The proposed budget for the next phase of the India Semiconductor Mission is expected to exceed ₹1 lakh crore, according to officials familiar with the discussions. The Ministry of Electronics and Information Technology has sought this amount from the government, and an announcement on the second phase is likely by the end of April. The proposal is currently undergoing inter ministerial consultations.
The first phase of the mission had a financial allocation of ₹76,000 crore and attracted investments worth around ₹1.6 lakh crore. The ₹1 lakh crore requested for the next phase would be in addition to the funds already allocated under the initial programme.
By December 2025, ten semiconductor projects had received approval under the first phase, with four expected to begin chip production this year across six states. These projects include silicon fabrication units, silicon carbide fabrication facilities, advanced and memory packaging units, and specialised assembly and testing infrastructure.
A senior official from the IT ministry said the second phase will involve fresh funding because the resources allocated in the first phase have already been committed to approved projects. The ₹76,000 crore originally allocated will be released gradually as the projects move forward.
ISM 2.0 is expected to focus more strongly on strengthening India’s semiconductor design ecosystem, developing essential equipment and materials used in chip manufacturing, and building end to end Indian intellectual property across the semiconductor value chain. The programme will also aim to secure supply chains and develop a long term roadmap that could eventually enable India to move toward advanced chip technologies such as three nanometre and two nanometre nodes.
At present, India’s semiconductor manufacturing capability is limited to 180 nanometre chips produced at the government run Semiconductor Laboratory Mohali in Mohali. These chips are mainly used in sectors such as defence, space and industrial electronics.
Several new projects under the government’s semiconductor incentive programme are aiming to manufacture more advanced 28 nanometre chips. One of the key projects is the fabrication plant being developed by Tata Electronics in partnership with Powerchip Semiconductor Manufacturing Corporation in Gujarat.
Globally, leading chip manufacturers such as Taiwan Semiconductor Manufacturing Company and Samsung Electronics are already producing chips using three nanometre technology, highlighting the technological gap India is attempting to close through initiatives like the India Semiconductor Mission.
The government also hopes to attract global semiconductor companies under ISM 2.0 as part of a broader plan to build Indian chip design firms capable of competing with global leaders such as Advanced Micro Devices and Qualcomm. This vision was recently outlined by Ashwini Vaishnaw.
In addition, the next phase of the mission will encourage industry led research and training centres to develop new technologies and build a skilled workforce for the semiconductor sector. The government also plans to support at least 50 fabless semiconductor companies by expanding the Design Linked Incentive scheme.
