As India sharpens its focus on building a strong domestic semiconductor ecosystem, the government is moving closer to approving the next phase of its flagship chip incentive programme.
The India Semiconductor Mission, the government’s fiscal support scheme for chip development and manufacturing, is expected to receive Cabinet approval by the end of March 2026. Officials from the Ministry of Electronics and IT have confirmed that preparations are underway for ISM 2.0, which is designed as an extension of the existing incentive framework to further promote chip design, fabrication and allied manufacturing in the country.
ISM 2.0 builds on the progress of Phase 1, which was approved in 2021 with a budget allocation of ₹76,000 crore. Under the first phase, a total of 10 semiconductor projects have been approved. These include semiconductor fabs, display fabs, compound semiconductor units, and Assembly Testing Marking and Packaging facilities. Together, these projects represent an estimated investment of ₹1.6 lakh crore spread across 6 states.
According to officials, the proposed budget for ISM 2.0 is likely to be higher than the ₹76,000 crore allocated for the initial phase. The overall structure of the new scheme has already been finalised within the Ministry of Electronics and IT. The proposal will now move to the Finance Ministry for approval of funding arrangements and projected expenditures.
Inter-ministry consultations are expected to begin shortly to secure the necessary clearances. Once these discussions are completed, the government is likely to submit a Cabinet note seeking final approval for ISM 2.0.
The expanded mission forms a key part of India’s long-term strategy to strengthen its semiconductor supply chain, attract global manufacturers, and reduce dependence on chip imports. With rising demand for electronics, electric vehicles and advanced computing, policymakers see semiconductor self-reliance as critical to both economic growth and national security.
If approved on schedule, ISM 2.0 is expected to accelerate investment momentum and deepen India’s role in the global semiconductor value chain.
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