The Finance Ministry's Expenditure Finance Committee (EFC) has cleared an outlay of ₹1.25 lakh crore for India Semiconductor Mission (ISM) 2.0, marking a decisive escalation in the country's ambition to become a self-reliant chip-manufacturing nation. The proposal, approved last week, will now move to the Union Cabinet for final clearance before it becomes operative.

A Sharp Increase from ISM 1.0

The fresh outlay represents a substantial jump from the ₹76,000 crore committed under ISM 1.0, under which the government sanctioned 10 semiconductor facilities spanning chip fabrication, assembly, and design. The expanded programme is designed to go beyond chipmaking itself, extending support to industrial gases, specialty chemicals, capital equipment, MSMEs, and ancillary suppliers — effectively targeting the full semiconductor supply chain rather than just end-product manufacturing.

What ISM 2.0 Aims to Achieve

The government expects the enhanced scheme to help India meet up to 75 per cent of its domestic semiconductor demand by 2030, significantly reducing import dependence. The broader strategic goal is to position India as a credible node in the global electronics manufacturing value chain — a target that has gained urgency as geopolitical tensions continue to disrupt established supply routes from Taiwan, South Korea, and China.

Notably, inter-ministerial consultations for the new scheme had already been completed, with the Ministry of Electronics and Information Technology (MeitY) awaiting the Finance Ministry's green light before proceeding.

The Demand Surge Driving the Push

India's electronics consumption is expanding at an unprecedented pace. The country now has over 65 crore smartphone users, and annual electronics manufacturing output has reached ₹12 lakh crore. Simultaneously, the rapid build-out of AI-based systems, data centres, and electric vehicles (EVs) is creating compounding chip demand that domestic production currently cannot meet.

This convergence of consumer scale and industrial transformation makes securing a place in the global semiconductor supply chain not merely an economic ambition but a strategic necessity, according to government assessments.

Ground Progress Under ISM 1.0

Construction on the 10 approved semiconductor plants is reportedly progressing at pace. A pilot production line has already commenced at one facility in Sanand, Gujarat, and within a year, four more units are expected to enter production. Global industry leaders — including Applied Materials, Lam Research, Merck, and Linde — have committed investments in supporting factories and supply chain infrastructure alongside these facilities.

What Comes Next

With EFC clearance secured, the proposal now awaits Union Cabinet approval, which would formally launch ISM 2.0 and unlock disbursements. If cleared, the scheme would represent the single largest public investment in India's technology manufacturing history. The pace of Cabinet scheduling and the structure of incentive disbursal — whether tied to production milestones or capacity creation — will be closely watched by industry and investors alike.