Add MobiGyaan as a preferred source on GoogleThe Government of India has officially notified the six pillars of the Semicon 2.0 Scheme, expanding the country’s semiconductor policy framework to cover design, materials, manufacturing, packaging, research, and talent development. The notification lays out fiscal incentives, eligibility requirements, and implementation guidelines across 10 categories covering the semiconductor value chain.
Objectives & Strategic Scope
Semicon 2.0 builds on the earlier Semicon India Programme and focuses on strengthening India’s semiconductor supply chain, reducing external dependencies, supporting long-term economic growth, and improving national security.
The scheme is structured around six pillars covering semiconductor design, machines and materials, semiconductor and display fabs, packaging facilities, research and development, and talent development.
Pillar 1 – Design
The design pillar covers three categories:
- Category 1 – Strategic Priorities: Support for semiconductor IPs, chips, SoCs, and modules focused on national importance and critical infrastructure. IP rights under this category will be co-owned with C-DAC.
- Category 2 – Commercial Sector: Design infrastructure support, seed funding of up to ₹15 crore, equity co-investment, and royalty financing for domestic fabless companies, startups, and MSMEs.
- Category 3 – Deployment-Linked Incentive (DLI): Incentive of 9% on net sales for up to five years for newly launched products, capped at ₹30 crore per application and ₹120 crore per company.
Pillar 2 – Machines and Materials
Category 4 covers semiconductor raw materials such as wafers, photoresists, chemicals and specialty gases, along with equipment R&D, refurbished and capital machinery, and testing facilities.
The pillar provides 30% capital expenditure support on a pari-passu basis. Equipment manufacturers can also receive a five-year graded PLI of 2% to 10% on domestic Bill of Materials (BoM), beginning FY 2028-29.
Pillar 3 – Semiconductor and Display Fabs
The third pillar covers three categories:
- Category 5 – Silicon Wafer Fabs: 40% fiscal support on a pari-passu basis for 300 mm wafer fabs with a minimum capacity of 40,000 wafer starts per month and minimum capital investment of ₹20,000 crore.
- Category 6 – Compound, Photonics, Sensors/MEMS and Discrete Fabs: 35% fiscal support on a pari-passu basis, with a minimum investment threshold of ₹500 crore.
- Category 7 – Display Fabs: 35% fiscal support on a pari-passu basis for OLED, Micro LED and Gen-8+ LCD fabs.
Pillar 4 – Packaging Facilities
Category 8 provides 35% fiscal support on pari-passu capital expenditure for advanced packaging technologies, including 2.5D/3D packaging, wafer-level packaging and heterogeneous integration.
Legacy packaging facilities will be eligible for 25% fiscal support.
Pillar 5 – Research and Development
Category 9 provides fiscal assistance of up to 75% of combined capex and opex project costs, including state incentives.
The support covers research in areas including advanced process nodes, silicon photonics and chiplet technologies.
Pillar 6 – Talent Development
Category 10 provides up to 75% project cost support to academic institutions, research laboratories and domestic training centres.
The funding is intended to expand semiconductor training across chip design, fabrication and shop-floor operations.
Implementation & Governance
The India Semiconductor Mission (ISM) will act as the nodal agency for appraisal, recommendations and operational oversight under Semicon 2.0.
Approval responsibilities are divided according to project size:
- Below ₹100 crore: Secretary, MeitY
- ₹100 crore to ₹500 crore: Minister for Electronics and IT
- Above ₹500 crore: Union Cabinet
- Manufacturing and fab categories: Union Cabinet
The initial application window will remain open for three years, while supported projects can run for up to six years. A mid-term impact assessment is planned after three years.
ISM may also introduce dedicated Semiconductor Deep Tech Awards from 2026 to encourage specialised semiconductor research and development.
Industry Progress & Projections
During the notification briefing, Union Minister Ashwini Vaishnaw highlighted progress made under the initial semiconductor programme.
India has surpassed its original target of preparing 85,000 semiconductor engineers over 10 years, achieving the target within four years. The government now aims to train another 100,000 engineers.
Several semiconductor projects have also received approvals within 90 to 200 days, with commercial production beginning at some facilities within 13 months of groundbreaking.
The initiatives are projected to generate approximately 50,000 to 60,000 direct jobs, while India’s semiconductor demand is expected to account for around 10% of global demand in the coming years.
