India has taken a major step towards building a stronger domestic semiconductor ecosystem with Semicon 2.0. The Union Cabinet approved the programme on 15 July 2026 with a total outlay of ₹1,27,500 crore. The programme aims to move India beyond semiconductor fabrication and build capabilities across the wider chip value chain.
This article explains Semicon 2.0, its key features, six pillars, objectives and significance for India’s semiconductor ecosystem. It also highlights how the programme supports technological self-reliance, strategic security, innovation and India’s role in the global semiconductor value chain.
What is Semicon 2.0?
This programme is the next phase of India’s semiconductor policy. It builds on the Semicon India Programme, which received a ₹76,000 crore outlay and focused on developing India’s semiconductor and display manufacturing ecosystem.
Moreover, Semicon 2.0 takes a broader approach. Instead of focusing mainly on fabs, it covers chip design, manufacturing equipment, materials, advanced packaging, research and development, and talent development. This approach aims to create a complete semiconductor ecosystem within India.
What are the Six Key Pillars of Semicon 2.0?
1. Chip Design
- First, it will strengthen India’s chip-design capabilities. The programme will support the development of semiconductor intellectual property, chip designs and systems for strategic and commercial applications.
- India has already supported semiconductor design projects and provided access to industry-standard Electronic Design Automation (EDA) tools for startups and MSMEs.
2. Machines and Materials
- Second, the programme will encourage domestic production and R&D in manufacturing equipment, materials, chemicals and speciality gases.
- This step can reduce dependence on imported inputs. Moreover, it can strengthen India’s precision-manufacturing capabilities.
3. More Semiconductor Fabs
- Third, it will encourage the establishment of more fabrication facilities or fabs.
- The government aims to attract manufacturers for different types of facilities. It includes silicon fabs, compound semiconductor fabs, discrete semiconductor fabs and display fabs.
4. Advanced ATMP and OSAT
- Fourth, the programme will strengthen ATMP/OSAT capabilities.
- ATMP refers to Assembly, Testing, Marking and Packaging. On the other hand, while OSAT refers to Outsourced Semiconductor Assembly and Test. India wants to attract more advanced packaging technologies and expand its role in this segment.
5. Research and Development
- Fifth, it gives greater importance to semiconductor R&D.
- India’s semiconductor journey initially focused on technologies in the 28 nm-110 nm range. The new programme aims to support more advanced nodes and technologies. It also encourages collaboration with leading research centres in India and abroad.
- The scheme can provide support of up to 75% of eligible project costs for advanced semiconductor R&D through combined Centre and state support. The government has also highlighted 7 nm technology as an area for research-linked incentives.
6. Talent Development
- Finally, it focuses on developing skilled manpower.
- The government states that 315 universities are already training students in complex chip design using modern EDA tools. So far, around 68,000 students got trained. The programme seeks to deepen this training and expand industry participation in areas such as clean-room operations and fab construction.
How Is It Different from Semicon 1.0?
The biggest difference lies in the breadth of the ecosystem.
- Under the first phase, the government approved 12 semiconductor projects with committed investments exceeding ₹1.64 lakh crore. These projects include silicon and compound semiconductor facilities, a display fabrication facility and packaging units. Three companies – Micron, Kaynes Semicon and CG Semi, have already started commercial production.
- In contrast, Semicon 2.0 expands support beyond manufacturing. It focuses on the complete value chain, including design, equipment, materials, R&D, advanced packaging and skilled talent.
- The incentive structure has also become more differentiated. For example, the new framework provides 40% capital expenditure support for large silicon fabs. While other fabs can receive up to 35%. Advanced packaging projects can receive 35% support. On the other hand, equipment and materials projects can receive incentives of up to 30%.
Semicon 2.0 and India’s Technological Self-Reliance
- The semiconductor strategy also supports India’s broader objective of technological self-reliance.
- The government aims to develop capabilities across the semiconductor value chain rather than relying only on imported chips.
- Moreover, India expects to develop the capability to design and manufacture chips required for around 70-75% of domestic applications by 2029. Moreover, India also aims to become one of the leading semiconductor nations by 2035.
Thus, this programme represents a shift from simply attracting manufacturing units towards building an end-to-end semiconductor ecosystem.
Conclusion
Semicon 2.0 marks a significant expansion of India’s semiconductor strategy. With a ₹1,27,500 crore outlay, the programme moves beyond fabs and addresses design, equipment, materials, advanced packaging, R&D and talent development.
Therefore, the initiative can strengthen India’s technological self-reliance, economic resilience and strategic autonomy. More importantly, it seeks to position India not merely as a semiconductor manufacturing destination but as a stronger participant across the global semiconductor value chain.
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Frequently asked question
1. What is Semicon 2.0 and why is it important for India?
This programme is India’s next phase of semiconductor development policy with an outlay of ₹1,27,500 crore. It aims to build an end-to-end semiconductor ecosystem. It will support chip design, manufacturing, advanced packaging, research and skilled manpower. Moreover, it helps India reduce import dependence and strengthen technological self-reliance.
2. How is Semicon 2.0 different from the Semicon India Programme?
This programme expands beyond semiconductor fabrication facilities. While the earlier Semicon India Programme focused mainly on building manufacturing capacity, the new programme covers the complete value chain, including chip design, equipment, materials, advanced packaging, R&D and talent development.
3. What are the six key pillars of Semicon 2.0?
The six major pillars of this programme are chip design, machines and materials, semiconductor fabs, ATMP/OSAT facilities, research and development, and talent development. Together, these pillars aim to create a strong domestic semiconductor ecosystem and integrate India into global semiconductor supply chains.
