Semicon India 1.0 vs 2.0: What's new in the govt's ₹1.27 trillion plan?

From chip design and fabs to talent development, here's how Semicon India 2.0 builds on the gains of the first phase

The Union Cabinet on July 15 approved the Semicon India Programme 2.0 with a budgetary outlay of ₹1.27 trillion, marking the next phase of India's ambition to emerge as a globally competitive semiconductor manufacturing and design hub.

 

Building on the momentum created under the ₹76,000 crore Semicon India Programme launched in 2021, the new initiative seeks to develop a comprehensive semiconductor ecosystem spanning chip design, fabrication, advanced packaging, equipment, materials, research and talent development.

 

Recognising the need for sustained and long-term support for the semiconductor sector, Semicon 2.0 seeks to deepen India's capabilities across the entire semiconductor value chain while building on the gains of the first phase.

   

What is Semicon India 1.0 and why was it launched?

 

Approved in December 2021, the Semicon India Programme was launched in response to the global semiconductor supply chain disruptions witnessed during the Covid-19 pandemic. Implemented through the India Semiconductor Mission (ISM), the programme adopted a mission-mode approach offering globally competitive incentives and flexible financial support to encourage semiconductor manufacturing in India.

 

Unlike earlier initiatives that largely focused on chip fabrication, Semicon India 1.0 recognised the need for a complete semiconductor ecosystem encompassing chip design, fabrication, packaging, testing, equipment, specialty chemicals, industrial gases, logistics and skilled manpower. Its primary objective was not merely to manufacture chips in India, but to lay the foundation for an end-to-end domestic semiconductor ecosystem capable of competing globally.

 

How successful has Semicon India 1.0 been so far?

 

Significant progress has already been achieved under the first phase of the programme.

 

So far, India has approved 12 semiconductor manufacturing projects across Gujarat, Uttar Pradesh, Punjab, Assam, Odisha and Andhra Pradesh. These include one silicon fab, one silicon carbide fab, one integrated gallium nitride (GaN) micro LED display fab and nine packaging facilities expected to cater to sectors such as consumer electronics, automobiles, telecommunications, aerospace, industrial electronics and power electronics. Collectively, the approved projects involve cumulative investments exceeding ₹1.64 trillion.

 

Three companies-Micron, Kaynes Semicon and CG Power (CG Semi), have already commenced commercial production, marking India's transition from policy intent to actual semiconductor manufacturing. Another facility is expected to begin commercial production during 2026.

 

Among recent developments, Tata is setting up a semiconductor facility in Dholera, Gujarat, and has entered into an agreement with Dutch semiconductor equipment maker ASML to manufacture 300mm wafers in India, which could pave the way for more advanced chip manufacturing capabilities in the country.

 

How has India strengthened semiconductor design capabilities?

 

Alongside manufacturing, India has continued to strengthen its position as a global semiconductor design hub, with nearly 20 per cent of the world's semiconductor design talent based in the country.

 

Under the Design Linked Incentive (DLI) Scheme, 24 semiconductor design projects from startups and Micro, Small, and Medium Enterprises (MSMEs) have been approved for financial support. Additionally, 105 startups and MSMEs have been granted access to industry-standard Electronic Design Automation (EDA) tools. These companies are developing semiconductor chips and Systems-on-Chip (SoCs) for a wide range of strategic and commercial applications.

 

Recognising that skilled talent will be critical to sustaining India's semiconductor ambitions, the government has been investing in nurturing the country's next generation of chip designers and engineers. Under the Chips to Startup (C2S) programme, EDA tools have been deployed across 315 universities.

 

The government has also made industry-standard semiconductor design software available free of cost to universities and startups, while the Semiconductor Laboratory (SCL) in Mohali is being revamped to support the chips designed by students and researchers.

 

How is Semicon India 2.0 different?

 

If Semicon India 1.0 was about proving that India could begin building a semiconductor ecosystem, Semicon India 2.0 aims to significantly expand the country's capabilities across semiconductor design, fabrication, advanced packaging, materials, research and talent development.

 

According to Electronics and IT Secretary S Krishnan, the next chapter is no longer about demonstrating India's semiconductor manufacturing potential, but about strengthening capabilities across the entire value chain.

 

The programme rests on six strategic pillars designed to create a globally competitive semiconductor ecosystem.

 

1 Deepening India's chip design ecosystem

 

According to the government, Semicon India 2.0 will build upon the initial success achieved in chip design. With 105 startups already engaged in semiconductor development, the focus will now shift towards developing intellectual property (IP), chip designs and complete systems for both strategic and commercial applications. The objective is to position India as a key global semiconductor chip design and IP destination.

 

2 Developing semiconductor machines, materials and chemicals

 

For the first time, companies involved in manufacturing semiconductor equipment as well as critical materials, chemicals and industrial gases required for chip manufacturing will be incentivised. The government expects this to strengthen domestic manufacturing capabilities and lay the foundation for sustainable growth of the semiconductor ecosystem.

 

3  Setting up more semiconductor fabs

 

With India's first semiconductor fab expected to be commissioned in 2028, Semicon 2.0 aims to attract more manufacturers to establish fabrication facilities in the country. These will include silicon fabs, compound semiconductor fabs, discrete component fabs and display fabs, among others.

 

4 Strengthening the ATMP and OSAT ecosystem

 

Building on the success of Assembly, Testing, Marking and Packaging (ATMP) facilities approved under the first phase, the government plans to actively encourage more ATMP and Outsourced Semiconductor Assembly and Test (OSAT) units. The focus will be on attracting some of the world's most advanced packaging technologies to India.

 

5 Expanding semiconductor research and development

 

India's semiconductor journey has begun with technology nodes ranging from 28nm to 110nm. Under Semicon India 2.0, the focus will shift towards developing more advanced technology nodes and strengthening collaborations with leading domestic and international research institutions.

 

6 Scaling semiconductor talent development

 

While around 68,000 students have already been trained across 315 universities, Semicon India 2.0 proposes to further deepen semiconductor training at the college level. The programme will also strengthen industry participation in specialised training for clean rooms, fabrication facilities and semiconductor manufacturing ecosystems to ensure the availability of skilled manpower across the value chain.

 

What is the government trying to achieve through Semicon India 2.0?

 

According to the government, Semicon India Programme 2.0 is aimed at accelerating economic growth, strengthening national security through resilient semiconductor supply chains and positioning India as a global leader in critical technologies.

 

By expanding capabilities across semiconductor design, manufacturing, advanced packaging, research, equipment and skilled talent development, the programme seeks to deepen domestic value addition, create high-quality jobs and reduce India's strategic dependence on global semiconductor supply chains while building a globally competitive semiconductor ecosystem.