Government proposes $20 Bn package for ISM 2.0
First display fabrication unit to be set up in India
Chip design patents and sensor supply chain to be supported
The central government is considering a $20 billion package for the India Semiconductor Mission (ISM) 2.0 to boost the country’s growing semiconductor ecosystem. The Ministry of Electronics and Information Technology (MeitY) has sent a proposal to the finance ministry for the same, Mint reported.
The ISM 2.0 aims to create an advanced semiconductor manufacturing ecosystem in India, which will involve setting up the country’s first display fabrication unit. The report stated that the move will encourage chip design patents, and strengthen the supply chain through subsidies for sensor suppliers.
Additionally, the initiative will support the development of OSAT facilities, capital equipment, and materials, which will ensure comprehensive coverage across the semiconductor value chain.
The finance ministry is expected to give its nod to the proposal by October, after which it will be presented to the Union cabinet before the end of 2025. Under ISM 2.0, the government intends to allocate ₹5,000 crore for design-linked incentives (DLI) – more than tripling the ₹1,500 crore provided in the earlier phase.
The mission was launched in 2021 to set up fab and OSAT facilities in India and build semiconductor testing labs and assembly units in the country. The total outlay for the program was ₹76,000 crore, of which ₹65,000 crore was allocated to build chip manufacturing and packaging units.
The remaining amount was kept aside for modernising the semiconductor lab at Mohali and the DLI scheme. Recently, the government has approved projects, including Tata Electronics' fab facility in Gujarat's Dholera, an OSAT unit in Assam's Morigaon, Micron's assembly, among others.
Prime Minister Narendra Modi, while addressing Semicon India 2025, said the day is not far when the country will not only design but also emerge as a major market for the global semiconductor industry.
He assured that as the global semiconductor market heads towards becoming a $1 trillion economy, India will secure a significant share of it.
The Prime Minister noted that around $18 billion has been invested across 10 semiconductor plants, and lauded the single-window clearance system, which has reduced the time from ‘files to factories’ and helped attract more global investors to India’s semiconductor industry.
