PM interacts with chip industry ahead of Semicon event
Ahead of a major Semicon India industry event, the Union Government held interactions with semiconductor industry representatives to review progress and plans in India's chip manufacturing ecosystem
The engagement follows the recent notification of the second phase of the India Semiconductor Mission (ISM 2.0), which builds on the original Mission launched in 2021
ISM 2.0 substantially raises the financial outlay compared to the first phase and is aimed at deepening India's presence across the semiconductor value chain — design, fabrication and assembly/testing — rather than only anchoring a handful of large fabs
The Ministry of Electronics and Information Technology (MeitY) remains the nodal ministry administering the Mission through the India Semiconductor Mission body
India Semiconductor Mission (ISM): Origin, Structure and Phase 2
The India Semiconductor Mission was approved by the Union Cabinet in December 2021 with a financial outlay of ₹76,000 crore, to build a sustainable semiconductor and display ecosystem in India. It was set up as an independent business division within the Digital India Corporation, with administrative and financial autonomy to formulate and implement schemes for semiconductor fabs, display fabs, compound semiconductor units, assembly/testing/packaging (ATMP) facilities, and chip design. ISM 2.0, notified in 2026, significantly enlarges this outlay and rebalances incentives toward design and packaging, not just fabrication.
Key Details
- ISM Phase 1 (2021): outlay ₹76,000 crore under MeitY; offered fiscal support of up to 50% of project cost for fabs, compound semiconductor/ATMP units, and design-linked incentives
- ISM Phase 2 (2026): approved outlay of roughly ₹1.27 lakh crore (about ₹1,270 billion), a substantial step-up from Phase 1, reportedly prioritising India-designed chipsets and indigenous IP alongside continued fab/ATMP investment
- As of late 2025, roughly 10 semiconductor-related projects (fabs, compound-semiconductor units, and packaging/testing facilities) worth about ₹1.6 lakh crore had been approved under the Mission across multiple States
The PM's interaction with industry ahead of the Semicon India event is timed to the rollout of this enlarged Phase 2 framework, signalling the shift from the first phase's fab-anchoring strategy toward a broader domestic value chain.
Semiconductor Manufacturing and the PLI/Incentive Framework
Semiconductor fabrication is capital-intensive and strategically significant because chips underpin electronics, telecom, defence and automotive value chains; India's dependence on imports for advanced chips is treated as a supply-chain vulnerability, especially after global shortages during 2021-22. The Government's approach combines a dedicated semiconductor mission (rather than a standard PLI scheme) with capital subsidy support, reflecting the higher upfront cost of fab construction compared to typical manufacturing PLI schemes.
Key Details
- Fiscal support under ISM covers up to 50% of project cost for silicon and compound semiconductor fabs and ATMP/OSAT units, a considerably higher subsidy rate than standard sector-specific PLI schemes (usually calculated as a percentage of incremental sales)
- Design-linked incentive (DLI) components under the Mission support domestic chip-design startups and companies, reimbursing a share of eligible expenditure on design infrastructure
- Semiconductor manufacturing falls under the broader "Make in India" and self-reliance (Atmanirbhar Bharat) push, alongside sectors such as electronics manufacturing, solar cells, and telecom equipment already covered by production-linked incentive schemes
Industry consultations ahead of Semicon India typically address implementation issues in accessing this capital-subsidy support — a recurring theme in commentary on the Mission needing "more clarity" on execution even as outlay expands.
Strategic Significance: Supply Chain Security and the Global Chip Ecosystem
Semiconductors sit at the intersection of technology policy and economic security; a handful of countries and firms (Taiwan, South Korea, the US, and a few equipment/materials suppliers) dominate advanced-node fabrication and lithography equipment, creating geopolitical chokepoints. India's Mission is explicitly framed as reducing this exposure by building domestic fabrication, packaging and design capacity, positioning India within global "friend-shoring" and supply-chain diversification trends following disruptions such as the 2021 global chip shortage.
Key Details
- India currently has no large-scale operational advanced-logic fab; the first Mission-approved fabs and ATMP units are in various stages of construction/commissioning
- Global chip manufacturing capacity remains concentrated, with foundries and equipment makers based predominantly outside India, making domestic mission-linked capacity-building a stated national-security as well as economic priority
- India's semiconductor policy is often discussed alongside its participation in initiatives to diversify global electronics/chip supply chains away from single-country concentration
The scale-up to ISM 2.0 and direct government-industry engagement ahead of Semicon India reflect the continuing prioritisation of semiconductors as a strategic sector, distinct from ordinary manufacturing incentive schemes.
- ISM Phase 1 launched: December 2021; outlay ₹76,000 crore; nodal ministry MeitY; housed within Digital India Corporation
- ISM Phase 2 (2026) outlay: approximately ₹1.27 lakh crore
- Fiscal support under the Mission: up to 50% of project cost for fabs, compound semiconductor and ATMP/OSAT facilities
- Mission-approved projects as of late 2025: about 10 projects worth roughly ₹1.6 lakh crore across multiple States
- Mission structured around four components: silicon/display fabs, compound semiconductor units, ATMP/OSAT facilities, and chip design incentives