Govt unveils Semicon 2.0 with Rs 1,27,500 crore outlay for chip ecosystem

The government on Monday notified the Semicon 2.0 scheme, launching the Rs 1,27,500-crore programme aimed at expanding India’s semiconductor ecosystem across chip manufacturing, indigenous design and intellectual property (IP), equipment, materials, advanced packaging, research and development (R&D), and talent development.

Semiconductors have emerged as a critical strategic resource globally, with the AI boom driving unprecedented demand for advanced chips and memory. At the same time, concerns over supply-chain vulnerabilities and shifting geopolitics have encouraged global players to expand semiconductor capacity and reduce dependence on concentrated production hubs.

The Union Cabinet approved the Semicon 2.0 scheme on July 15, 2026. The notification issued on Monday lays out the implementation of the Rs 1,27,500-crore programme, including its incentive structure and eligibility criteria for different categories.

“Now the time is ripe to move to next stage to develop semiconducor ecosystem through Semicon 2.0. The objective of the scheme is self reliance and fostering a globally competitive industry,” IT Secretary S Krishnan said at a briefing.

For commercial chip design, startups and companies owned by Indian citizens or OCI will be eligible.

Startups will receive financial support through grants and equity co-investment, while companies will be supported through royalty financing or equity co-investment.

For setting up more fabs, the scheme will provide 40% fiscal support for silicon fabs and 35% support for compound, display (LCD, OLED, micro LED), and other specialised fabs.

For strengthening ATMP/OSAT (Assembly, Testing, Marking and Packaging/Outsourced Semiconductor Assembly and Test), the scheme will support both advanced and legacy packaging. It provides an incentive of 35% of capex for advanced packaging and 25% of capex for conventional packaging.

Under the first phase of the programme, the government had approved 12 semiconductor projects across six states. Three facilities — Micron’s ATMP plant, Kaynes Semicon and CG Semi OSAT facility — commenced commercial production earlier this year.