Cabinet approves ₹1.27 lakh crore for Semicon Mission 2.0, for mobile manufacturing, new highways
The Union Cabinet approved 'Semicon 2.0', a new phase of the India Semiconductor Mission, with a total outlay of ₹1,27,500 crore to build design, fabrication, packaging, R&D and talent capacity in the semiconductor value chain
The Cabinet also approved the National Investment Policy for Urea-2026 (NIPU-2026), clearing the way for 8-9 new gas-based urea plants with a combined production capacity of about 10 million tonnes
Two highway projects worth ₹25,400 crore were approved to decongest traffic around Varanasi
The total outlay across all decisions taken at the Cabinet meeting was reported at over ₹2.19 lakh crore, spanning semiconductors, mobile manufacturing, fertiliser and road infrastructure
India Semiconductor Mission (ISM) — Phase 1 (2021) to Semicon 2.0
The India Semiconductor Mission was approved by the Union Cabinet on 15 December 2021 with an initial outlay of ₹76,000 crore, operating as an independent business division under the Digital India Corporation and administered by the Ministry of Electronics and Information Technology (MeitY). It was the government's first dedicated push to build domestic semiconductor design, fabrication and packaging capability under the broader Atmanirbhar Bharat framework. Semicon 2.0 is the scaled-up second phase, more than 1.5 times the original outlay, reflecting the shift from setting up initial fabrication units to building a full ecosystem.
Key Details
- ISM 1.0 (2021) outlay: ₹76,000 crore; Semicon 2.0 (2026) outlay: ₹1,27,500 crore
- Under ISM 1.0, 12 semiconductor manufacturing projects were approved, drawing cumulative investments of over ₹1.64 lakh crore
- Semicon 2.0 is structured around six strategic pillars covering chip design, equipment and materials, fabrication, advanced packaging and testing, R&D, and talent development
- India's first domestically fabricated semiconductor chip/fab commissioning is targeted for 2028
The Cabinet's approval of Semicon 2.0 formalises the second, larger phase of the ISM launched in 2021, extending the mission from initial fab approvals toward a self-sustaining chip design and manufacturing ecosystem.
Design Linked Incentive (DLI) Scheme and Chip Design Ecosystem
Alongside fabrication incentives, the government runs a Design Linked Incentive (DLI) scheme with a ₹1,000 crore outlay to support Indian semiconductor design start-ups, offering support for chip design infrastructure, product design (up to 50% of project cost), and deployment incentives. This scheme underpins the "chip design" pillar carried forward into Semicon 2.0.
Key Details
- 24 chip design projects from startups/MSMEs have received financial assistance so far
- 105 startups and MSMEs have been given access to industry-standard Electronic Design Automation (EDA) tools
- The scheme aims to reduce India's near-total dependence on imported chip designs, especially for defence and telecom applications
Semicon 2.0 builds on the DLI scheme's design-support architecture, signalling a continued policy emphasis on design sovereignty, not just assembly of imported chips.
National Investment Policy for Urea-2026 (NIPU-2026) and Fertiliser Subsidy Design
India's urea subsidy architecture rests on the government fixing the maximum retail price of urea (the only major fertiliser still under statutory price control, unlike the Nutrient Based Subsidy or NBS regime that covers P&K fertilisers) and reimbursing manufacturers the difference. NIPU-2026 replaces the earlier New Investment Policy of 2012 (NIP-2012) to make fresh gas-based urea capacity more commercially viable and reduce import dependence.
Key Details
- India's current urea production is around 30 million tonnes against demand of about 40 million tonnes, with the 10 million tonne gap met through imports
- NIPU-2026 separates fixed and variable costs for transparency and introduces a return-on-equity band of 12-16%, compared with the fixed-return model under NIP-2012
- 8-9 new gas-based brownfield and greenfield plants are envisaged, each with a capacity of roughly 1.27 million tonnes per annum
- Urea pricing/subsidy falls under the Essential Commodities Act, 1955 framework and the Department of Fertilisers, Ministry of Chemicals and Fertilisers
The new policy is aimed directly at closing India's 10-million-tonne urea import gap by making domestic gas-based capacity additions financially attractive to private investors.
- Semicon 2.0 outlay: ₹1,27,500 crore; expected to attract ~₹4 lakh crore in investment and ~₹2 lakh crore in semiconductor production during the scheme period
- ISM 1.0 (2021) outlay: ₹76,000 crore; 12 fab/ATMP projects approved, ₹1.64 lakh crore cumulative investment
- NIPU-2026: 8-9 new gas-based urea plants, ~10 million tonnes additional capacity, ~₹250 crore savings per plant versus NIP-2012 terms
- Varanasi highway decongestion projects: ₹25,400 crore
- Total Cabinet-approved outlay reported for the day: over ₹2.19 lakh crore