India Launches Rs 1.5 Lakh Crore Semiconductor Mission 2.0 in Budget 2026
Finance Minister Nirmala Sitharaman unveiled the ambitious India Semiconductor Mission (ISM) 2.0 in the Union Budget 2026-27, marking a major push to establish India as a global chip manufacturing hub.
Key Takeaways
- Initial outlay of Rs 1.5 lakh crore to build on the first ISM.
- Fiscal support increased to 55% for setting up fabs.
- Aims to train 1 lakh engineers and attract cutting-edge technology below 28nm.
The new mission focuses on attracting major global semiconductor fabrication units (fabs) and strengthening the entire ecosystem from design to packaging.
“Our vision for a ‘Viksit Bharat’ by 2047 is incomplete without technological sovereignty. The India Semiconductor Mission 2.0 will provide the necessary financial and strategic impetus to establish end-to-end semiconductor manufacturing within our borders,” Sitharaman said in her budget speech.
Key Features of ISM 2.0
Enhanced Fiscal Support: The scheme now offers a 55% fiscal incentive on capital expenditure for establishing semiconductor fabs, display fabs, and compound semiconductor facilities, up from 50% earlier.
Focus on Advanced Nodes: Special emphasis on attracting investments for cutting-edge fabrication technologies below 28 nanometres (nm), crucial for modern electronics and high-performance computing.
Design-Linked Incentive (DLI) Expansion: The DLI scheme for design companies is extended for 8 years, with its corpus doubled to Rs 10,000 crore.
Talent Development: Rs 5,000 crore allocated for the ‘Semiconductor India Talent (SIT)’ initiative to train over 1 lakh engineers over five years.
Supply Chain & Clearances: A new sub-scheme promotes indigenous manufacturing of raw materials and equipment. A ‘Semiconductor Fast-Track Committee’ will expedite approvals for projects within 90 days.
Impact on IT & Electronics Industry
Industry leaders have hailed the move as a game-changer. A domestic semiconductor ecosystem is expected to:
- Drastically cut India’s electronics import bill and reduce supply chain vulnerability.
- Boost ‘Make in India’ by providing reliable components for mobile phones, laptops, and EVs.
- Catalyse innovation in AI, IoT, and 5G/6G by providing local chip access.
- Create high-skill jobs and attract global giants like TSMC, Intel, and Samsung.
“This is a monumental budget for the technology sector. ISM 2.0 provides the long-term policy certainty and enhanced support that global semiconductor players need to commit to India. It will be the cornerstone for achieving true self-reliance in electronics,” said a spokesperson for the India Electronics and Semiconductor Association (IESA).
The success of ISM 2.0 will hinge on efficient implementation, timely incentive disbursement, and sustained collaboration between the government, industry, and academia.
