Building on the momentum of the first phase, Finance Minister Nirmala Sitharaman officially launched India Semiconductor Mission (ISM) 2.0 during the Union Budget 2026 on February 1, 2026.
This second phase is designed to deepen India’s electronics manufacturing value chain, moving beyond just chip assembly and packaging toward the production of critical equipment, raw materials, and the development of homegrown intellectual property (IP).
1. Key Financial Outlays
The budget provides a massive capital injection into the electronics and semiconductor ecosystem to capitalize on the success of the 2021 and 2025 schemes.
- ISM 2.0 Launch: Building on the ₹76,000 crore original outlay (which is now nearly exhausted), the second phase is estimated to have a fresh multi-billion dollar roadmap to be finalized within the next three months.
- ECMS Hike: The Electronic Component Manufacturing Scheme (ECMS) outlay has been nearly doubled to ₹40,000 crore (up from ₹22,919 crore).
- Design-Linked Incentives (DLI): A sharper focus on fabless startups with the goal of producing “Indian versions of AMD or Qualcomm.”
2. Strategic Focus: Beyond the “Foundry”
While ISM 1.0 focused on establishing the first few “Fabs” (fabrication plants) and ATMP (assembly and testing) units, ISM 2.0 shifts focus upstream:
- Equipment & Materials: Incentivizing the local production of specialized chip-making machinery and chemicals/gases.
- Full-Stack Indian IP: Supporting domestic firms in designing and owning the “blueprints” for chips, ensuring long-term technology sovereignty.
- Supply Chain Fortification: Streamlining the procurement of raw materials and integrating Indian manufacturers into the global semiconductor network.
- Advanced Nodes: A roadmap to achieve 3-nanometre and 2-nanometre technology nodes to stay competitive with global leaders like TSMC and Samsung.
3. “Chips to Classrooms”: The Talent Pipeline
To support the projected demand for a skilled workforce, the government is scaling up its educational integration:
- University Integration: The mission will expand chip design training to 315 universities, where students are already designing functional chips.
- AI Synergy: The upcoming AI Mission 2.0 will mirror this model, expanding AI training to 500 universities to create a 2-million-strong workforce by 2030.
- Research Hubs: Establishing industry-led research and training centers to develop next-gen technology in electronics, defense, and clean energy.
4. Market Reaction: Electronics Stocks Surge
The market responded positively to the continuity and expansion of the semiconductor policy. On Budget Day (Sunday session), several key players saw immediate gains:
- CG Power & Tata Elxsi: Gained up to 5% following the announcement.
- Dixon Technologies & Kaynes Tech: Jumped over 4% as the ECMS hike directly benefits large-scale contract manufacturers.
Conclusion: The $500 Billion Goal
ISM 2.0 is the “second stage” of a rocket aimed at making India a $500 billion electronics manufacturing ecosystem by 2030. By doubling down on component manufacturing and upstream IP, the government is ensuring that India isn’t just a place where chips are “packaged,” but a place where they are conceived, designed, and powered.
