Modi government working on next phase of India Semiconductor Mission
What's the story
The Indian government is expediting the approval process for the second phase of its semiconductor initiative, India Semiconductor Mission (ISM 2.0). A cabinet note on this is likely to be tabled by the end of October, according to The Economic Times. The new scheme is expected to expand support across the entire semiconductor value chain, including compound semiconductor fabs, advanced packaging units, display fabs, capital equipment manufacturing facilities, and suppliers of specialized chemicals and gases.
Financial boost
Industry urges government to double ISM 2.0 outlay
The semiconductor industry has urged the government to double its financial outlay for ISM 2.0 to $20 billion (about ₹1.76 lakh crore). This is to attract more projects and investments in the sector. Prime Minister Narendra Modi recently held a roundtable with global semiconductor industry executives at Semicon 2025, where they provided feedback on ongoing projects and suggestions for future initiatives.
Incentive structure
Different incentives for each category
The government is likely to offer different incentives under ISM 2.0 for each category of the semiconductor value chain. The highest subsidies will be given to those setting up silicon wafer fabrication units, while compound semiconductor units will get lesser subsidies as they are less capital-intensive. A part of the outlay will also be reserved for fabless semiconductor designs and MSMEs (micro, small, and medium enterprises).
Supply chain
Manufacturers working on local supply chain setup
Under ISM 1.0, approved projects are now looking to set up a local supply chain for materials, chemicals, and gasses. This is part of their strategy to compete in global markets. An executive from a semiconductor manufacturer told The Economic Times that they are trying to bring overseas suppliers of necessary materials like chemicals and gases to India, to have local suppliers who can provide quick support.
Future projects
Dixon Technologies plans display fabrication unit
Dixon Technologies, a contract manufacturer, has plans to set up a display fabrication unit for LED panels. The project is still in its early stages with no technology partner identified yet. The fab will require an investment of over $3 billion, which could be subsidized under ISM 2.0 if approved by the government.