a major step towards becoming a global semiconductor manufacturing and design hub after the government officially notified the Semicon 2.0 scheme, with a massive total outlay of ₹1,27,500 crore.

The notifications for all six pillars of the programme were issued on August 31, 2026, laying down the framework for government support across the semiconductor value chain — from chip design and fabrication to advanced packaging, equipment, materials, research and development, and talent development.

The move marks the next phase of India’s semiconductor strategy and aims to build a more resilient, trusted and domestically capable chip ecosystem.

What Is Semicon 2.0?

• Semicon 2.0 is the second major phase of India’s semiconductor programme. It builds on the progress made under the earlier Semicon India Programme and expands government support beyond individual semiconductor projects to the wider ecosystem required to manufacture advanced chips in India.
• The Union Cabinet approved the programme in July 2026 with an outlay of ₹1,27,500 crore. The government subsequently notified the detailed framework covering six pillars and 10 categories.
• The programme is designed to strengthen India’s technological capabilities, improve semiconductor supply-chain resilience and establish greater technological leadership in strategically important sectors.

Six Pillars of Semicon 2.0

The Semicon 2.0 framework is built around six major pillars:

1. Semiconductor Design

• The first pillar focuses on developing Indian semiconductor intellectual property, chips, System-on-Chips (SoCs) and modules.
• It includes support for chips and semiconductor IP aimed at national and strategic priorities as well as commercial applications. A Deployment-Linked Incentive (DLI) component will also support the deployment of semiconductor IP, chips and SoCs.

2. Machines and Materials

• Semiconductor manufacturing requires highly specialised machinery, gases, chemicals and other materials.
• Semicon 2.0 therefore seeks to develop a domestic ecosystem for semiconductor manufacturing equipment and materials, reducing dependence on overseas supply chains.

3. More Semiconductor Fabs

A major objective is to expand semiconductor fabrication capacity in India.

The framework covers:

• Silicon semiconductor wafer fabs
• Compound semiconductor fabs
• Photonics fabs
• Sensor and MEMS fabs
• Discrete semiconductor fabs
• Display fabs

Under the notified guidelines, silicon wafer fabs can receive fiscal support of 40% of eligible capital expenditure, subject to the prescribed eligibility conditions.

4. ATMP and OSAT

• The fourth pillar focuses on semiconductor assembly, testing, marking and packaging.
• It strengthens India’s ATMP/OSAT ecosystem — an important part of the chip value chain that converts fabricated semiconductor wafers into packaged and tested chips ready for use in electronic products.
• Advanced packaging technologies such as 2.5D and 3D packaging and wafer-level chip-scale packaging are among the areas covered by the framework. Advanced packaging projects can receive 35% support on eligible capex, according to the notified guidelines.

5. Research and Development

• Semicon 2.0 also places significant emphasis on advanced semiconductor research.
• Projects involving advanced semiconductor technologies can receive support of up to 75% of eligible project costs, including eligible capital and operational expenditure, according to the detailed guidelines.
• This could help Indian institutions and companies work on next-generation semiconductor technologies rather than focusing only on manufacturing.

6. Talent Development

• India’s semiconductor ambitions require a large pool of highly skilled engineers and researchers.
• The government has therefore included talent development as a dedicated pillar.
• According to Electronics and IT Minister Ashwini Vaishnaw, India has already achieved its earlier target of developing 85,000 semiconductor engineers in four years, compared with a 10-year target. The government has now set a target of developing another one lakh engineers.

How Much Money Will Semicon 2.0 Provide?

• The total financial outlay for Semicon 2.0 is:
• ₹1,27,500 crore
• The scheme covers multiple segments rather than concentrating solely on chip fabrication.

Some of the notified support measures include:

The exact support depends on the technology, project category and eligibility conditions prescribed under the scheme.

India Targets a Bigger Share of the Global Chip Industry

• The government expects India’s semiconductor industry to play a significantly larger role in the global market.
• Ashwini Vaishnaw said India could account for close to 10% of the global semiconductor industry market in the coming years. The government also expects the developing semiconductor ecosystem to generate around 50,000–60,000 direct jobs.
• The government has highlighted the speed of implementation under the first phase, including one case where commercial production began only 13 months after groundbreaking.

Why Semicon 2.0 Matters for India

Semiconductors are fundamental to almost every modern technology sector.

They power:

• Smartphones
• Computers
• Electric vehicles
• Automobiles
• Artificial intelligence systems
• Data centres
• Telecom networks
• Defence systems
• Satellites
• Medical equipment
• Industrial automation

A stronger domestic semiconductor ecosystem can therefore have implications far beyond the electronics industry.

For India, the objective is not simply to manufacture chips but to build capabilities across the entire semiconductor value chain.

India’s Semiconductor Talent Push

• India has already developed a significant base of semiconductor engineering talent.
• The government says the previous target of developing 85,000 semiconductor engineers over a 10-year period was achieved in just four years.
• Students from Tier-II and Tier-III cities have also designed more than 250 semiconductor chips, according to the government.
• The new talent-development push could therefore create opportunities for engineering students, researchers, semiconductor startups and technology companies.

Who Will Implement Semicon 2.0?

• The India Semiconductor Mission (ISM) will serve as the nodal agency for the programme.
• ISM will invite applications, undertake technical and financial appraisal, recommend applicants and oversee implementation.
• For certain design and deployment categories, ISM may work with the Centre for Development of Advanced Computing (C-DAC).
• The government also plans a mid-term assessment after three years of implementation, or earlier if required, to evaluate the scheme’s impact and consider modifications or continuation.

How Long Will Semicon 2.0 Run?

• Projects supported under Semicon 2.0 will generally have a duration of up to six years.
• The scheme will initially remain open for applications for three years.
• This gives companies and institutions a multi-year policy framework for making capital-intensive investments in semiconductor technology.

What Does Semicon 2.0 Mean for Jobs?

The semiconductor industry can generate both direct and indirect employment.

Direct opportunities are expected in areas such as:

• Semiconductor engineering
• Chip design
• Fab operations
• Equipment engineering
• Materials science
• Packaging and testing
• Semiconductor R&D
• Quality control
• Industrial automation

Indirect employment can emerge across construction, logistics, maintenance, supply chains and supporting industries.

The government estimates that the semiconductor ecosystem being developed under the programme could create 50,000–60,000 direct jobs.

Click Here to Read: Cabinet Approves India Semiconductor Mission 2.0 with ₹1.27 Trillion Outlay: Key Features Explained
Click Here to Read: Govt Approves SEZ for Tata’s ₹91,000 Crore Chip Plant in Dholera