📰 Sources: This article is based on reporting from Business Standard (business-standard.com), India TV News (indiatvnews.com), Entrepreneur India (entrepreneurindia.com), India's World (indiasworld.in), and the Press Information Bureau (PIB), Government of India (pib.gov.in). Published February–March 2026.

In a landmark policy move that signals India's growing technological ambitions, the Union Budget 2026–27 — presented by Finance Minister Nirmala Sitharaman on February 1, 2026 — officially launched India Semiconductor Mission 2.0 (ISM 2.0). The new phase marks a decisive shift in India's chip strategy: moving beyond mere assembly and packaging toward building a fully self-reliant, globally competitive semiconductor ecosystem — from equipment and raw materials to advanced chip design and intellectual property.

The announcement comes at a time when India consumes nearly $50 billion worth of semiconductors annually, yet domestic manufacturing contributes only $2–3 billion to that figure. With consumption projected to cross $100–110 billion by 2030, the government has made clear that production capacity must now grow faster than demand — or India risks deepening its strategic vulnerability.

From ISM 1.0 to ISM 2.0 — What Changed?

India Semiconductor Mission 1.0, launched in 2021, focused on attracting fabrication plants and assembly, testing, marking and packaging (ATMP) facilities. By December 2025, ten projects worth ₹1.6 lakh crore had been approved across six Indian states. However, ISM 1.0 left critical gaps: India's chip factories still depended heavily on imported manufacturing equipment, speciality chemicals, industrial gases, wafers, and foreign design software. Indian engineers, despite their talent, remained concentrated in services — owning little to no product-level intellectual property.

ISM 2.0 directly addresses these structural weaknesses. As Electronics and IT Minister Ashwini Vaishnaw put it, the new mission will prioritise "indigenous chip design, productisation, attracting ecosystem partners, and development of talent."

💡 Key Pillars of ISM 2.0:
1. Equipment & Materials: Domestic production of semiconductor manufacturing machines, speciality chemicals, industrial gases, and wafers — all currently imported.
2. Full-Stack Indian IP: Developing homegrown chip designs and semiconductor intellectual property, with design startups at the centre.
3. Supply Chain Strengthening: Reducing dependence on concentrated global suppliers and building resilient domestic and global supply chains.
4. Industry-Led R&D & Training: Establishing research and training centres co-developed with industry to create a future-ready skilled workforce.

Budget Allocation & Financial Firepower

The government has allocated ₹1,000 crore specifically for ISM 2.0 in FY 2026–27 — focused on industry-led research and training. On top of this, the broader Modified Programme for Semiconductor and Display Manufacturing carries a total outlay of ₹8,000 crore for 2026–27, targeting accelerated capital investment, high-quality employment, and expanded fabrication, packaging, and design capacity.

In another major move, the Electronics Component Manufacturing Scheme (ECMS) — launched in April 2025 with an initial outlay of ₹22,919 crore — has been expanded to ₹40,000 crore, after investment commitments exceeded double its original target. The ECMS will play a pivotal role in reducing India's dependence on imported electronics parts and chip components.

📊 Projected Outcomes for 2026–27:
• Support for 1 new semiconductor fab with ₹4,000 crore in investment and 1,500 jobs
• Support for 9 compound semiconductor & ATMP units with ₹11,000 crore in investment and 3,000 jobs
• Support for 30 chip design companies
• Development of 10 new semiconductor IP cores
• Employment of 200 semiconductor design professionals
• Approximately 51,000 direct jobs linked to approved electronics component projects

Made-in-India Chips — A Historic Milestone

On February 28, 2026, Prime Minister Narendra Modi inaugurated Micron Technology's Semiconductor Assembly, Test and Packaging (ATMP) facility in Sanand, Gujarat — marking one of the most tangible milestones in India's chip journey. Modi was also presented with the first set of Made-in-India chips at Semicon India 2025 in September, a moment Union Minister Vaishnaw called "a moment of pride."

India has also developed its own processor ecosystem — including the SHAKTI, VEGA, VIKRAM, and THEJAS processor families — under the Digital India RISC-V (DIR-V) Programme. These chips, based on the open-source RISC-V architecture, eliminate licensing costs and are designed for deployment in 5G infrastructure, automotive electronics, industrial automation, consumer devices, and IoT. India currently consumes nearly 20% of global microprocessors — and these homegrown chips directly reduce that dependence.

The 2nm Dream — India's Long-Term Roadmap

ISM 2.0 is not just about today's chips — it's about tomorrow's. The government has set out an ambitious roadmap: by 2029, India aims to manufacture chips for 70–75% of domestic applications. The next phase under ISM 2.0 targets 3-nanometre and 2-nanometre technology nodes — the cutting edge of global chip manufacturing. By 2035, India aims to rank among the world's top semiconductor nations.

Minister Vaishnaw underscored this ambition at a Qualcomm event announcing the company's 2nm chip co-developed in India: "We want to channel the innovation and energy of our startups into deep tech — the next Qualcomm could come from India."

Talent — The Make-or-Break Factor

A semiconductor ecosystem is only as strong as its people. India's National EDA (Electronic Design Automation) Platform has already logged over 22.5 million tool hours. Around 62,000 engineers have been trained under the Chips to Startup (C2S) initiative, which targets training 1 lakh (100,000) engineers in chip design. The Design Linked Incentive (DLI) Scheme currently supports 24 semiconductor design startups across the country, with 30 more to be supported in the coming year.

Why It Matters — The Geopolitical Context

India's chip push is happening against a backdrop of intense global competition. Taiwan produces over 60% of the world's semiconductors and nearly 90% of advanced chips — a concentration that makes global supply chains dangerously fragile. The COVID-19 pandemic exposed this vulnerability when chip shortages disrupted over 169 industries worldwide. Since then, the U.S., EU, Japan, and South Korea have all launched massive chip subsidy programmes, making it imperative for India to act or be left behind in the technological race.

KPMG India partner Abhishek Jain noted that the ISM 2.0 budget signals "policy resolve that could meaningfully influence long-term investment decisions and India's positioning within global manufacturing value chains." Grant Thornton Bharat's Raja Lahiri added that by extending support beyond fabs to equipment, materials, and full-stack IP, the mission "addresses a key bottleneck — control over critical technologies."

📌 Where Things Stand — March 2026: ISM 2.0 is officially underway, backed by ₹1,000 crore in dedicated funding and a ₹40,000 crore electronics manufacturing push. Micron's ATMP facility in Gujarat is now operational. India's first homegrown chips are in production. Design startups are being scaled. The 2nm roadmap is set. The question is no longer whether India can become a global chip hub — but how fast it can get there.

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