The Union Cabinet has approved two schemes with a combined government outlay of Rs 1.9 lakh crore to accelerate India's electronics manufacturing capabilities beyond assembly into semiconductor fabrication, advanced packaging, materials, and homegrown mobile phone brands, according to the government announcement reported by Times of India.
Semicon 2.0: Broadening the Semiconductor Ecosystem
The Cabinet cleared Semicon 2.0 with an outlay of Rs 1,27,500 crore. The scheme significantly broadens the government's strategy beyond fabrication, electronics and information technology minister Ashwini Vaishnaw told reporters. Besides supporting new fabs and advanced packaging units, Semicon 2.0 will extend incentives for:
- Semiconductor materials
- Specialty chemicals
- Manufacturing equipment
- Research and development
- Chip design
- Talent development
The government said the programme is expected to attract investments of around Rs 4 lakh crore, generate semiconductor production worth Rs 2 lakh crore, and exports of nearly Rs 1 lakh crore over time. Financial support will be available for Indian startups and companies designing chips for both strategic and commercial sectors, with additional investments going towards research, advanced-node technologies, and workforce development.
Mobile Phone Manufacturing Scheme: Deeper Localisation
Alongside the semiconductor push, the Cabinet approved the Mobile Phone Manufacturing Scheme (MPMS) with a budget of Rs 62,500 crore. The scheme succeeds the existing production-linked incentive scheme for mobile phones, shifting the focus from large-scale assembly towards deeper localisation and Indian intellectual property.
The MPMS will provide:
- Sales-linked incentives ranging from 2.25% to 5%
- Additional incentives of up to 1.5% linked to domestic sourcing of key components and sub-assemblies
- Indian brands undertaking design and R&D will be eligible for an additional 3% incentive
Scheme Comparison
| Feature | Semicon 2.0 | MPMS |
|---|---|---|
| Outlay | Rs 1,27,500 crore | Rs 62,500 crore |
| Total govt support | Rs 1.9 lakh crore (combined) | |
| Duration | 5 years (2026-27 to 2029-31) | 5 years (2026-27 to 2029-31) |
| Focus areas | Fabrication, advanced packaging, materials, equipment, R&D, design, talent | Sales-linked incentives, domestic sourcing, Indian brand R&D |
| Expected investments | Rs 4 lakh crore | Not specified |
| Expected production | Semiconductor output Rs 2 lakh crore | Not specified |
| Expected exports | Rs 1 lakh crore | Not specified |
| Long-term target | Build a $500 billion electronics manufacturing industry by 2030-31 | Same overarching target |
Expected Impact on Manufacturing Supply Chains
Both schemes aim to deepen domestic value addition and reduce import dependence, strengthening India's position in the global electronics supply chain. For manufacturing executives, the incentives signal a shift towards localisation of critical components and an opportunity to invest in semiconductor design and fabrication ecosystems. The MPMS's additional support for Indian brands doing R&D encourages intellectual property development within the country.
The schemes will run for five years from 2026-27 to 2029-31. The government's long-term target is to build a $500 billion electronics manufacturing industry by 2030-31. Plant managers and procurement professionals should anticipate increased demand for locally sourced materials, equipment, and design services as the ecosystem matures.
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