Government to Amend Rules for Semiconductor and Auto Component Manufacturing
The government has announced that regulations governing manufacturers, including semiconductor and auto-component firms, will be amended and new rules introduced within two months
The assurance followed discussions with companies planning semiconductor equipment and automotive component manufacturing investments in India
The Bureau of Indian Standards (BIS) approval and certification framework has been simplified as part of a broader ease-of-doing-business push for manufacturers
The government aims to draw about $50 billion in investment into semiconductor and associated industries
The move is framed as part of a longer-term effort to strengthen India's manufacturing ecosystem
India Semiconductor Mission (ISM): Phase 1 and Phase 2
The India Semiconductor Mission is the nodal programme for building India's chip manufacturing and design ecosystem. Approved by the Union Cabinet in December 2021 under ISM 1.0, it was substantially scaled up in July 2026 with ISM 2.0 to accelerate fabrication, packaging, and materials manufacturing.
The two-month regulatory amendment window is aimed at removing friction for manufacturers seeking to invest under the ISM 2.0-driven expansion of India's semiconductor ecosystem, complementing the fiscal incentives already committed.
BIS Certification Simplification: Transition Facilitation (Quality Control) Order, 2026
The Bureau of Indian Standards (BIS), a statutory body under the BIS Act, 2016, enforces mandatory Quality Control Orders (QCOs) requiring domestic and imported goods in notified categories to carry the ISI mark before sale. The compliance burden of the inspection-heavy QCO regime has been a long-standing complaint of manufacturers, prompting a simplified registration-based route.
Key Details
- BIS functions under the Ministry of Consumer Affairs, Food and Public Distribution, administering standards, certification (ISI mark, hallmarking) and testing under the BIS Act, 2016
- The Transition Facilitation (Quality Control) Order, 2026, administered by the Department for Promotion of Industry and Internal Trade (DPIIT), lets eligible manufacturers obtain BIS certification through a simplified registration-based mechanism instead of the conventional inspection-intensive process
- Initially applicable to sectors such as toys, footwear, electrical appliances, furniture, air conditioners and hinges, with the broader simplification push extending to manufacturing-linked approval processes generally
- QCOs are distinct from voluntary Indian Standards — QCOs make BIS certification mandatory for specified goods under Section 16 of the BIS Act, 2016
The government's commitment to simplify approval processes for semiconductor and auto-component manufacturers builds on this broader BIS/QCO simplification drive to cut regulatory friction for new manufacturing investment.
Production-Linked Incentive (PLI) Scheme Framework
The PLI scheme is the government's flagship instrument for incentivising domestic manufacturing across sectors, including automobiles and auto components, by rewarding incremental production and sales rather than upfront capital subsidies.
The auto-component manufacturers referenced in the announcement operate within this PLI ecosystem; regulatory simplification is positioned as a complement to the fiscal incentives already available under the scheme.
- Target investment: $50 billion into semiconductor and associated industries
- ISM 1.0 outlay: ₹76,000 crore (approved December 2021); 12 projects approved, cumulative investment over ₹1.60 lakh crore, 3 in commercial production by mid-2026
- ISM 2.0 outlay: ₹1.27 lakh crore (approved by Union Cabinet, July 15, 2026); flat 30% incentive for equipment, chemicals, gases and materials
- Mobile Phone Manufacturing Scheme Phase 2: ₹62,500 crore (approved alongside ISM 2.0)
- BIS Transition Facilitation (Quality Control) Order, 2026: registration-based certification route administered by DPIIT
- PLI scheme (since 2020): spans 14 sectors including automobiles and auto components, with a combined outlay of roughly $40 billion