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Semicon 2.0: India’s Cabinet Approves $13.23 Billion for Second Phase of Semiconductor Push

India's Union Cabinet has approved Semicon 2.0 with an outlay of ₹1,27,500 crore ($13.23 billion), expanding beyond ISM 1.0's fab-first approach to fund chip design, advanced packaging, materials, equipment manufacturing and R&D across the semiconductor value chain.
Semiconductor assembly machinery over a circuit board with an Indian tricolour ribbon, representing India's Semicon 2.0 programme
July 16, 2026 12:54 PM IST | Written by Neelam Sharma | Edited by Vaibhav Jha

Government of India’s Union Cabinet approved Semicon 2.0–the second phase of its semiconductor design and manufacturing ecosystem, at a budget of $13.23 Billion (Rupees 1,27,500 crores), aimed to deepen the design ecosystem, push for fabs and ATMP units, incentivize R&D involved companies and nurture indigenous talent.

According to a statement by the Indian government’s Press Information Bureau, the union cabinet under Prime Minister Narendra Modi approved Semicon 2.0 on Wednesday to further strengthen the country’s efforts to put itself on the semiconductor world map.

“The Cabinet has approved Semicon 2.0 with an outlay of Rs. 1,27,500 crore, reaffirming our long-term commitment to making India a global centre for semiconductor design, manufacturing and innovation. Powered by our youth, Semicon 2.0 will strengthen every aspect of the semiconductor ecosystem.

Semicon 2.0 will attract greater investment, create high-value opportunities for our youth, strengthen supply chains and advance technological self-reliance in critical sectors (sic),” wrote PM Modi on his official X handle.

 

Semicon 2.0 follows ISM 1.0 –India’s first phase of semiconductor primarily focused on attracting semiconductor fabrication (fab) projects and saw 12 manufacturing units approved in different states of India, with a heavy focus on Gujarat.

Under the ISM 2.0 initiative, the Indian government aims to deepen the country’s entire semiconductor value chain to support chip design, advanced packaging, materials, equipment, and research and development, while also strengthening domestic manufacturing capabilities.

“Semicon 2.0 will build upon the initial success in chip design. Under Semicon 2.0, the aim is to develop IPs, designs of chips and systems with this approach…Companies involved in the manufacturing and R&D of the machines and manufacturing of materials, chemicals and gases that are essential for manufacturing semiconductors will be incentivized,” read the release from PIB.

ISM 1.0: Mapping India’s Semiconductor Journey So Far

Launched in December 2021, ISM 1.0, known as Programme for Development of Semiconductors and Display Manufacturing Ecosystem in India has approved 12 units that include three semiconductor fabs in Gujarat and Odisha and nine Assembly, Testing, Marking and Packaging (ATMP) and OSAT (Outsourced Semiconductor Assembly and Testing) Units in Gujarat, UP, Punjab, Andhra Pradesh, Assam and Odisha states.

The Indian government has also approved 24 semi-conductor design projects by startups under the first phase.

Also Read: India Taps Dutch ASML and Taiwan’s PSMC for First Semiconductor Fab in Gujarat

Authors

  • Neelam Sharma, reporter at AI FrontPage

    Neelam Sharma is a passionate storyteller, and journalist with over a decade of experience across leading Indian media houses.
    Known for her calm presence on screen and powerful storytelling off it, Neelam brings a rare blend of credibility, creativity, and empathy to journalism. Her strength lies in ground reporting and research-driven narratives that connect with the heart of the audience. Whether covering social issues, human-interest features, or breaking news, she combines factual depth with a human touch—making every story not just informative.

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  • Vaibhav Jha, editor and co-founder at AI FrontPage

    Vaibhav Jha is an Editor and Co-founder of AI FrontPage. In his decade long career in journalism, Vaibhav has reported for publications including The Indian Express, Hindustan Times, and The New York Times, covering the intersection of technology, policy, and society. Outside work, he’s usually trying to persuade people to watch Anurag Kashyap films.

    LinkedIn

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