The government officially announced the launch of the Semicon 2.0 scheme on Monday, initiating a plan valued at 127,500 crore rupees. This initiative aims to deepen India's ambitions in the semiconductor sector, covering chip manufacturing, building a complete ecosystem that includes domestic design and intellectual property, equipment, materials, advanced packaging, research and development, and talent development.
This move comes as semiconductors have become a critically important strategic resource globally, given that the artificial intelligence boom is driving unprecedented demand for advanced chips and memory. Simultaneously, growing concerns over supply chain vulnerabilities and the changing geopolitical landscape are prompting global players to expand semiconductor manufacturing capacity and reduce dependence on concentrated production hubs.
The Semicon 2.0 scheme was approved by the Union Cabinet on July 15, 2026. The notification published on Monday details the framework of the new program, explaining how the budget of 127,500 crore rupees will be implemented, how incentives will be structured, and what the eligibility criteria are for various categories.
IT Secretary S Krishnanu stated at a press briefing: 'Now is the right time to transition to the next stage of the semiconductor ecosystem's development through Semicon 2.0. The scheme's goal is self-reliance and the formation of a globally competitive industry.'
For designing chips intended for the commercial sector, startups and companies owned by Indian citizens or Overseas Citizens of India (OCI) are being considered as applicants.
Financial support for startups will be provided in the form of grants and co-investments in equity, while companies are eligible for funding through royalties or co-investments in equity.
When establishing new fabrication plants (fabs), the new scheme will provide 40% fiscal support for silicon fabs and 35% for fabs dealing with assembly, displays (LCD, OLED, Micro LED), and other specialized types.
Incentives are provided for strengthening the ATMP/OSAT sectors (Assembly, Testing, Marking and Packaging / Outsourcing of Semiconductor Assembly and Testing): 35% capital expenditure for advanced packaging and 25% capital expenditure for traditional packaging.
Previously, under the first phase of the program, the government approved 12 semiconductor projects across six states. Commercial production has already commenced at three facilities this year: at Micron's ATMP plant, as well as at the OSAT facilities of Kaynes Semicon and CG Semi.