Centre Mulls $20 Bn Incentives For Semiconductor Mission 2.0

SUMMARY

The ministry of electronics and information technology has sent a proposal to the finance ministry to approve the outlay for ISM 2.0

ISM 2.0 will focus on building a sophisticated chip manufacturing ecosystem, which will include building India’s first display fab, incentivising chip design patents, and building a robust supply chain by subsidising sensor suppliers

Under ISM 2.0, the Centre plans to allocate INR 5,000 Cr towards design linked incentives (DLI), more than tripling it from INR 1,500 Cr in the previous phase

To give a further thrust to the country’s growing semiconductor ecosystem, the Centre is mulling a $20 Bn (INR 1.7 Lakh Cr) package for the India Semiconductor Mission (ISM) 2.0.

The ministry of electronics and information technology (MeitY) has sent a proposal to the finance ministry for the same, as per a Mint report.

ISM 2.0 will focus on building a sophisticated chip manufacturing ecosystem in the country which will include building India’s first display fab, incentivising chip design patents, and building a robust supply chain by subsidising sensor suppliers, the report said.

ISM 2.0 will also help in developing OSAT units in the country, capital equipment, and materials to cover the entire semiconductor value chain.

The finance ministry is expected to give its nod to the proposal by October, following which it will go to the Union cabinet before the end of 2025.

Under ISM 2.0, the Centre plans to allocate INR 5,000 Cr towards design linked incentives (DLI), more than tripling it from INR 1,500 Cr in the previous phase.

The ISM was launched in 2021 with an aim to set up fab and OSAT facilities in India and build semiconductor testing labs and assembly units in the country. Out of the INR 76,000 Cr outlay for the programme, INR 65,000 Cr was allocated to build chip manufacturing and packaging units. The remaining INR 10,000 Cr and INR 1,000 Cr were set aside for modernising the semiconductor lab at Mohali and the DLI scheme, respectively.

The government has approved projects such as Tata Electronics’ fab facility in Gujarat’s Dholera and an OSAT unit in Assam’s Morigaon, Micron’s assembly, testing, marking and packaging (ATMP) facility in Gujarat’s Sanand, among others, under the ISM.

Last month, the Union cabinet approved four new semiconductor projects with a total investment of INR 4,584 Cr in Odisha, Andhra Pradesh and Punjab.

Highlighting the big strides taken by the country in the semiconductor segment, ISRO’s Vikram 32-bit processor – India’s first indigenous space-grade chip – was unveiled at Semicon India 2025 earlier this month.