Finance Minister Nirmala Sitharaman officially announced the launch of India Semiconductor Mission (ISM) 2.0 during the Union Budget 2026-27 presentation on February 1. The government aims to build upon the foundation laid by the first phase of the mission to further expand India’s capabilities in the electronics sector. A significant outlay has been proposed to support the development of equipment, materials, and the supply chain within the country.
What are the key financial allocations?
The government has allocated a substantial amount to ensure the success of this new phase. The budget includes a direct outlay of ₹40,000 crore specifically for ISM 2.0. Additionally, the budget for the ‘Electronics Components Manufacturing Scheme’, which started in April 2025, has been increased from ₹22,919 crore to ₹40,000 crore to support the ecosystem.
Financial incentives for chip design have also seen a boost. The proposal includes increasing the Design Linked Incentive (DLI) to ₹5,000 crore. Furthermore, ₹4,500 crore has been set aside for the modernization of the SCL Mohali facility to upgrade its infrastructure.
What is the focus of ISM 2.0?
Unlike the first phase which focused heavily on setting up fabrication units, ISM 2.0 will concentrate on the broader ecosystem. The mission targets the production of semiconductor equipment and raw materials such as special chemicals and gases. A major goal is to develop ‘Full-Stack’ Indian Intellectual Property (IP) rather than just assembling components.
- Homegrown Chips: The government plans to develop 25 strategic indigenous chipsets.
- Future Roadmap: IT Minister Ashwini Vaishnaw stated a roadmap to produce 2 nanometer (2nm) chips by 2035.
- Training: New research and training centers will be set up to train over 2.75 lakh semiconductor experts by 2030.
- Supply Chain: Incentives will be provided for Silicon Carbide (SiC) wafer production and special substrates.
