India Semiconductor Mission (ISM) 2.0
Union Budget 2026–27, the Union Finance Minister
announced the launch of India Semiconductor Mission 2.0, aiming to boost the
country’s semiconductor ecosystem.
India Semiconductor Mission (ISM) 2.0
¨
The mission builds on ISM
1.0 to expand India’s semiconductor capabilities across the value chain. A
provision of ₹1,000 crore has been made for ISM 2.0 in FY 2026–27.
¨
ISM 2.0 will focus on
designing and manufacturing semiconductor equipment in India, manufacturing of
materials used in semiconductor production, and creation of a large design
ecosystem.
¨
It focuses on developing
full-stack Indian intellectual property in chip design and manufacturing, and
fortifying semiconductor supply chains to reduce import dependence.
¨
It will focus on
industry-led research and training centres to develop technology and a skilled
workforce.
Key Objectives of ISM 2.0
¨
Equipment &
Materials: For the first time, India is incentivising the domestic
manufacturing of specialised semiconductor machinery and raw materials.
¨
Full-Stack Indian IP: A
major push to move beyond assembly by developing homegrown chip designs and
intellectual property. It marks a shift from “fab centric” support to a whole
of ecosystem approach.
¨
Research & Training:
Establishment of industry-led research and training centres to create a
specialised workforce and foster indigenous technology.
¨
Supply Chain Resilience:
Strengthening domestic supply chains to reduce the heavy reliance on imported
components.
About ISM 1.0
¨
The India Semiconductor
Mission (ISM) 1.0 was launched in December 2021 with a financial outlay of
₹76,000 crore ($10 billion) to reduce India’s reliance on imported
semiconductor chips and establish a robust, self-reliant electronics
manufacturing ecosystem within the country.
¨
It is operated as an
independent business division under the Digital India Corporation, and it
serves as the nodal agency for implementing the Semicon India Programme.
¨
A total of 10
semiconductor and display projects (Micron, Tata, etc.) with ~₹1.60 lakh crore
investment have been approved across six states, mainly targeting fabs and ATMP/OSAT.
Components under ISM 1.0
¨
Semiconductor Fabs:
Offers 50% fiscal support on a pari-passu basis for setting up silicon
semiconductor wafer fabrication plants.
¨ Display Fabs: Provides
50% fiscal support for establishing large-scale display manufacturing
facilities (e.g., TFT LCD/AMOLED).
¨ Compound Semiconductors & ATMP: Extends 50% capital expenditure support for setting up Compound Semiconductors, Silicon Photonics, Sensors, and OSAT (Outsourced Semiconductor Assembly and Test) units
¨ Design Linked Incentive (DLI): Provides up to 50% financial support for eligible expenditure (capped at ₹15 crore per application) and deployment-linked incentives of 4%–6% on net sales turnover over five years.
