Union Cabinet approves Rs 1.28 lakh crore Semicon 2.0 to boost India’s chip ecosystem

Ziraat Times Team Report

New Delhi, July 15: The Union Cabinet on Wednesday approved Semicon 2.0, a Rs 1,27,500 crore programme aimed at strengthening India’s semiconductor design and manufacturing ecosystem and providing long-term policy support to position the country as a global semiconductor hub.

The decision was taken at a Cabinet meeting chaired by Prime Minister Narendra Modi.

The government said the new programme builds on the momentum created under Semicon 1.0 and is designed to develop a comprehensive semiconductor ecosystem, spanning chip design, manufacturing, research, talent development and supply chain capabilities.

According to the government, Semicon 2.0 will be implemented around six strategic pillars.

The first pillar focuses on strengthening semiconductor design by building on the progress made by 105 startups already engaged in chip development. The programme aims to support development of intellectual property (IP), chip designs and semiconductor systems, positioning India as a leading semiconductor design IP nation.

The second pillar seeks to incentivise companies involved in manufacturing semiconductor equipment, materials, chemicals and gases essential for chip production, while also promoting precision manufacturing in the country.

The third pillar aims to attract additional investments in semiconductor fabrication plants. With India’s first silicon fabrication facility scheduled to be commissioned in 2028, the government plans to encourage more manufacturers to establish silicon, compound semiconductor, discrete component and display fabrication units in the country.

The fourth pillar focuses on expanding the Assembly, Testing, Marking and Packaging (ATMP) and Outsourced Semiconductor Assembly and Test (OSAT) industry by attracting advanced packaging technologies to India.

The fifth pillar will strengthen research and development by promoting work on advanced semiconductor technologies beyond the current 28nm-110nm manufacturing nodes through collaboration with leading domestic and international research institutions.

The sixth pillar emphasises talent development. The government said 315 universities are already training students in advanced chip design using industry-standard Electronic Design Automation (EDA) tools, with around 68,000 students trained so far. The programme will further expand training in semiconductor design, clean-room operations and fabrication technologies.

The government said Semicon 2.0 is expected to support economic growth across sectors, improve supply chain resilience, strengthen national security and establish India’s technological leadership in critical industries.

Progress under Semicon 1.0

The government also highlighted progress made under the first phase of the India Semiconductor Mission.

It said 12 manufacturing projects with a cumulative investment of over Rs 1.64 lakh crore have been approved. These include one silicon fabrication plant, one silicon carbide fabrication unit, an integrated gallium nitride Micro LED display fabrication facility and nine semiconductor packaging units catering to sectors such as consumer electronics, automobiles, power electronics, telecommunications and aerospace.

Of the approved projects, Micron, Kaynes and CG Semi have already commenced commercial production, while another manufacturing unit is expected to begin operations during 2026.

On the design front, the government said 24 semiconductor design projects proposed by startups and MSMEs have received financial support, while 105 startups and MSMEs have been provided access to industry-standard EDA tools.

These firms are developing chips and systems-on-chip (SoCs) for applications including satellite communications, drones, surveillance systems, Internet of Things (IoT) devices, LED drivers, artificial intelligence, telecom equipment and smart meters. According to the government, many of these projects are at advanced stages of design and prototyping and are expected to move towards commercial deployment after successful validation.