Union Cabinet Approves India Semiconductor Mission 2.0 With Mega Outlay Of Rs 1.25 Lakh Crore

The Union Cabinet has cleared the second phase of the country's flagship chip manufacturing program, the India Semiconductor Mission 2.0 (ISM 2.0). The revamped scheme has been cleared with a fiscal outlay of Rs 1.25 lakh crore.

The change is to reassure long-term institutional investors, the government has extended the program's lifecycle from five years to 12 years. The policy extension ensures sustained fiscal support for highly capital-intensive projects like silicon fabs, assembly units, and testing facilities.

While the initial phase (ISM 1.0) focused heavily on building capacity and bringing packaging facilities online, ISM 2.0 shifts the focus to vertical integration.

Union Minister Ashwini Vaishnaw says, “We all know that the semiconductor industry is foundational; semiconductor chips are essential to virtually all modern manufacturing, whether it is the mobile phone or camera, household appliances like fridges, TVs, and ACs, vehicles like scooters, cars, and trains, or even missiles. Electronics has emerged as a major sector in its own right, and this initiative now covers the entire electronics value chain.”

The mandate will fund the domestic production of critical semiconductor equipment, essential raw materials, chemical supplies, and specialized gases. And, a significant portion of the capital has been earmarked to cultivate homegrown, full-stack Indian Intellectual Property (IP) in chip architecture.

Building on ISM 1.0 Momentum

The rollout of ISM 2.0 follows the successful deployment of the first phase, which was launched in December 2021 with a budget of Rs 76,000 crore.

Under the inaugural phase, the government approved a total of 12 critical semiconductor manufacturing projects across multiple states, translating into a cumulative investment pipeline of over Rs 1.64 lakh crore. This initial footprint includes major billion dollar commercial facilities spanning silicon fabrication, compound semiconductor fabs, and advanced ATMP (Assembly, Testing, Marking, and Packaging) operations.

The semiconductor clearance was part of a broader technology push by the Cabinet.

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