India's Union Cabinet has formally notified the Semicon 2.0 programme with a total outlay of Rs 1,27,500 crore, expanding government support across six pillars covering chip design, fabrication, advanced packaging, semiconductor equipment and materials, research and development, and talent development, building on the foundation of Semicon 1.0 which already has 12 approved projects.
Semicon Hunt -> investment -> India Semiconductor Mission
2026-09-01
The Government of India has formally notified the India Semiconductor Mission 2.0, known as Semicon 2.0, through a gazette notification issued on August 31, 2026. The programme carries a total outlay of Rs 1,27,500 crore, making it one of the largest single-programme government commitments to an industrial sector in India's post-liberalisation history. Semicon 2.0 builds on the foundation of Semicon 1.0, which approved 12 semiconductor and display projects worth over Rs 1.5 lakh crore in combined public and private investment, and widens the scope of government support to cover the entire semiconductor value chain from materials and equipment through to talent development.
Semicon 2.0 is structured around six thematic pillars. The first is chip design, which deepens incentives for fabless semiconductor companies developing processor IP, SoCs, memory controllers, RF chips, and sensor interfaces. The second is machines and materials, addressing India's near-zero domestic presence in semiconductor manufacturing equipment and specialty chemicals, a critical gap exposed by the global chip shortage. The third is fabrication, which continues incentives for front-end wafer fabs with a 40 percent capital subsidy and technology requirements linked to node capability. The fourth is advanced packaging or ATMP and OSAT, building on the Micron and CG Power facilities already operational. The fifth is research and development, funding industry-led innovation centres at IITs, NITs, and private institutions. The sixth is talent development, with a dedicated Rs 1,000 crore outlay for financial year 2026-27 to train engineers at scale.
One of the most consequential additions in Semicon 2.0 is a new category of support specifically designed for semiconductor startups and MSMEs. Under Category 2 of the design pillar, eligible companies can receive seed funding of up to Rs 15 crore, equity co-investment alongside venture capital firms where the government takes a minority stake while founders retain operational control, royalty-linked financing for commercial IP deployment, and deployment-linked incentives of up to 9 percent of net sales for five years for newly launched chips or SoC products. This equity co-investment model is unprecedented in Indian industrial policy and signals a recognition that the semiconductor sector requires patient, risk-sharing capital structures rather than purely debt-based or grant-based support.
Three of the twelve projects approved under Semicon 1.0 are already in commercial production as of mid-2026, and the government expects five to six projects to be operational by December 2026. Semicon 2.0 is designed to catalyse a second wave of investments, particularly in the segments that Semicon 1.0 did not sufficiently incentivise, namely semiconductor equipment manufacturing, speciality chemicals, and compound semiconductors such as silicon carbide and gallium nitride for power and RF applications. The notification of Semicon 2.0 a week before the opening of SEMICON India 2026 on September 17 was timed to maximise visibility and signal to global industry participants that India's semiconductor programme has entered a new, more ambitious phase with committed long-term government backing.
Industry bodies including IESA, SEMI India, and NASSCOM welcomed the Semicon 2.0 notification and called it a watershed moment for India's technology sovereignty agenda. Global semiconductor companies attending SEMICON India 2026, including equipment vendors, EDA tool providers, and foundry partners, are expected to announce expanded India partnerships and investment commitments in direct response to the policy framework that Semicon 2.0 establishes. Analysts project that Semicon 2.0 could catalyse up to USD 30 billion in additional private investment over its planned horizon, pushing India's total semiconductor ecosystem investment well beyond the USD 20 billion already committed under Semicon 1.0.
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