With a 64% increase in funding, the ISM 2.0 crosses another hurdle before being tabled at the Union Cabinet. Are India-made chips finally moving towards ‘designed in India’?
India’s semiconductor programme is set for a major expansion after the Finance Ministry’s Expenditure Finance Committee (EFC) approved a proposal to allocate ₹1.25 trillion for the second phase of the India Semiconductor Mission (ISM 2.0), according to government sources. The proposal will now be placed before the Union Cabinet for final approval.
The proposed allocation is around 64% higher than the ₹760 billion budget approved for the first phase of the mission, which was launched in December 2021 to establish semiconductor manufacturing and design capabilities in the country.
Unlike the first phase, which primarily focused on semiconductor fabrication, assembly, testing and chip design incentives, ISM 2.0 is expected to support the broader semiconductor value chain. The programme will extend fiscal support to chip fabrication, advanced packaging, semiconductor design, manufacturing equipment, speciality materials, industrial gases and other ancillary industries required to strengthen the domestic ecosystem.
The expanded mission is part of the government’s long-term objective of reducing dependence on imported semiconductors and meeting up to 75% of India’s domestic semiconductor demand by 2030, while improving supply chain resilience and attracting additional investments into the sector.
The funding proposal comes as India’s semiconductor manufacturing ecosystem continues to expand. A senior Ministry of Electronics and Information Technology (MeitY) official said CG Semi Private Limited is expected to begin commercial production on 4 July, becoming the third semiconductor manufacturing unit to commence operations under the ISM.
The first facility to begin commercial production was Micron Technology’s US$2.75 billion Assembly, Testing, Marking and Packaging (ATMP) plant in Sanand, Gujarat, inaugurated on 28 February 2026. The facility manufactures DRAM and NAND flash memory products for mobile devices, data centres and automotive applications.
This was followed by Kaynes Semicon’s outsourced semiconductor assembly and test (OSAT) facility in Sanand, which started commercial production in March 2026.
CG Semi, a joint venture between CG Power and Industrial Solutions, Renesas Electronics of Japan and Stars Microelectronics of Thailand, is investing more than ₹7,600 crore to establish two OSAT facilities—G1 and G2—at Sanand for semiconductor packaging and testing.
Under ISM 1.0, the government provides fiscal support covering up to 50% of project costs for silicon fabrication plants, compound semiconductor facilities, ATMP and OSAT units, and semiconductor design projects.
To date, 12 semiconductor projects spanning six states have received approval, representing a combined investment of approximately ₹1.64 trillion. These include one semiconductor fabrication plant, two compound semiconductor fabrication facilities, nine packaging units and 24 chip design projects under the Design Linked Incentive (DLI) Scheme.
With additional manufacturing units expected to become operational later in 2026 and Cabinet approval pending for ISM 2.0, the government is seeking to broaden India’s semiconductor capabilities from chip manufacturing to equipment, materials and advanced design.
