Semicon 2.0 marks a major policy shift from subsidising fabs to building a broader semiconductor ecosystem, with new support for displays, advanced packaging, equipment, materials, and chip design.
The government has reduced financial support for silicon fabrication projects from 50% to 40% under Semicon 2.0, while widening the scheme to cover display fabs, advanced packaging, semiconductor equipment, materials, and commercial chip design.
The revised structure provides eligible silicon fabs with support of up to 40% of project capital expenditure, compared with the 50% assistance available under Semicon 1.0, launched in 2022.
Union Minister for Electronics and Information Technology Ashwini Vaishnaw said the lower support level remains globally competitive and is unlikely to affect India’s attractiveness for semiconductor investments. He pointed to policy certainty and improvements in the business environment as factors supporting investor confidence.
Vaishnaw said global semiconductor companies that were uncertain about India when Semicon 1.0 was launched now have greater confidence in the country as a long-term manufacturing base.
Display fabs get dedicated support
Semicon 2.0 introduces dedicated incentives for display manufacturing, bringing OLED, LCD, and Micro LED projects into the support framework.
OLED and LCD projects will require a minimum investment of ₹10,000 crore and will qualify for 35% support. Micro LED projects will have a minimum investment requirement of ₹1,500 crore, with the same 35% support.
Advanced semiconductor packaging is another major addition. Projects involving 2.5D and 3D packaging, wafer-level chip-scale packaging, and heterogeneous integration will receive 35% support. Legacy packaging projects will be eligible for 25%.
Supply chain gets a bigger role
The scheme also extends incentives to the equipment and materials needed for semiconductor manufacturing. Eligible areas include semiconductor equipment, sub-assemblies, components, wafers, photomasks, photoresists, substrates, chemicals, gases, and other semiconductor-grade materials.
Equipment manufacturers will additionally qualify for a production-linked incentive linked to the value of components sourced from domestic suppliers. This creates a direct incentive for localisation within India’s semiconductor manufacturing supply chain.
Chip design gets financing support
Commercial chip design has also received a dedicated financing mechanism. Startups and MSMEs can access seed funding of up to ₹15 crore, along with equity co-investment.
Larger eligible companies can access royalty financing or equity co-investment.
The detailed framework therefore broadens Semicon 2.0 beyond fab construction. While silicon fabs remain a core focus, the scheme now targets several layers of the semiconductor value chain—from displays and advanced packaging to manufacturing equipment, materials, and domestic chip design.
