The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday, 15 July approved the 'Semicon 2.0' scheme, committing a ₹1,27,500 crore outlay to deepen India's domestic semiconductor design and manufacturing ecosystem. The decision builds on the foundation laid by the earlier Semicon 1.0 initiative, which has already drawn over ₹1.64 lakh crore in cumulative investment across 12 approved manufacturing units.

What Semicon 1.0 Has Already Delivered

Under the first phase, the government approved a diverse set of facilities — including one silicon fab, one silicon carbide fab, an integrated gallium nitride micro LED display fab, and nine packaging units. These are expected to serve chip requirements across consumer appliances, industrial electronics, automobiles, power electronics, telecommunications, and aerospace sectors.

Of the 12 approved units, three companies — Micron, Kaynes, and CG Semi — have commenced commercial production, with a fourth expected to begin operations in 2026. Additionally, 24 semiconductor design projects from startups and MSMEs have received financial support, while 105 startups and MSMEs have been granted access to industry-standard Electronic Design Automation (EDA) tools.

The Six Pillars of Semicon 2.0

According to the Cabinet communiqué, Semicon 2.0 is structured around six strategic pillars designed to create a self-sustaining semiconductor ecosystem.

The first pillar focuses on chip design, deepening the ecosystem where 105 startups are already developing chips, with an emphasis on building intellectual property (IP) and system-level designs. The second pillar covers machines and materials — incentivising companies engaged in manufacturing and R&D of semiconductor-grade machines, chemicals, and gases, laying what the Cabinet describes as 'the foundation for sustainable growth' and advancing precision manufacturing in India.

The third pillar targets new fabs. With the first fab scheduled for commissioning in 2028, the government intends to attract additional global manufacturers to establish fabrication units in India. The fourth pillar focuses on ATMP and OSAT units — Assembly, Testing, Marking, and Packaging — where India is increasingly being viewed as an alternative global hub, with the government seeking to attract advanced ATMP technologies.

The fifth pillar is research and development. India's semiconductor journey began at the 28nm–110nm node range; the focus will now shift to more advanced nodes and emerging technologies, pursued in collaboration with leading R&D centres both within and outside India. The sixth pillar is talent development — 315 universities are currently training students in complex chip design using the latest EDA tools, with approximately 68,000 students already trained. The scheme aims to expand this pipeline and deepen the level of training at the undergraduate stage.

Why This Matters for India's Tech Ambitions

Semiconductors are the bedrock of modern technology — from smartphones and electric vehicles to defence systems and data centres. India has historically been a net importer of chips, making it vulnerable to global supply chain disruptions, as starkly exposed during the 2020–2022 chip shortage that paralysed automotive and electronics production worldwide. Semicon 2.0 is the government's most ambitious attempt yet to change that calculus.

Notably, this comes at a moment when the global semiconductor industry is undergoing a significant geographic realignment, with the United States, European Union, Japan, and South Korea all offering large incentives to attract fab investments. India's ₹1,27,500 crore commitment signals that it intends to compete seriously for a place on that map.

What Comes Next

With the Cabinet approval now in place, implementation guidelines and sector-specific incentive structures are expected to be notified in the coming weeks. The semiconductor industry and investor community will watch closely whether the scheme's six pillars translate into binding timelines and verifiable milestones — particularly for the first fab commissioning targeted for 2028.