Cabinet clears ₹1.27 lakh crore Semicon 2.0 to boost India's chip ecosystem

The Union Cabinet on Wednesday approved Semicon 2.0 with an outlay of ₹1.27 lakh crore to expand India's semiconductor design and manufacturing ecosystem.

The second phase of the semiconductor programme focuses on chip design, machines and materials, fabrication units (fabs), assembly, testing, marking and packaging (ATMP/OSAT), research and development, and talent development.

Speaking to reporters after the Cabinet meeting, Information & Broadcasting Minister Ashwini Vaishnaw said, "Today, whatever is manufactured, whether it is the mobile phone in your hand, a camera, a refrigerator, a television, an air conditioner, a scooter, a car, a train, missiles, or anything else, uses semiconductor chips."

Vaishnaw said the government's semiconductor initiative now covers the entire electronics value chain, beginning with silicon ingots made from raw materials, followed by wafers, fabrication, packaging and finished electronic products.

Explaining the complexity of chip fabrication, he said, "Imagine writing your name on your fingernail... but imagine being asked to write the entire Ramayana or Mahabharata on that same fingernail. That level of precision and minute detail is exactly what the fabrication process entails."

Under the design pillar, Semicon 2.0 will seek to deepen India's chip design ecosystem after 105 startups began developing semiconductor chips under the first phase.

The programme aims to support the development of intellectual property, chip designs and system-level products, with the objective of making India a major semiconductor design IP destination.

"The work under Semicon 2.0 will place India as a key semiconductor chip design IP country," an official release said.

The scheme will also provide incentives for companies engaged in manufacturing semiconductor equipment as well as critical materials, chemicals and gases required for chip production.

The government said it will step up efforts to attract more global companies to establish fabrication facilities in India.

"With the first fab scheduled to be commissioned in 2028, the world is showing greater confidence in India's semiconductor strategy," it said.

The programme will support silicon fabs, compound semiconductor fabs, discrete component fabs and display fabs.

The scheme also seeks to strengthen the ATMP/OSAT ecosystem by attracting advanced chip packaging technologies to India.

"The world is now looking at India as an alternative location for setting up ATMP/OSAT units," the government said.