The Indian government on Monday, 31 August formally notified Semicon 2.0, a ₹1.27 lakh crore scheme designed to strengthen and expand the country's semiconductor manufacturing and design ecosystem. The initiative extends fiscal support across the chip industry's entire value chain, from design to fabrication to packaging and testing.

What Semicon 2.0 Covers

The scheme has been structured into six segments, spanning semiconductor design by Indian companies, manufacturing of capital equipment for chip production, semiconductor fabrication units, and chip assembly, packaging, and testing. According to the government notification, the scheme aims to provide sustained policy support to the sector and accelerate the development of a comprehensive domestic ecosystem.

The government's focus is not limited to building manufacturing capacity. It also seeks to develop capabilities across the full semiconductor value chain, encouraging domestic companies to participate at every stage — from chip design through to specialised equipment production.

High-Level Expert Panel to Identify Strategic Chips

Union Minister for Electronics and Information Technology Ashwini Vaishnaw announced that the government will constitute a high-level expert panel to identify strategic semiconductor chips that will qualify for incentives under the scheme. The committee will be jointly chaired by the Principal Scientific Adviser (PSA) and the National Security Adviser (NSA), reflecting the dual civilian and strategic importance of the initiative.

Speaking to reporters, Vaishnaw said the panel will identify semiconductor products based on their national importance and strategic priorities. This structure signals that Semicon 2.0 is as much a national security initiative as it is an industrial policy.

Reducing Import Dependence

Vaishnaw indicated that the scheme is expected to help India reduce its dependence on overseas semiconductor supplies for a range of critical products. When asked about specific areas where India could eventually meet domestic demand, he said the initiative aims to enable products such as sensors to meet up to 100 per cent of domestic requirements.

This comes amid growing global concern over semiconductor supply chain vulnerabilities, a lesson reinforced by the chip shortages of 2021–22 that disrupted automobile, electronics, and consumer goods production worldwide.

Strategic Importance and Sectoral Impact

Semiconductors are considered critical inputs for electronics, automobiles, telecommunications, defence, and other strategic industries. India's move to formalise Semicon 2.0 follows earlier efforts under the original Semicon India programme, and positions the country as a serious contender in a global race that has seen the United States, the European Union, Japan, and China each commit hundreds of billions of dollars to domestic chip capacity.

Notably, the involvement of the National Security Adviser in the new expert panel marks a significant escalation in the strategic framing of India's semiconductor ambitions — moving the conversation beyond economics into the realm of national security and technological sovereignty.

What Comes Next

With the scheme now formally notified, industry stakeholders and domestic chipmakers are expected to engage with the government on eligibility and incentive structures. The identification of strategic chips by the PSA-NSA panel will be a key milestone that determines which segments attract the most significant fiscal support under the ₹1.27 lakh crore outlay.