BT Explainer: All you need to know about India’s Semicon and mobile manufacturing push
The Cabinet has approved Semicon India Programme 2.0 and the Rs 62,500-crore Mobile Phone Manufacturing Scheme (MPMS). Here's how the two initiatives aim to deepen local manufacturing, strengthen India's electronics ecosystem and create new opportunities for startups.
- Jul 16, 2026,
- Updated Jul 16, 2026 7:39 PM IST
India's manufacturing ambitions received a major boost after the Union Cabinet approved Semicon India Programme 2.0 with an outlay of Rs 1,27,500 crore and the Rs 62,500 crore Mobile Phone Manufacturing Scheme (MPMS). Together, the two initiatives signal that India's industrial policy is entering a larger and deeper phase. From attracting factories to building a complete manufacturing ecosystem spanning chip design, research and development (R&D), components, intellectual property (IP) , and advanced manufacturing.
The semiconductor programme builds on the success of Semicon India 1.0, which helped put India on the global semiconductor map. The first phase approved 12 semiconductor facilities, including silicon fabrication plants, compound semiconductor fabs, and assembly, testing, marking and packaging (ATMP/OSAT) units. It also attracted over $20 billion in announced investments, laying out the groundwork for domestic chip manufacturing.
For startups, this could create a much wider set of opportunities than the first phase. While semiconductor fabrication plants require massive capital investments and are typically built by large global companies, the surrounding ecosystem offers significant opportunities for deep-tech entrepreneurs.
According to Amit Chand, Founder of BYT Capital, the biggest opportunity now lies upstream in areas such as indigenous chip design and intellectual property, semiconductor manufacturing equipment, advanced materials, specialty chemicals and industrial gases that support fabrication facilities. These are the areas where India's deep-tech startups can build globally competitive and defensible businesses. For investors, this signals a shift from creating manufacturing capacity to nurturing a self-reliant innovation ecosystem that can drive long-term value creation,” he added.
Industry body IESA believes the programme also reinforces India's long-standing strength in semiconductor design while adding manufacturing capabilities. According to the industry body, the stronger emphasis on indigenous product development, industry-led R&D and innovation could help transform India into a complete design-to-manufacturing destination. It estimates that Semicon India 2.0 could catalyse another $40-50 billion in investments, create 2-3 lakh high-skilled jobs, significantly increase domestic value addition and strengthen India's position as a trusted global semiconductor partner.
MUST READ: India may need $80 billion in government incentives by 2035 to build semiconductor ecosystem
Alongside Semicon India 2.0, the Cabinet also cleared the Mobile Phone Manufacturing Scheme (MPMS) for five years. The scheme aims to nearly double cumulative mobile phone production to around Rs 39 lakh crore and exports to Rs 15 lakh crore, while creating an additional 60,000 direct jobs.
The scheme builds on India's success in mobile manufacturing over the past few years. The country has a manufacturing ecosystem that has produced around 125 crore mobile phones, emerged as the world's second-largest mobile manufacturing ecosystem, and now meets 99.2% of domestic demand through locally manufactured devices.
Unlike earlier incentive programmes that primarily encouraged mobile phone assembly, the new scheme places greater emphasis on domestic sourcing, component manufacturing, design and R&D by Indian companies. That opens opportunities for startups working on electronics components, embedded systems, precision manufacturing, industrial automation, testing solutions and product design.
Taken together, Semicon India 2.0 and MPMS reflect a broader shift in India's manufacturing strategy. The focus is no longer just on assembling products or attracting large factories, but on building the technologies, components and intellectual property that underpin manufacturing.
MUST READ: India approves first Mini/MicroLED fab; can Crystal Matrix deliver on its big semiconductor promise?
For Unparalleled coverage of India's Businesses and Economy – Subscribe to Business Today Magazine
India's manufacturing ambitions received a major boost after the Union Cabinet approved Semicon India Programme 2.0 with an outlay of Rs 1,27,500 crore and the Rs 62,500 crore Mobile Phone Manufacturing Scheme (MPMS). Together, the two initiatives signal that India's industrial policy is entering a larger and deeper phase. From attracting factories to building a complete manufacturing ecosystem spanning chip design, research and development (R&D), components, intellectual property (IP) , and advanced manufacturing.
The semiconductor programme builds on the success of Semicon India 1.0, which helped put India on the global semiconductor map. The first phase approved 12 semiconductor facilities, including silicon fabrication plants, compound semiconductor fabs, and assembly, testing, marking and packaging (ATMP/OSAT) units. It also attracted over $20 billion in announced investments, laying out the groundwork for domestic chip manufacturing.
For startups, this could create a much wider set of opportunities than the first phase. While semiconductor fabrication plants require massive capital investments and are typically built by large global companies, the surrounding ecosystem offers significant opportunities for deep-tech entrepreneurs.
According to Amit Chand, Founder of BYT Capital, the biggest opportunity now lies upstream in areas such as indigenous chip design and intellectual property, semiconductor manufacturing equipment, advanced materials, specialty chemicals and industrial gases that support fabrication facilities. These are the areas where India's deep-tech startups can build globally competitive and defensible businesses. For investors, this signals a shift from creating manufacturing capacity to nurturing a self-reliant innovation ecosystem that can drive long-term value creation,” he added.
Industry body IESA believes the programme also reinforces India's long-standing strength in semiconductor design while adding manufacturing capabilities. According to the industry body, the stronger emphasis on indigenous product development, industry-led R&D and innovation could help transform India into a complete design-to-manufacturing destination. It estimates that Semicon India 2.0 could catalyse another $40-50 billion in investments, create 2-3 lakh high-skilled jobs, significantly increase domestic value addition and strengthen India's position as a trusted global semiconductor partner.
MUST READ: India may need $80 billion in government incentives by 2035 to build semiconductor ecosystem
Alongside Semicon India 2.0, the Cabinet also cleared the Mobile Phone Manufacturing Scheme (MPMS) for five years. The scheme aims to nearly double cumulative mobile phone production to around Rs 39 lakh crore and exports to Rs 15 lakh crore, while creating an additional 60,000 direct jobs.
The scheme builds on India's success in mobile manufacturing over the past few years. The country has a manufacturing ecosystem that has produced around 125 crore mobile phones, emerged as the world's second-largest mobile manufacturing ecosystem, and now meets 99.2% of domestic demand through locally manufactured devices.
Unlike earlier incentive programmes that primarily encouraged mobile phone assembly, the new scheme places greater emphasis on domestic sourcing, component manufacturing, design and R&D by Indian companies. That opens opportunities for startups working on electronics components, embedded systems, precision manufacturing, industrial automation, testing solutions and product design.
Taken together, Semicon India 2.0 and MPMS reflect a broader shift in India's manufacturing strategy. The focus is no longer just on assembling products or attracting large factories, but on building the technologies, components and intellectual property that underpin manufacturing.
MUST READ: India approves first Mini/MicroLED fab; can Crystal Matrix deliver on its big semiconductor promise?
For Unparalleled coverage of India's Businesses and Economy – Subscribe to Business Today Magazine