Indian government is finalizing a massive ₹1 lakh crore ($10.8–$11 billion) fund to launch the second phase of the India Semiconductor Mission (ISM 2.0).
This new capital injection is designed to expand upon the initial ₹76,000 crore incentive package from 2021, moving India beyond assembly and testing into full-scale indigenous manufacturing and design.
ISM 2.0: The ₹1 Lakh Crore Blueprint
The Ministry of Electronics and Information Technology (MeitY) has officially moved the proposal for inter-ministerial consultation, with a formal announcement expected by the end of April 2026.
| Feature | Details of the New Fund |
| Total Outlay | ₹1,00,000 Crore (~$11 Billion) in fresh funding. |
| Primary Goal | Supporting chip design, manufacturing equipment, and the raw material supply chain. |
| Tech Frontier | Shifting focus from 28nm/40nm legacy chips to advanced 2nm and 3nm nodes. |
| Design Push | Strengthening the Design Linked Incentive (DLI) to support 50+ fabless startups. |
| IP Creation | Developing end-to-end “Indian Intellectual Property” to reduce dependence on foreign cores. |
Strategic Objectives: Catching Up to 2032
IT Minister Ashwini Vaishnaw recently stated that the goal of this fund is to give India chipmaking capabilities comparable to Taiwan, South Korea, and the U.S. by 2032.
- Subsidies for Equipment: Unlike Phase 1, which focused on the “Fabs” (factories), Phase 2 will provide significant subsidies for the high-cost machinery and specialized chemicals (gases/wafers) required to run them.
- Supply Chain Fortress: The fund aims to localize the production of semiconductor-grade chemicals and materials to insulate India from geopolitical shocks (like the current Strait of Hormuz crisis).
- Workforce Scale: Leveraging India’s 20% share of the global chip design workforce to move from “service providers” to “IP owners.”
Progress of Phase 1 (The Foundation)
The government confirmed this week that the initial ₹76,000 crore has been largely committed to 10 approved projects totaling ₹1.6 lakh crore in investment:
- Tata Electronics (Dholera, Gujarat): Building India’s first mega-fab in partnership with PSMC (Taiwan).
- Micron (Sanand, Gujarat): Its $2.75 billion assembly and testing facility is already in pilot production.
- CG Power & Renesas: Establishing an OSAT unit expected to be operational by late 2026.
- Tata-ASAT (Assam): A specialized chip packaging unit currently under construction.
The Global “Chips War” Context
India’s $11 billion move is being compared to the $52 billion U.S. CHIPS Act and China’s massive state-backed investment vehicles. While smaller in absolute dollars, India is positioning its fund to “stack” with existing PLI (Production Linked Incentive) schemes for smartphones and EVs, creating a cohesive electronics ecosystem.
