Semicon 2.0 Scheme: ₹1.27 Lakh Crore Semiconductor Push Explained

Semicon 2.0 Mission: The government on Monday notified the detailed framework for Semicon 2.0, expanding policy support across India’s semiconductor ecosystem. 

The scheme, notified by the Ministry of Electronics and Information Technology (MeitY) on August 31, aims to build a resilient, trusted and sovereign semiconductor technology ecosystem covering the complete value chain.

The programme has an overall outlay of ₹1,27,500 crore. The government is targeting around ₹4 lakh crore of investment, ₹2 lakh crore in production and ₹1 lakh crore in exports through the programme.

What does Semicon 2.0 cover?

The scheme has been divided into six pillars covering key segments of the semiconductor industry:

• Chip design

• Semiconductor fabrication

• ATMP/OSAT and advanced packaging

• Semiconductor equipment and materials

• Semiconductor R&D

• Talent and skill development

The framework targets local development of semiconductor intellectual property (IP) cores, chips, System-on-Chips (SoCs) and modules for electronic products based on national importance and strategic priorities.

The government also plans to develop standard IP building blocks covering areas such as compute, memory, radio frequency, power, networking and sensors.

What fiscal support will semiconductor projects receive?

Semicon 2.0 provides different levels of fiscal support depending on the technology and segment.

For manufacturing of silicon semiconductor wafer fabs, the government will provide 40% fiscal support. Advanced packaging projects will receive 35% of eligible capital expenditure on a pari-passu basis.

The advanced packaging support covers technologies including 2.5D and 3D packaging, wafer-level chip-scale packaging and heterogeneous integration.

Legacy packaging projects will receive 25% support. The scheme will also support advanced semiconductor R&D covering CMOS process technologies, silicon photonics, display fabrication and chiplet-based packaging.

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What are the timelines for Semicon 2.0?

Projects under Semicon 2.0 will run for up to six years, while the initial application window will remain open for three years.

The India Semiconductor Mission (ISM) will serve as the nodal agency for implementing the scheme and overseeing its execution across the semiconductor value chain.

The notification follows the government’s earlier decision to approve the ₹1,27,500 crore programme. The framework is designed to extend support beyond chip fabrication and assembly into design, advanced packaging, equipment, materials, research and talent.

Why is semiconductor value chain important?

The scheme’s focus extends across the complete semiconductor ecosystem rather than concentrating solely on fabrication. By supporting chip design, fabs, packaging, equipment, materials and R&D, Semicon 2.0 seeks to strengthen domestic capabilities across multiple stages of semiconductor development and manufacturing.

The government has also linked the programme to the development and deployment of technologies for national strategic and critical infrastructure. Its focus on sovereign semiconductor technologies includes the development of local IP cores, chips, SoCs and modules.

Conclusion: What does this mean for investors?

Semicon 2.0 marks a broader expansion of government support for India’s semiconductor ecosystem, with fiscal incentives covering six major segments of the value chain. The key indicators to monitor will be project applications, investment commitments, manufacturing and production progress, and the development of domestic semiconductor design, packaging, equipment, materials and R&D capabilities.