India Semiconductor Mission 2.0 Sets the Stage for a Self-Reliant Chip Future
India has taken a major step towards strengthening its technology backbone with the announcement of India Semiconductor Mission (ISM) 2.0 in the Union Budget 2026–27. This new phase reflects a clear and strategic intent to deepen domestic semiconductor capabilities, recognising that chips are at the heart of every modern digital and industrial system. From smartphones and data centres to automobiles, defence platforms and artificial intelligence, semiconductors quietly power the systems that drive today’s economy. ISM 2.0 aims to ensure that India is not just a consumer of these critical components but an important producer and innovator in the global semiconductor ecosystem.
Under ISM 2.0, the government will focus on building capabilities across semiconductor equipment, materials, and full-stack chip design, while also strengthening both domestic and international supply chains. An allocation of ₹1,000 crore has been made for the mission in FY 2026–27, with a strong emphasis on industry-led research, development and training centres. These centres are expected to play a key role in advancing technology, supporting innovation, and creating a skilled workforce that can meet the demands of a fast-evolving semiconductor industry.
India has already laid a solid foundation through India Semiconductor Mission 1.0, approved by the Union Cabinet in December 2021. Backed by an incentive outlay of ₹76,000 crore, ISM 1.0 offered fiscal support of up to 50 per cent for silicon fabs, compound semiconductor units, assembly and testing facilities, and chip design. Since then, the country has steadily moved towards building a full-stack semiconductor ecosystem, covering design, fabrication, assembly, testing and packaging.
As of December 2025, ten large semiconductor projects with a combined investment of about ₹1.60 trillion have been approved across six states. These include silicon fabrication plants, silicon carbide facilities, advanced and memory packaging units, and specialised assembly and testing infrastructure. Together, these projects are shaping a resilient domestic semiconductor base that can support India’s growing electronics and manufacturing sectors.
The market potential is significant. Industry estimates suggest that India’s semiconductor market was valued at around $38 billion in 2023 and grew to nearly $45–50 billion in 2024–25. By 2030, the market is expected to reach $100–110 billion, driven by demand from electronics, automotive, telecommunications, industrial equipment and emerging technologies. This growth aligns closely with the national “Make in India” and “Make for the World” vision, positioning India as both a manufacturing hub and a reliable global supplier.
Looking ahead, India is expected to develop the capability to design and manufacture chips that meet nearly 70–75 per cent of its domestic needs by 2029. ISM 2.0 builds on this momentum with a roadmap focused on advanced manufacturing, including progress towards 3-nanometre and 2-nanometre technology nodes. By 2035, India aims to be counted among the world’s leading semiconductor nations, with strong capabilities across the value chain.
The renewed push comes at a time when global competition in semiconductors is intensifying. Advanced chip manufacturing is currently concentrated in a few countries, with Taiwan alone accounting for more than 60 per cent of global production and nearly 90 per cent of the most advanced chips. Recent global disruptions, especially during the COVID-19 pandemic, exposed the risks of such concentration, as shortages affected over 169 industries worldwide. In response, major economies including the United States, the European Union, Japan and South Korea have launched aggressive programmes to strengthen domestic chip manufacturing. India’s recalibrated approach reflects the need to stay competitive in this global race.
For 2026–27, the Modified Programme for Development of Semiconductor and Display Manufacturing Ecosystem in India has been allocated ₹8,000 crore. This programme aims to accelerate investment, generate high-quality employment, and expand capabilities across fabrication, packaging and design. During the year, the government expects to support nine units under schemes for compound semiconductors, silicon photonics, sensors, discrete fabs and ATMP/OSAT facilities, with investments of around ₹11,000 crore and employment for about 3,000 people. In addition, around 30 design companies are expected to be supported, leading to the development of ten semiconductor IP cores and employment for 200 design professionals.
A major strength of India’s semiconductor strategy lies in design and innovation. The Design Linked Incentive (DLI) Scheme has played a crucial role in nurturing domestic chip design startups and building a vibrant fabless ecosystem. Currently, 24 startups are supported under the scheme, collectively attracting nearly ₹430 crore in venture capital funding. Access to advanced Electronic Design Automation tools through the national chip design platform has further strengthened this ecosystem, with students and engineers logging millions of tool hours and completing several successful tape-outs.
Academic and startup innovation is also gaining momentum. Universities and research institutions have taped out over 100 designs, filed dozens of patents, and fabricated chips at both mature and advanced technology nodes. The next phase of the programme aims to support at least 50 fabless semiconductor companies, reinforcing India’s ambition to emerge as a global hub for chip design.
India is also investing in sovereign processor capabilities as a core pillar of technological self-reliance. The launch of DHRUV64, a fully indigenous 64-bit microprocessor developed by C-DAC, marks a significant milestone. Built using modern architecture and based on the open-source RISC-V framework, DHRUV64 reduces dependence on imported chips and supports applications across telecom, automotive, industrial automation, consumer electronics and IoT. It joins a growing family of indigenous processors such as SHAKTI, AJIT, VIKRAM and THEJAS, forming the backbone of India’s homegrown processor ecosystem.
Equally important is talent development. Recognising that people are as critical as infrastructure, India has rolled out multiple initiatives to build a future-ready semiconductor workforce. Programmes such as Chips to Start-up, specialised AICTE-approved academic courses, SMART Labs under NIELIT, industry partnerships with global equipment leaders, and FutureSkills PRIME are collectively training tens of thousands of engineers across design, fabrication and advanced packaging.
India Semiconductor Mission 2.0 marks a clear transition from ecosystem creation to ecosystem consolidation and global integration. With focused investments in manufacturing, design, innovation and skills, semiconductors are being positioned as a strategic national capability. The enhanced support in 2026–27 provides the momentum needed to scale domestic capacity, attract private investment and secure India’s place in a more resilient and diversified global semiconductor supply chain.
Source: Business Standard
