Government notifies ₹1.27 lakh crore Semicon 2.0 scheme with six-pillar strategy

The government on Monday notified the Semicon 2.0 scheme with an outlay of ₹1,27,500 crore, unveiling a six-pillar strategy covering chip design, semiconductor equipment and materials, fabrication, ATMP and OSAT, research and development, and talent development.

The scheme seeks to build a complete semiconductor ecosystem in India, covering the value chain from indigenous chip design and intellectual property to manufacturing, packaging, equipment, materials and skilled manpower.

The Semicon 2.0 scheme was approved by the Union Cabinet on July 15, 2026. The notification issued on Monday lays out the implementation framework, incentives and eligibility criteria for the different segments.

Speaking to reporters at a media briefing for the launch of Semicon 2.0, Electronics and Information Technology Minister Ashwini Vaishnaw said the second phase is aimed at building an ecosystem that can sustain India’s semiconductor industry over the long term.

“The companies look at the long term perspective of growth in India when they make these decisions, because these are industries which are extremely complex,” Vaishnaw said.

IT Secretary S Krishnan said the programme is aimed at strengthening India’s self-reliance while making the industry globally competitive.

“Now the time is ripe to move to next stage to develop semiconductor ecosystem through Semicon 2.0. The objective of the scheme is self reliance and fostering a globally competitive industry,” Krishnan said.

Six pillars of Semicon 2.0

The first pillar focuses on semiconductor chip design, including indigenous IP cores, chips, System-on-Chips (SoCs) and modules.

The second covers semiconductor equipment and materials, including equipment, chemicals, gases and other consumables used in chip production.

The third supports semiconductor fabrication, including silicon, compound semiconductor, display and other specialised fabs.

The fourth covers ATMP and OSAT facilities, including advanced and conventional semiconductor packaging.

The fifth focuses on research and development, while the sixth covers talent development for semiconductor design and manufacturing.

Under the talent pillar, the government aims to train one lakh semiconductor design engineers over five years.

Semicon 2.0 incentives for fabs and packaging

Under the new scheme, silicon semiconductor fabs will receive fiscal support of 40% of eligible capital expenditure. Compound semiconductor fabs, display fabs covering LCD, OLED and micro LED technologies, and other specialised fabs will receive support of 35%.

Advanced packaging projects under ATMP and OSAT will receive support of 35% of capital expenditure, while conventional or legacy packaging projects will receive 25%.

For commercial chip design, startups and companies owned by Indian citizens or Overseas Citizens of India (OCI) will be eligible.

Startups will receive support through grants and equity co-investment, while eligible companies can access royalty financing or equity co-investment.

India targets larger role in global semiconductor supply chain

Vaishnaw said Semicon 2.0 is aimed at making India an integral part of the global semiconductor value chain “People should feel dependent on India, people should become dependent on our country, on our industry, on our production, on our design. That makes us really valuable in the entire supply chain,” he said.

Vaishnaw said India’s share of the global semiconductor market could reach close to 10% in the coming years. He said incentives are only one factor for companies deciding where to invest. “The incentive structure is incidental part of it, it is not the core of the entire programme,” he said, citing India’s talent base and policy certainty as other factors.

Government pushes indigenous semiconductor IP

The scheme will support development of indigenous semiconductor IP cores, chips, SoCs and modules for strategically important applications.

The government has identified six broad chip categories: compute, memory, radio frequency (RF), power, networking and sensors.

Vaishnaw said a team of experts from industry and academia, chaired by the Principal Scientific Adviser and National Security Adviser, will identify and prioritise strategic chips. “There are about hundred chips, almost more than that, in these six buckets, where we are prioritising further, which can really help us develop our own products in multiple sectors, in aviation, in transportation, in consumer electronics, in many sectors, in strategic sectors,” he said.

Equipment and materials to get greater focus

Semicon 2.0 will also focus on developing domestic suppliers of semiconductor equipment, chemicals, gases and other materials. Vaishnaw said major equipment manufacturers are expected to establish bases and supply chains in India, creating opportunities for domestic manufacturers and MSMEs. “The parts which go into manufacturing the machines and the machines which are used for manufacturing the chips, that entire ecosystem gets developed in a country,” he said.

One lakh design engineers to be trained

Vaishnaw said the first phase had exceeded its original target of developing 85,000 semiconductor engineers. “In the first phase, we had said eight years, 85,000. Ten years, 85,000 engineers to be built. We did that in four years, completed that target. Now we have taken a target of one lakh engineers to be developed,” he said.

The government has established semiconductor design facilities across 355 universities, with students from Tier-2 and Tier-3 cities also designing chips. For manufacturing, the government will work with industry on training workers for semiconductor production facilities.

Three Semicon 1.0 facilities begin commercial production

Under Semicon 1.0, the government approved 12 semiconductor projects across six states. Three facilities, Micron’s ATMP plant, Kaynes Semicon and CG Semi’s OSAT facility have commenced commercial production this year. Vaishnaw said the progress of these projects has increased confidence among global semiconductor companies.

“When we started Semicon 1.0 in 2022, at that time the global semiconductor industry majors had a serious doubt about whether this can really happen in a country. That doubt is no longer there. That doubt is now replaced by confidence,” he said. He said one project began commercial production 13 months after groundbreaking.

The government will continue to evaluate Semicon 2.0 proposals rigorously, with Vaishnaw saying the quality of projects will take precedence over the number of approvals. “We would rather err on the side of rejecting rather than accepting. That’s the principle we have followed,” he said.