By Jennifer Read, EMSNOW Editor
India’s five-year experiment in courting the global chip industry has entered a new, more ambitious phase. In mid-July 2026, the Union Cabinet, chaired by Prime Minister Narendra Modi, approved “Semicon 2.0”, the second phase of the India Semiconductor Mission (ISM) with a fiscal outlay of ₹1,27,500 crore (roughly $14.8 billion). Announced alongside a companion ₹62,500 crore ($7.3 billion) Mobile Phone Manufacturing Scheme, the package signals that New Delhi’s semiconductor ambitions have shifted from “can India build a fab” to “can India own the whole value chain.”
For the EMS and electronics supply chain community, that shift matters. Semicon 1.0, launched in 2021, was primarily about proving India could attract fabrication and packaging investment at all. Semicon 2.0 is about depth: equipment, materials, chip design IP, advanced nodes, and a domestic workforce large enough to run all of it.
From Assembly Line to Design Studio
Electronics and IT Minister Ashwini Vaishnaw has framed Semicon 2.0 as the next logical step after ISM 1.0’s early wins. Under the first phase, the government committed roughly ₹76,000 crore and ultimately approved 12 semiconductor manufacturing projects worth more than ₹1.64 lakh crore ($19 billion-plus) across six states: Gujarat, Assam, Uttar Pradesh, Punjab, Odisha and Andhra Pradesh. That portfolio includes a silicon fab, a silicon carbide fab, a gallium nitride micro-LED display fab, and nine ATMP/OSAT (assembly, test, mark and package) facilities. Three companies, Micron, Kaynes, and CG Semi, have already begun commercial production, with another facility expected online later this year.
Semicon 2.0 builds on that base but deliberately widens the aperture. Rather than concentrating incentives on fabrication alone, the new scheme is organized around six strategic pillars: chip design and indigenous intellectual property; semiconductor manufacturing equipment and materials; wafer fabrication; ATMP/OSAT packaging capacity; research, development and innovation; and talent development. The idea, officials have said, is to move India from being a country that merely hosts foreign-designed chip production toward one that designs, verifies, and owns intellectual property for the chips it makes.
That design push already has a running start. More than 105 chip-design startups have received government support, and 315 universities are now training students on industry-standard electronic design automation (EDA) tools, with roughly 68,000 students having gone through that pipeline. Semicon 2.0 aims to double down on that ecosystem, backing next-generation chip architectures and system-level products rather than just contract design work.
Why OSAT and ATMP Matter Most for EMS
For companies in the EMS and electronics manufacturing supply base, the packaging and assembly pillar is arguably the most immediately relevant piece of Semicon 2.0. OSAT and ATMP facilities require significantly less capital than a wafer fab and can be stood up faster, which is why India’s early wins, including CG Semi’s Sanand facility, which Modi personally inaugurated in early July, among them, have concentrated there. Industry analysts expect this back-end segment to keep growing fastest under the new scheme, both because it’s more attainable for domestic and mid-tier global players and because it plugs India more quickly into existing global supply chains rather than requiring the country to leapfrog straight to leading-edge fabrication.
The government’s own roadmap reflects that sequencing. Officials have said India should be capable of designing and manufacturing chips for 70-75% of its domestic applications by 2029, with a longer-term push toward 3-nanometer and 2-nanometer process nodes and a stated ambition to rank among the world’s top semiconductor nations by 2035. A provision of ₹1,000 crore has been earmarked for ISM 2.0 specifically in the FY2026-27 budget to seed industry-led research and training centers, with the broader ₹1.27 lakh crore figure covering the program over its full multi-year run.
A Bigger Bet on Supply Chain Independence
The third pillar, semiconductor equipment, materials, specialty chemicals and industrial gases, targets a dependency that has quietly constrained India’s chip ambitions: nearly all of the specialized inputs a fab or packaging line needs, from photoresist to ultra-pure gases to capital equipment, are currently imported. Building a domestic supplier base for those inputs is less headline-grabbing than a new fab announcement, but it is arguably the harder and more strategically important problem, since it determines how exposed India’s semiconductor industry remains to global trade friction and export controls.
That concern isn’t abstract. Global chip supply chains have faced repeated disruption in recent years from geopolitical tensions, export restrictions, and concentrated manufacturing risk, the exact vulnerabilities that originally motivated countries including the U.S., the EU, Japan, and South Korea to pursue their own domestic semiconductor incentive programs. India’s Semicon 2.0 places the country firmly in that same global race for supply chain resilience, but with the added ambition of building sovereign design capability rather than simply hosting manufacturing capacity owned elsewhere.
Jobs and the Workforce Question
Industry estimates suggest Semicon 2.0 could generate 1.5 to 2 lakh (150,000-200,000) direct and indirect jobs over the next five years, according to analysis circulated by workforce consultancy NLB Services. That job creation is expected to span not just fab and packaging floor roles but embedded systems engineering, chip verification, AI-enabled manufacturing operations, and supply chain management, which is a broader occupational mix than the first phase generated. The sixth pillar, talent development, is explicitly designed to expand that pipeline, building on the existing university EDA-training network with more hands-on fab and cleanroom skill-building.
What to Watch Next
The next major public checkpoint for the program will be Semicon India 2026, the mission’s flagship industry event, scheduled for September 17-19, organized in partnership with SEMI. For EMS providers, OSAT operators, materials suppliers, and design houses watching India’s trajectory, that gathering is likely to be where the government fleshes out implementation details, including state-level incentive stacking, specific equipment and materials incentive rates, and further project approvals. These will determine how quickly Semicon 2.0’s ambitions translate into orders on the floor.
What’s clear already is that India is no longer treating semiconductors as a single-fab prestige project. Semicon 2.0 is a bet that the country can build an entire vertically integrated ecosystem, from raw materials to advanced packaging to chip IP, and in doing so, become a genuine node in the global electronics supply chain rather than just another assembly destination.
SOURCES:
https://www.comparos.in/news/india-approves-semicon-20-with-rs-127-lakh-crore-to-boost-chip-industry
https://utkarsh.com/current-affairs/national/science-technology-news/indias-cabinet-approves-127-lakh-crore-for-semicon-mission-20
https://www.tribuneindia.com/news/business/semicon-2-0-in-pipeline-to-boost-indias-chips-ecosystem
