The Union Cabinet has approved the ₹1.27 lakh crore Semicon 2.0 programme to accelerate India's semiconductor ambitions by strengthening the entire chip value chain, from design and manufacturing to advanced packaging and raw materials. The scheme is expected to attract around ₹4 lakh crore in investments and boost companies such as CG Power, Kaynes Technology, Dixon Technologies, TCS and Tata Electronics that are linked to semiconductor manufacturing and electronics.
The Union Cabinet on July 15 approved the second phase of the India Semiconductor Mission (ISM 2.0) with a total outlay of ₹1.27 lakh crore, marking a major expansion of India’s semiconductor push. The new phase aims to develop a complete semiconductor ecosystem by focusing on chip design, manufacturing, advanced packaging, equipment, materials and supply chain development.
The government expects Semicon 2.0 to attract investments of around ₹4 lakh crore and generate semiconductor production worth nearly ₹2 lakh crore during the scheme period. The latest initiative is significantly larger than the first phase of the India Semiconductor Mission, which had an approved outlay of ₹76,000 crore.
Focus Shifts Towards Complete Semiconductor Value Chain
Unlike ISM 1.0, which primarily focused on attracting semiconductor fabrication units, the second phase will concentrate on strengthening the entire semiconductor value chain. The government plans to promote domestic manufacturing of semiconductor equipment, speciality chemicals, critical raw materials and advanced packaging technologies.
The scheme will also provide incentives to suppliers of raw materials, minerals and gases required for semiconductor manufacturing. The objective is to reduce India’s dependence on imported inputs and create a stronger domestic ecosystem for electronics and chip manufacturing.
Electronics and IT Minister Ashwini Vaishnaw said Semicon 2.0 covers the entire semiconductor ecosystem and will have six key pillars. The programme will focus on chip design, development and production of indigenous semiconductor technologies.
The government aims to achieve self-reliance in indigenous chip production by the end of the programme.
Push Towards Advanced Chips and Global Partnerships
Prime Minister Narendra Modi has highlighted the need to build a complete semiconductor ecosystem in India and create stronger partnerships across domestic and global supply chains. India’s semiconductor market, currently estimated at around $50 billion, is expected to grow beyond $100 billion by the end of the decade.
Finance Minister Nirmala Sitharaman had announced ISM 2.0 in the Union Budget for FY27, stating that the next phase would focus on semiconductor equipment, materials, full-stack design capabilities and supply chain resilience.
Vaishnaw said the government’s priorities include supporting design companies and startups that can develop market-ready products, creating a complete ecosystem from equipment to materials and testing, and strengthening the semiconductor talent base.
India is also looking to gradually move towards advanced semiconductor nodes, including 2 nanometre technology, to compete in the global chip industry.
Investments and Industry Interest
The government expects strong participation from global companies as interest in India’s semiconductor ecosystem grows. Companies from the US, Europe, Japan and Singapore have shown interest in partnering with India’s semiconductor initiatives.
Industry representatives said government-to-government discussions, industry partnerships and trade talks are progressing positively as India positions itself as a key player in the global semiconductor supply chain.
Under ISM 1.0, the government approved 12 semiconductor projects involving cumulative investments of around ₹1.64 lakh crore. A significant portion of these investments came from Tata Electronics and its semiconductor division.
The launch of Semicon 2.0 comes at a time when the global semiconductor industry is witnessing supply challenges, especially in memory chips, while demand for advanced chips continues to rise due to artificial intelligence, electric vehicles and other emerging technologies.
Stocks to Watch
The approval of Semicon 2.0 is expected to benefit companies involved in semiconductor manufacturing, electronics manufacturing, chip design, defence electronics and related supply chains.
Tata Electronics is expected to remain in focus as the Tata Group has emerged as one of the largest investors under India’s semiconductor programme. Tata Electronics has received approvals for major semiconductor projects, including chip fabrication and assembly facilities.
Tata Consultancy Services could benefit from rising opportunities in semiconductor design, engineering services and chip-related software solutions as India expands its semiconductor design capabilities.
CG Power and Industrial Solutions is likely to remain on investors’ radar after entering the semiconductor manufacturing space through plans for an outsourced semiconductor assembly and test (OSAT) facility.
Kaynes Technology India may gain from the government’s focus on domestic electronics manufacturing, advanced packaging and semiconductor supply chain development.
Dixon Technologies could also benefit as semiconductor ecosystem development supports electronics manufacturing and component localisation in India.
Other companies linked to semiconductor equipment, speciality chemicals, electronics manufacturing and technology supply chains may also attract investor attention as India accelerates efforts to build a self-reliant semiconductor ecosystem.
With Semicon 2.0, India aims to move beyond semiconductor assembly and establish capabilities across the entire chip value chain, strengthening domestic manufacturing, attracting global investments and reducing dependence on imports.
