The Union government has formally notified the Semicon 2.0 programme, setting the framework for its ₹1,27,500-crore plan to build a broader and more resilient semiconductor ecosystem in India.

The programme goes beyond chip manufacturing and seeks to strengthen the entire semiconductor value chain, including design, equipment, materials, packaging, research and skilled manpower.

The notification comes as the global semiconductor industry faces unprecedented demand from artificial intelligence and growing concerns over supply-chain vulnerabilities and geopolitical disruptions.

Six Strategic Pillars

Semicon 2.0 is structured around six major pillars: chip design, semiconductor equipment and materials, fabrication facilities, advanced packaging, research and development, and talent development.

The approach is intended to create a complete domestic ecosystem rather than focusing only on semiconductor fabrication.

Up to 40% Support for Silicon Fabs

The new scheme will provide fiscal support of up to 40% of project capital expenditure for silicon semiconductor fabrication facilities.

Specialised fabs, including compound semiconductor and display facilities covering LCD, OLED and micro LED technologies, can receive support of up to 35% of capital expenditure.

Incentives for Semiconductor Packaging

Advanced semiconductor packaging has also been given significant policy support.

Projects involving advanced packaging can receive incentives equivalent to up to 35% of capital expenditure, while conventional packaging projects can receive up to 25%.

The move is aimed at ensuring that India’s packaging capabilities expand alongside domestic chip manufacturing.

Support for Chip Design

The scheme provides support for commercial chip design to eligible startups and companies owned by Indian citizens or Overseas Citizens of India.

For startups, financial assistance will be provided through grants and equity co-investment. Companies can receive support through royalty financing or equity co-investment.

Equipment and Materials Ecosystem

Semicon 2.0 places greater emphasis on domestic manufacturing of semiconductor equipment, specialised materials, chemicals and industrial gases.

The government expects the expansion of fabrication facilities to generate demand for locally produced inputs and encourage more Indian companies, including small and medium-sized enterprises, to become part of global semiconductor supply chains.

12 Projects Approved Under First Phase

Under Semicon 1.0, the government had approved 12 semiconductor projects across six states.

Micron, Kaynes Semicon and CG Semi are among the companies that have already begun commercial production, marking the initial operational progress of India’s semiconductor programme.

The government now intends to use this foundation to expand the sector into a more comprehensive manufacturing and innovation ecosystem.

Greater Focus on Indigenous Chip Design

Semicon 1.0 had already supported India’s chip-design ecosystem, with 105 startups and MSMEs receiving access to industry-standard electronic design automation tools.

These companies are working on chips and systems for applications including satellite communications, drones, surveillance cameras, artificial intelligence, telecom equipment and smart meters.

Semicon 2.0 aims to deepen these capabilities and encourage the creation of more indigenous semiconductor intellectual property.

Building a Skilled Workforce

A larger semiconductor industry will require a substantial pool of engineers, researchers, technicians and other specialised professionals.

Talent development is therefore one of the six pillars of the programme. The government has also highlighted the introduction of semiconductor-related curricula across hundreds of engineering colleges to create a stronger pipeline of industry-ready talent.

India’s Global Semiconductor Ambition

Semiconductors have become a strategic priority for governments worldwide as supply chains remain concentrated in a limited number of locations.

India is seeking to establish itself as a significant global hub for semiconductor design, manufacturing, packaging and innovation.

The new programme is intended to reduce strategic vulnerabilities, increase domestic value addition and integrate Indian companies more deeply into global supply chains.

Conclusion

The notification of the ₹1,27,500-crore Semicon 2.0 programme gives India’s semiconductor ambitions a more detailed policy framework. The scheme covers the entire value chain, from chip design and fabrication to packaging, equipment, materials, research and workforce development.

With fiscal support of up to 40% for silicon fabs, 35% for specialised fabs and advanced packaging, and 25% for conventional packaging, the government is seeking to attract large-scale private investment while building domestic capabilities.

If implemented effectively, Semicon 2.0 could help India move beyond individual chip manufacturing projects and establish a broader, globally competitive semiconductor ecosystem.