Semicon 2.0, space, hydrogen trains: How manufacturing push is gaining pace, shows July's economic review
The Department of Economic Affairs' Monthly Economic Review for July 2026 noted that while geopolitical tensions in West Asia, elevated commodity prices and global supply-chain risks continue to cloud the economic outlook, India's manufacturing sector has maintained momentum, supported by policy reforms and investments in high-technology industries.
- Jul 29, 2026,
- Updated Jul 29, 2026 8:25 PM IST
India is accelerating its push to become a global manufacturing hub, with the government highlighting a series of strategic initiatives spanning semiconductors, electronics, commercial space, clean mobility and critical minerals. According to the Department of Economic Affairs' Monthly Economic Review for July 2026, these developments are strengthening domestic manufacturing capabilities even as geopolitical tensions, supply-chain disruptions and commodity price volatility continue to weigh on the global economy.
The report stated that "strategic manufacturing initiatives gathered further momentum" during the month with the inauguration of the CG Semi OSAT facility, approval of Semicon 2.0 and the Mobile Phone Manufacturing Scheme (MPMS), progress in critical minerals, coal gasification and shipbuilding, and Skyroot Aerospace's successful orbital launch.
It added that these initiatives, together with regulatory reforms for SEZ manufacturers and the launch of India's first hydrogen fuel cell-powered train, are helping "strengthen domestic manufacturing capabilities, enhance supply-chain resilience and reduce dependence on concentrated import sources across strategic sectors."
Semiconductor push
One of the biggest milestones during the month was the inauguration of the CG Semi Outsourced Semiconductor Assembly and Test (OSAT) facility in Sanand, Gujarat. Built under the India Semiconductor Mission with an investment of more than ₹7,500 crore, the facility has commenced commercial production and will serve sectors such as automotive, telecom, artificial intelligence and consumer electronics.
The momentum continued with the Union Cabinet approving Semicon 2.0, a second-generation semiconductor mission with an outlay of ₹1.27 lakh crore, alongside the ₹62,500-crore Mobile Phone Manufacturing Scheme (MPMS). According to the report, Semicon 2.0 is built around six pillars—chip design, semiconductor equipment and materials, fabrication, assembly and packaging, research and development, and workforce training—to deepen India's capabilities across the semiconductor and electronics value chain.
The MPMS, which succeeds the earlier Production Linked Incentive (PLI) scheme for large-scale electronics manufacturing, offers incentives of 2.25% to 5% on eligible sales, along with additional benefits for domestic component sourcing, design and R&D.
Private space and critical minerals
India's private space ambitions also achieved a landmark during the month. The report highlights Skyroot Aerospace's Vikram-1, which became the first privately developed Indian rocket to successfully reach orbit under Mission Aagaman. Supported by ISRO's launch infrastructure and coordinated by IN-SPACe, the mission marks an important step in strengthening India's commercial space capabilities and advancing its high-technology manufacturing ecosystem.
The government is also moving to reduce dependence on imported strategic materials. The Ministry of Heavy Industries is implementing a scheme to promote domestic manufacturing of Sintered Rare Earth Permanent Magnets (REPM), targeting a cumulative production capacity of 6,000 metric tonnes per annum. The initiative aims to support sectors such as electric vehicles, renewable energy, electronics, aerospace and defence while strengthening India's critical mineral supply chains.
Shipbuilding receives policy boost
The review also points to significant momentum in the maritime sector. India's share of global ship recycling increased from 30.1% in 2024 to 35.4% in 2025, enabling the Maritime India Vision 2030 ship-recycling target to be achieved five years ahead of schedule. The government is simultaneously implementing a ₹69,725-crore shipbuilding package, including financial assistance and dedicated financing support to strengthen domestic shipbuilding capacity and promote greater value addition.
Green mobility
Clean mobility continues to emerge as another pillar of India's industrial strategy. Citing SBI Research, the review notes that average monthly EV registrations rose to 2.3 lakh between March and June 2026, with annual registrations projected to cross 25 lakh this year. EV penetration has already crossed 8% of total vehicle registrations, and increasing it to 20% by 2030 could reduce India's annual oil import bill by around ₹1 lakh crore, highlighting the macroeconomic benefits of the transition.
Complementing the EV push, India also introduced its first hydrogen fuel cell-powered train on the Jind-Sonipat route in Haryana. Developed indigenously, the train uses a 1,200-kW hybrid propulsion system combining a proton exchange membrane fuel cell with lithium iron phosphate batteries, producing electricity onboard while emitting only water vapour. According to the report, the launch places India among a select group of countries deploying hydrogen fuel-cell technology in rail transport, reinforcing the country's transition towards cleaner and more sustainable transportation.
India is accelerating its push to become a global manufacturing hub, with the government highlighting a series of strategic initiatives spanning semiconductors, electronics, commercial space, clean mobility and critical minerals. According to the Department of Economic Affairs' Monthly Economic Review for July 2026, these developments are strengthening domestic manufacturing capabilities even as geopolitical tensions, supply-chain disruptions and commodity price volatility continue to weigh on the global economy.
The report stated that "strategic manufacturing initiatives gathered further momentum" during the month with the inauguration of the CG Semi OSAT facility, approval of Semicon 2.0 and the Mobile Phone Manufacturing Scheme (MPMS), progress in critical minerals, coal gasification and shipbuilding, and Skyroot Aerospace's successful orbital launch.
It added that these initiatives, together with regulatory reforms for SEZ manufacturers and the launch of India's first hydrogen fuel cell-powered train, are helping "strengthen domestic manufacturing capabilities, enhance supply-chain resilience and reduce dependence on concentrated import sources across strategic sectors."
Semiconductor push
One of the biggest milestones during the month was the inauguration of the CG Semi Outsourced Semiconductor Assembly and Test (OSAT) facility in Sanand, Gujarat. Built under the India Semiconductor Mission with an investment of more than ₹7,500 crore, the facility has commenced commercial production and will serve sectors such as automotive, telecom, artificial intelligence and consumer electronics.
The momentum continued with the Union Cabinet approving Semicon 2.0, a second-generation semiconductor mission with an outlay of ₹1.27 lakh crore, alongside the ₹62,500-crore Mobile Phone Manufacturing Scheme (MPMS). According to the report, Semicon 2.0 is built around six pillars—chip design, semiconductor equipment and materials, fabrication, assembly and packaging, research and development, and workforce training—to deepen India's capabilities across the semiconductor and electronics value chain.
The MPMS, which succeeds the earlier Production Linked Incentive (PLI) scheme for large-scale electronics manufacturing, offers incentives of 2.25% to 5% on eligible sales, along with additional benefits for domestic component sourcing, design and R&D.
Private space and critical minerals
India's private space ambitions also achieved a landmark during the month. The report highlights Skyroot Aerospace's Vikram-1, which became the first privately developed Indian rocket to successfully reach orbit under Mission Aagaman. Supported by ISRO's launch infrastructure and coordinated by IN-SPACe, the mission marks an important step in strengthening India's commercial space capabilities and advancing its high-technology manufacturing ecosystem.
The government is also moving to reduce dependence on imported strategic materials. The Ministry of Heavy Industries is implementing a scheme to promote domestic manufacturing of Sintered Rare Earth Permanent Magnets (REPM), targeting a cumulative production capacity of 6,000 metric tonnes per annum. The initiative aims to support sectors such as electric vehicles, renewable energy, electronics, aerospace and defence while strengthening India's critical mineral supply chains.
Shipbuilding receives policy boost
The review also points to significant momentum in the maritime sector. India's share of global ship recycling increased from 30.1% in 2024 to 35.4% in 2025, enabling the Maritime India Vision 2030 ship-recycling target to be achieved five years ahead of schedule. The government is simultaneously implementing a ₹69,725-crore shipbuilding package, including financial assistance and dedicated financing support to strengthen domestic shipbuilding capacity and promote greater value addition.
Green mobility
Clean mobility continues to emerge as another pillar of India's industrial strategy. Citing SBI Research, the review notes that average monthly EV registrations rose to 2.3 lakh between March and June 2026, with annual registrations projected to cross 25 lakh this year. EV penetration has already crossed 8% of total vehicle registrations, and increasing it to 20% by 2030 could reduce India's annual oil import bill by around ₹1 lakh crore, highlighting the macroeconomic benefits of the transition.
Complementing the EV push, India also introduced its first hydrogen fuel cell-powered train on the Jind-Sonipat route in Haryana. Developed indigenously, the train uses a 1,200-kW hybrid propulsion system combining a proton exchange membrane fuel cell with lithium iron phosphate batteries, producing electricity onboard while emitting only water vapour. According to the report, the launch places India among a select group of countries deploying hydrogen fuel-cell technology in rail transport, reinforcing the country's transition towards cleaner and more sustainable transportation.