The government is set to introduce an enhanced version of the India Semiconductor Mission, known as ‘ISM 2.0,’ possibly by May, with a proposed budget ranging from Rs 1 lakh crore to Rs 1.2 lakh crore. Inter-ministerial discussions are ongoing, with the Ministry of Electronics and Information Technology awaiting final approval from the Finance Ministry, as per a report by NDTV Profit. The planned allocation for ISM 2.0 surpasses the Rs 76,000 crore designated for the initial phase of the semiconductor mission, sources revealed.
Under ISM 2.0, the government’s objective is to expand the program’s scope beyond chip fabrication and design to encompass support for semiconductor equipment, raw materials, and other essential inputs. The focus will also include the development of full-stack intellectual property and enhancing supply chain resilience. This initiative is a response to disruptions in global supply chains and escalating geopolitical uncertainties.
The revamped framework is expected to involve ancillary players like gas suppliers, specialty chemical manufacturers, MSMEs, and other ecosystem participants. A key highlight of the second phase is the revamped design-linked incentive (DLI 2.0) scheme, which is anticipated to enable foreign companies to collaborate with Indian firms for semiconductor research and development within the country.
The initiative aims to drive innovation and facilitate the emergence of around 50 fabless semiconductor design companies in the near future. The first phase of the mission saw approval for 10 semiconductor projects valued at approximately Rs 1.6 lakh crore across six states, covering fabrication, assembly, testing, and packaging facilities, thereby contributing to the establishment of a domestic semiconductor ecosystem.
During India’s inaugural ‘Nano Electronics Roadshow’ in March 2025, S. Krishnan, Secretary of MeitY, projected that the domestic semiconductor demand market could reach up to $110 billion by 2030. Officials highlighted that ISM 2.0 aligns with the government’s strategic goal of reducing reliance on imported chips and bolstering India’s position in the global semiconductor value chain. The mission aims for India to acquire the capacity to meet nearly 75% of its domestic semiconductor demand by 2030.
The roadmap also envisions targeting advanced manufacturing nodes such as 3-nanometre and 2-nanometre technologies, with the aspiration of positioning India among the leading semiconductor nations worldwide by 2035. This initiative coincides with efforts by major economies like the US, European Union, Japan, and South Korea to localize semiconductor production and diversify supply chains beyond concentrated hubs.
Finance Minister Nirmala Sitharaman unveiled ‘ISM 2.0’ in the Union Budget 2026–27, with an initial allocation of Rs 1,000 crore. She disclosed that the scheme has already garnered investment commitments double the target amount, prompting a proposed increase in the outlay to Rs. 40,000 crore to capitalize on the positive momentum.
