India Launches Semiconductor Mission 2.0 With $120 Mn Allocation in FY27, Focusing Domestic Chip Equipment, Materials, IP, and Workforce Training

India has officially launched the Semiconductor Mission 2.0 as part of the Union Budget 2026, with a ₹1,000 crore allocation for FY27. The new phase focuses on building domestic capacity in semiconductor equipment, materials, and full-stack Indian intellectual property (IP), while strengthening supply chains and expanding industry-led research and training centres.

Key Highlights of India Semiconductor Mission (ISM) 2.0

• Launch Date: Announced on February 1, 2026 during the Union Budget speech by Finance Minister Nirmala Sitharaman.
• Budget Allocation: ₹1,000 crore for FY27 to support the initiative.
• Focus Areas:
  • Domestic production of semiconductor equipment and materials.
  • Development of full-stack Indian IP for chip design.
  • Strengthening supply chains to reduce import dependency.
  • Establishing industry-led research and training centres to build a skilled workforce.

Comparison: ISM 1.0 vs ISM 2.0

Feature	ISM 1.0 (2021–2025)	ISM 2.0 (2026 onwards)
Primary Goal	Attract global fabs, expand sector capabilities	Build domestic ecosystem for equipment, materials, and IP
Funding Focus	Incentives for fab units, packaging, design startups	₹1,000 crore for R&D, training, supply chain resilience
Workforce Development	Initial skilling programs	Expanded industry-led training centres
Strategic Emphasis	Infrastructure creation	Self-reliance in semiconductor value chain

Strategic Importance

• Global Positioning: India aims to become a semiconductor powerhouse, reducing reliance on imports from Taiwan, South Korea, and China.
• Economic Impact: Strengthening supply chains will support electronics, automotive, telecom, and defense industries.
• Talent Development: Training centres will help create a skilled workforce, crucial for sustaining long-term growth.
• Innovation Push: By focusing on Indian IP creation, ISM 2.0 seeks to establish India as not just a manufacturing hub but also a technology innovator.

Risks & Challenges

• Capital Intensity: Semiconductor manufacturing requires billions in investment; ₹1,000 crore is a start but may need scaling.
• Global Competition: India must compete with established hubs like Taiwan and South Korea.
• Supply Chain Vulnerabilities: Raw material and rare earth dependencies could pose risks.
• Execution: Success depends on effective collaboration between government, academia, and industry.

In short, ISM 2.0 marks India’s pivot from attracting fabs to building a self-reliant semiconductor ecosystem, with emphasis on equipment, IP, and workforce development.