The Expenditure Finance Committee (EFC) under India's Finance Ministry has cleared a Rs 1.25 lakh crore outlay for the India Semiconductor Mission (ISM) 2.0, a major step toward strengthening domestic chip manufacturing, sources told PTI. The proposal now awaits Union Cabinet approval.
Funding and Scope of ISM 2.0
The approved funding is significantly higher than the Rs 76,000 crore allocated under the first phase of the India Semiconductor Mission. The Union Budget for 2026-27 had announced ISM 2.0 to deepen semiconductor manufacturing capabilities by supporting equipment, materials, indigenous chip designs, and other critical value-chain components, according to the government.
Union Electronics and IT Minister Ashwini Vaishnaw earlier stated that the second phase would focus on indigenous chip design, productisation, attracting ecosystem partners, and talent development.
Progress Under Phase 1
Under the first phase of ISM, the government approved 12 semiconductor manufacturing projects involving investments of around Rs 1.64 lakh crore. These include:
- One semiconductor fabrication unit
- Two compound semiconductor fabrication units
- Nine semiconductor packaging units
On the design front, 24 projects are being supported under the Design Linked Incentive (DLI) Scheme, while 105 companies have received access to advanced chip design tools. So far, 23 chip tapeouts have been completed at various foundries, including advanced technology nodes, reflecting India's growing semiconductor design capabilities.
Industry Impact and Timeline
Calling semiconductor manufacturing a long-standing national ambition, a senior IT Ministry official said two approved semiconductor projects have already been inaugurated for commercial production.
"CG Semi's inauguration is scheduled for July 4...and then probably one or two more (will happen) before the end of this calendar year, so our dream of having commercial semiconductor manufacturing in the country has finally been achieved," the official told PTI.
The official added that more semiconductor projects are expected to be announced, and that India has emerged as an important player in the global technology ecosystem, increasingly becoming "a voice to reckon with" in setting technology standards.
For enterprise technology decision-makers and supply chain managers, this development signals a strengthening of India's semiconductor supply chain, reducing dependency on foreign fabs and enabling more resilient electronics manufacturing. The focus on indigenous design and equipment under ISM 2.0 could lower procurement lead times and costs for domestic electronics and automotive producers. The timeline of commercial production already achieved, with CG Semi's inauguration on July 4 and more expected by year-end, suggests that the mission is on track to deliver tangible outcomes.
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