The Union Cabinet has approved the second phase of the India Semiconductor Mission (ISM 2.0), committing an outlay of Rs.1.27 lakh crore to expand India's semiconductor ambitions beyond chip packaging and assembly into the entire manufacturing value chain.
Under the new scheme, companies involved in manufacturing semiconductor equipment and materials will receive an upfront tax benefit of 30 per cent. In addition, ISM 2.0 will offer financial assistance for building the country’s indigenous chip IP, design capabilities and advanced research.
It signals India's change in strategy to move from luring investments in fabs and assemblies to developing a complete domestic semiconductor ecosystem. So far, the country has approved many semiconductor projects under phase one of the mission. The total investment under these schemes has exceeded Rs. 1.5 lakh crore for ATMP (Fabrication, Assembly, Testing, Marking and Packaging).
The Indian semiconductor industry is expected to touch USD 100-110 billion by 2030, backed by high growth in consumer electronics, automotive electronics, telecommunications devices, industrial automation and artificial intelligence. Government estimates suggest electronics production in the country has crossed USD 130 billion annually, with exports continuing to record double-digit growth in recent years.
Reducing Dependence
According to experts in the industry, the second phase can help in making India more competitive in the global supply chain of semiconductors as it will motivate local production of high-end products, and not just investing in backend manufacturing only. As per experts, the provision of unified incentives in semiconductor equipment and material manufacturing will help in attracting global technology companies, and at the same time will encourage Indian players to enter sectors that have been known to be capital intensive and technologically difficult.
They have also emphasised the fact that design and IP creation of chips will help in creating high-value jobs. In the international arena, governments are now increasing their investments in semiconductor manufacturing due to diversification of supply chains. The list includes countries like the US, Japan, South Korea, and European Union member nations, which are now having multibillion-dollar programs for semiconductor manufacturing.
For India, ISM 2.0 reflects a broader industrial policy aimed at positioning the country as a trusted semiconductor manufacturing destination. Alongside production-linked incentives and expanding electronics manufacturing, the latest mission is expected to deepen domestic capabilities, enhance supply chain resilience and improve India's participation in one of the world's fastest-growing strategic industries. |
