Semicon 2.0 notified: ₹1.27 lakh crore scheme widens India’s chip ambitions

The Central government has formally notified Semicon 2.0, setting in motion a ₹1,27,500-crore programme aimed at expanding India’s semiconductor ecosystem beyond chip fabrication to include indigenous design and intellectual property, equipment, materials, advanced packaging, research and development and talent creation.

The notification follows the Union Cabinet’s approval of the India Semiconductor Mission 2.0 outlay on July 15, 2026. The Ministry of Electronics and Information Technology (MeitY) has outlined eligibility criteria and incentives for companies and institutions across six pillars and 10 categories.

Broader semiconductor ecosystem

IT Secretary S Krishnan said the time was right for India to move to the next stage of semiconductor development, with the scheme aimed at strengthening self-reliance and creating a globally competitive industry.

Unlike the first phase, Semicon 2.0 covers a wider range of participants, including chip-design startups and MSMEs, semiconductor fabs, packaging companies, materials and equipment manufacturers, research organisations and training institutions.

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For commercial chip design, Indian companies owned or controlled by Indian citizens or Overseas Citizens of India (OCIs), including startups and MSMEs, will be eligible. Startups can receive seed funding, equity co-investment or other support, while larger companies can access royalty financing or equity co-investment.

Support for semiconductor fabs

For silicon wafer fabs, the government will provide 40% of eligible capital expenditure. Applicants must propose a 300-mm wafer facility with capacity of at least 40,000 wafer starts per month, possess production-grade licensed technology, invest at least ₹20,000 crore and have minimum revenue of ₹7,500 crore in at least one of the preceding three financial years.

The support is lower than the 50% offered under the first phase.

For compound semiconductor, photonics, sensor/MEMS and discrete semiconductor fabs, the minimum investment is ₹500 crore, with minimum revenue of ₹200 crore and capacity of at least 500 wafer starts per month. These projects will receive 35% of eligible capex. Display fabs, including OLED, Micro LED and LCD projects, will also receive 35% support, subject to technology-specific criteria.

Packaging, equipment and materials included

Semicon 2.0 will also support advanced and conventional ATMP/OSAT facilities, with incentives of 35% of capex for advanced packaging and 25% for conventional packaging. Eligible applicants in this category need minimum capex of ₹1,000 crore and revenue of ₹200 crore.

Equipment and materials companies can also participate. The thresholds include ₹300 crore capex and ₹120 crore revenue for semiconductor equipment R&D and equipment, sub-assembly and component manufacturing. Semiconductor-grade raw-material projects require ₹50 crore capex and ₹20 crore revenue, while test and characterisation facilities require ₹100 crore and ₹40 crore, respectively.

Equipment manufacturers will additionally receive a PLI of 10%, 8%, 6%, 4% or 2% of the value of bills of materials sourced from domestic manufacturers for five years from FY29, subject to a ceiling of 50% of eligible capex.

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Startups and R&D

Eligible chip-design startups and MSMEs can access the Design Infrastructure Support framework, including national EDA tools and multi-project wafer fabrication services. They can also seek seed funding of up to ₹15 crore, capped at 50% of project cost.

The scheme provides up to 75% of project costs for advanced semiconductor R&D and talent-development projects, subject to project-specific conditions.

The government had earlier approved 12 semiconductor projects across six states under the first phase. Micron’s ATMP plant, Kaynes Semicon and CG Semi’s OSAT facility have already commenced commercial production, according to the government.

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