India has taken a significant step forward in its semiconductor ambitions with the formal notification of the Semicon 2.0 programme. The Centre has operationalised a Rs 1.27 lakh crore framework that places domestic chip design and intellectual property at the centre of an expanded strategy. The scheme also extends fiscal support to manufacturing equipment, raw materials, fabrication plants, advanced packaging, research and talent development, aiming to build a more complete and resilient semiconductor ecosystem.
From Semicon 1.0 to a Broader Vision
Semicon 2.0 builds directly on the foundation laid by the first phase of the India Semiconductor Mission. Under the earlier programme, several manufacturing and packaging projects were approved, and a growing number of start-ups gained access to design tools. The new phase shifts the emphasis from primarily attracting fabrication capacity to creating indigenous capability across the full value chain. The Union Cabinet approved the outlay of Rs 1,27,500 crore in July 2026, and the detailed operational guidelines were notified at the end of August.
The programme is structured around six pillars: semiconductor design and intellectual property, machines and materials, additional fabrication facilities, assembly testing marking and packaging, research and development, and talent development. These pillars are further divided into ten categories, each with specific eligibility criteria and forms of support.
Design and Intellectual Property Take Centre Stage
A defining feature of Semicon 2.0 is the priority given to chip design by Indian entities. The framework distinguishes between strategic and commercial design projects. For strategic applications linked to national requirements, Indian companies owned and controlled by Indian citizens can participate through competitive processes. For commercial design, eligibility extends to Indian companies owned or controlled by Indian citizens or Overseas Citizens of India, including start-ups and MSMEs.
Support for design companies takes multiple forms. Start-ups and MSMEs can access seed funding of up to Rs 15 crore, capped at 50 per cent of project cost, along with equity co-investment. They also gain access to national electronic design automation tools and multi-project wafer services. Larger companies can receive royalty-linked financing or equity co-investment. Under the royalty model, beneficiaries repay a percentage of net revenue until a multiple of the government support is recovered.
This focus reflects recognition that design and intellectual property capture higher value in the semiconductor chain and reduce long-term dependence on foreign technology. India already possesses a substantial pool of design engineers working for global firms. Semicon 2.0 seeks to convert that expertise into domestically owned intellectual property and marketable products for both strategic and commercial use.
Support Across Manufacturing and Supply Chain
Beyond design, the scheme provides substantial capital support for fabrication. Silicon wafer fabs meeting specified thresholds—including a minimum capacity of 40,000 wafer starts per month for 300 mm facilities, capital investment of at least Rs 20,000 crore, and defined revenue criteria—are eligible for 40 per cent of eligible capital expenditure on a pari-passu basis. Other categories of fabs, including compound semiconductor and display facilities, qualify for 35 per cent support.
The programme also incentivises the domestic production of capital equipment and semiconductor-grade materials. Minimum investment and revenue thresholds apply to these projects, ensuring that support is directed towards facilities of meaningful scale. Advanced packaging receives 35 per cent capital support, while conventional packaging is eligible for 25 per cent. Research and development facilities and talent development initiatives form the remaining pillars, with the aim of strengthening both technological depth and the skilled workforce required for a sustained industry.
Implementation and Expected Impact
The India Semiconductor Mission serves as the nodal agency. It will invite applications, conduct technical and financial appraisals, and make recommendations to the Ministry of Electronics and Information Technology. The scheme is expected to remain open for applications for an initial period of three years, with individual projects generally supported for up to six years.
Government projections indicate that the programme could attract substantial private investment and generate significant semiconductor production over its duration. Industry bodies have estimated that cumulative private and industry investment catalysed by the scheme could exceed several lakh crore rupees across the value chain. Direct employment in supported projects is expected to be considerable, while the broader ecosystem is projected to create additional indirect opportunities.
Strategic Context and Long-Term Goals
Semiconductors have become a critical strategic resource worldwide. Supply-chain disruptions and geopolitical considerations have reinforced the case for greater domestic capability. India currently imports the large majority of its chip requirements. Semicon 2.0 aims to reduce that dependence by fostering design ownership, expanding fabrication capacity, and strengthening packaging, materials and equipment supply.
The programme also aligns with rising demand from artificial intelligence, electric vehicles, telecommunications, consumer electronics and data centres. By supporting both strategic chips for national infrastructure and commercial designs for broader markets, the framework seeks to balance security considerations with economic opportunity.
Challenges and the Road Ahead
Building a competitive semiconductor industry remains complex and capital-intensive. Success will depend on timely project execution, consistent policy support, availability of specialised talent, and the ability of Indian firms to move from design prototypes to volume production and market adoption. Global competition for investment and technology is intense, and India will need to demonstrate reliable infrastructure, efficient approvals and a stable operating environment.
The notification of detailed guidelines marks the transition from policy announcement to operational reality. Companies can now assess eligibility, prepare proposals and engage with the nodal agency. For start-ups and established firms alike, the combination of design-focused incentives, capital support for manufacturing and ecosystem measures offers a clearer pathway to participate in India’s semiconductor journey.
Semicon 2.0 represents a deliberate broadening of ambition. By placing domestic chip design and intellectual property at the forefront while continuing to support fabrication and related infrastructure, the programme seeks to create a more balanced and self-reliant semiconductor ecosystem. Its ultimate measure of success will be the extent to which Indian-designed and increasingly Indian-manufactured chips find their place in both domestic and global markets in the years ahead.
Read more – themenuspark.com , scorematchup.com