India Extends India Semiconductor Mission 2.0

The India Semiconductor Mission (ISM) was approved by the Union Cabinet in December 2021 with an outlay of ₹76,000 crore. By May 2026, the mission had approved 12 semiconductor manufacturing and packaging projects with investments of around ₹1.64 trillion.

India Semiconductor Mission 2.0

The second phase of the mission is under consideration for an extension from 5 years to as long as 12 years. The proposed extension is linked to longer investment and development timelines in the semiconductor sector.

Funding and Incentive Structure

ISM 2.0 is expected to have a higher outlay, with estimates of nearly ₹1.5 trillion. The first phase of the mission had an initial incentive package of $10 billion. The incentive support for semiconductor fabrication, OSAT, and ATMP units may be reduced to 30% from 50% in the first phase. The Union Budget 2026-27 allocated ₹1,000 crore for India Semiconductor Mission 2.0. The allocation places emphasis on industry-led research and training centres for technology development and skilled workforce creation.

Project Coverage and Industrial Scope

ISM 2.0 is expected to cover semiconductor supply chains, chip design, raw material support, and domestic chip design firms. The proposed framework also includes gases, ingots, and retention of intellectual property rights in India for domestic chip design firms. Semiconductor fabrication refers to the manufacturing of integrated circuits on silicon wafers. OSAT stands for outsourced semiconductor assembly and testing, and ATMP stands for assembly, testing, marking, and packaging.

Important Facts for Exams

• The India Semiconductor Mission was approved in December 2021 with an outlay of ₹76,000 crore.
• Micron Technology announced a $2.75 billion ATMP facility in Sanand, Gujarat, in June 2023.
• The Tata Group and Powerchip Semiconductor Manufacturing Corporation project was cleared at ₹91,000 crore.
• Gallium Nitride is a wide-bandgap semiconductor material used in power electronics and radio-frequency applications.

Recent Project Approvals

In May 2026, the Union Cabinet approved two more semiconductor projects worth about ₹4,000 crore. Crystal Matrix Limited will set up a Gallium Nitride semiconductor wafer project, and Suchi Semicon Limited will set up a semiconductor chip packaging project, both in Gujarat.