India's ISM 2.0 programme has introduced dedicated incentives for compound semiconductor manufacturing targeting silicon carbide and gallium nitride devices for power electronics, EV charging, solar inverters, defence electronics, and 5G radio applications, with separate capital subsidy thresholds and investment requirements designed to catalyse India's first domestic compound semiconductor fabrication and substrate manufacturing ecosystem.
Semicon Hunt -> technology -> India Semiconductor Mission
2026-09-01
India's Semiconductor Mission 2.0 has elevated compound semiconductors to a position of strategic priority within India's chip programme, introducing dedicated incentive structures for silicon carbide (SiC) and gallium nitride (GaN) device manufacturing, substrate production, and epitaxial wafer growth. This is a significant expansion of India's semiconductor programme beyond silicon-based mainstream logic and memory into the compound semiconductor domain, which serves the rapidly growing markets of electric vehicle power electronics, 5G radio frequency components, solar energy conversion, high-voltage industrial drives, and defence and space electronic systems.
Silicon carbide and gallium nitride semiconductors offer physical properties that silicon cannot match in high-power, high-temperature, and high-frequency applications. SiC power transistors and diodes handle voltages above 650 volts with lower switching losses than silicon, making them essential for EV traction inverters, fast chargers, and industrial motor drives where efficiency directly translates to battery range or energy cost. GaN-on-silicon and GaN-on-SiC devices operate at frequencies above 10 GHz with very high power density, making them the preferred technology for 5G mmWave base stations, satellite communications, radar systems, and electronic warfare. India's simultaneous national priorities in EV adoption, 5G rollout, renewable energy, and defence electronics modernisation create a large and guaranteed domestic demand base for compound semiconductor devices, making the economic case for domestic manufacturing particularly compelling.
India currently has no commercial compound semiconductor fabrication or substrate manufacturing capability, importing all SiC and GaN devices from companies headquartered in the United States, Europe, China, and Japan. This import dependency is particularly acute for defence applications, where the export control environment surrounding advanced radar and communications chips creates significant supply chain uncertainty. Several Indian defence research organisations including DRDO and ISRO have maintained small-scale compound semiconductor research activities at CEERI, SAMEER, and similar institutions, but none have reached commercial production scale. ISM 2.0's compound semiconductor pillar is designed to bridge this gap between laboratory capability and commercial manufacturing within the programme's horizon.
The compound semiconductor incentive structure under ISM 2.0 is calibrated to the different economics of this sector compared to silicon CMOS. Capital subsidies for SiC substrate and boule manufacturing are set at generous levels reflecting the high cost of SiC crystal growth equipment and the long maturation time required to develop consistent, low-defect SiC substrates. GaN epitaxial wafer growth on silicon substrates is incentivised at a different threshold, recognising that GaN-on-Si is more accessible to entry-level investors while still strategically important. Device fabrication incentives cover both discrete power devices and monolithic microwave integrated circuits (MMICs) for RF applications, with defence and space applications receiving additional strategic procurement support from DPSUs and space agencies.
Several domestic and international companies have expressed interest in ISM 2.0's compound semiconductor provisions. Indian defence-oriented conglomerates are exploring SiC substrate manufacturing, while at least two international SiC device companies have reportedly engaged with ISM about establishing India fabrication or assembly operations under the programme's incentive framework. The EV boom in India, with domestic EV sales growing at over 40 percent annually, is creating a direct commercial pull for India-sourced SiC power modules in a supply chain that currently purchases all compound semiconductor content from abroad. ISM 2.0's compound semiconductor pillar represents India's most direct attempt yet to capture a share of the high-growth compound semiconductor market on domestic soil.
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