The Indian government unveiled Semicon 2.0, a fresh policy framework aimed at building a self-reliant and globally competitive semiconductor ecosystem in India, by providing fiscal support to various verticals across the semiconductor value chain ranging from chip design, fabrication and packaging.
Announcing the scheme at a press conference in New Delhi on Monday, Union Electronics and Information Technology Minister Ashwini Vaishnaw said India has moved beyond the initial phase of proving that semiconductor manufacturing was possible in the country and is now ready to build an ecosystem capable of supporting the industry for decades.
“The doubt is no longer there. That doubt is now replaced by confidence,” Vaishnaw said, referring to the global industry’s earlier uncertainty about India’s semiconductor ambitions.
According to Vaishnaw, Semicon 2.0 will operate through six pillars covering 10 categories, including strategic and commercial chip design, semiconductor equipment and materials, silicon and memory fabs, display fabs, compound semiconductor manufacturing, ATMP/OSAT packaging and talent development.
Under the design pillar, the government plans to support the development of key building blocks covering compute, memory, radio frequency, power, networking and sensor chips. Strategic projects will be selected through competitive bidding, while commercial chip-design companies, including larger Indian firms and companies owned by Overseas Citizens of India, will also be eligible for support.
According to a gazette notification released Monday, the Indian government intends to support with 30% of capital expenditure in setting up R&D facilities, manufacturing semiconductor grade Raw Materials and Semiconductor Test characterization Facilities, Manufacturing and/or Assembly of Equipment/refurbish Equipment, Sub-Assemblies, Components for use in all semiconductor fabrication and packaging facilities.
The scheme also seeks to strengthen the upstream ecosystem. The government plans to provide support for semiconductor equipment, chemicals, gases and other materials, with the aim of encouraging suppliers and MSMEs to establish manufacturing capabilities in India. For fabs, the fiscal support has been revised from the earlier 50% of project cost to 40%, while display fabs will receive support of up to 35% of capex.
Advanced packaging projects will receive up to 35% support, compared with 25% for regular ATMP and OSAT facilities.
Vaishnaw defended the reduction in fab incentives, saying India’s growing credibility was itself becoming a major attraction for global investors.
“The interest of the entire industry in making India as the base because of its talent, because of its policy certainty, because of the ease of working here, all those factors have contributed to our decision making.”
The Indian government is targeting the development of one lakh semiconductor design engineers in five years, building on the training of around 85,000 people under the first phase.
Vaishnaw said the ultimate objective was not merely to attract individual semiconductor projects but to make India an indispensable part of the global supply 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.”
The minister said India would continue to prioritize quality over the number of projects approved, arguing that semiconductor manufacturing required a long-term ecosystem rather than short-term investments.
“For us quality is more important over quantity,” added Vaishnaw.
The government expects Semicon 2.0 to deepen India’s presence across the semiconductor value chain while reducing dependence on overseas suppliers in strategically important areas.
Also Read: Semicon 2.0: India’s Cabinet Approves $13.23 Billion for Second Phase of Semiconductor Push
