The scheme is expected to attract investments of around ₹4 lakh crore and enable semiconductor production of about ₹2 lakh crore over the scheme period. It spans six key segments, including chip design by Indian firms, setting up units for capital equipment required for chip production, semiconductor fabs, chip assembly, packaging and testing, and more.
NEW DELHI: The Centre on Monday notified the Semicon 2.0 scheme with a ₹1.27 lakh crore outlay to strengthen the domestic semiconductor manufacturing ecosystem in the country and its supply chains.The scheme is expected to attract investments of around ₹4 lakh crore and enable semiconductor production of about ₹2 lakh crore over the scheme period. It spans six key segments, including chip design by Indian firms, setting up units for capital equipment required for chip production, semiconductor fabs, chip assembly, packaging and testing, and more.
The scheme will provide a Central government-driven fiscal support of 40% of eligible capital expenditure (capex) for silicon semiconductor wafer fabs, with a minimum investment threshold of ₹20,000 crore. Furthermore, it offers incentives for chip design, advanced packaging, semiconductor equipment and materials, research and development, and talent creation.Union Minister of Electronics and IT Ashwini Vaishnaw, at a media briefing in the national capital, said that nearly 10% of the global semiconductor industry’s market is expected to be in India in the coming years.
He added that the application window is open now.
“The government has decided to provide…sustained policy support to the semiconductor sector in India by notifying the Semicon 2.0 Scheme for the development of semiconductor design and manufacturing ecosystem in India,” the notification said.
“Semicon 2.0 provides fiscal support to various verticals across the complete value chain of the semiconductor industry, ranging from chip design, fabrication and packaging to various segments of the semiconductor ecosystem,” it added.The scheme aims to build resilient, trusted, and sovereign semiconductor technologies with a focus on design, development, and deployment of “target segment technologies for national strategic and critical infrastructure”, according to a report by news agency PTI.
It will target local development of semiconductor Intellectual Property (IP) cores, Chips, System-on-Chips (SoCs), and modules for electronic products, as may be identified from time to time based on national importance and strategic priorities.
“To achieve this, building blocks will be developed, including standard IPs for various types of compute, memory, RF, power, networking, sensors, etc.,” the notification said.The ambitious scheme offers 25-40% capex support for chip manufacturing and assembly plants for investments of ₹50 crore to ₹20,000 crore. It provides the highest incentive at up to 75% of project cost for research and development of advanced semiconductor technologies and a similar incentive for semiconductor talent development.
Eligible entities for the design incentive must be incorporated and headquartered in India, have a significant local operational and manpower presence, and should be Indian-owned and controlled, as per scheme guidelines.
Chip design project screening will be done by a high-level expert committee chaired by the Principal Scientific Adviser (PSA) and the National Security Adviser (NSA).
Intellectual property (IP) rights will be jointly owned by the applicant and the Centre for Development of Advanced Computing (C-DAC), while fiscal support will be disbursed based on RFP terms and conditions.
For commercial chip design, Semicon 2.0 supports India-headquartered companies owned or controlled by Indian citizens or OCIs, with IP and design files required to remain in India.For product design-linked incentives, startups and MSMEs can receive seed funding of up to ₹15 crore, or 50% of project cost, and equity co-investment (beyond ₹15 crore), while other eligible companies can access royalty financing or equity co-investment.
Separately, under the deployment-linked incentive, new IPs, chips and SoCs with no prior sales can receive a 9% reimbursement on net sales for five years, capped at ₹30 crore per application and ₹120 crore per company.
Compound semiconductor, photonics, sensor and discrete semiconductor fabs with minimum capital investment of Rs 500 crore will get 35 per cent support.
For display fabs, the scheme offers 35% support. However, investment thresholds vary by technology. OLED and LCD fabs require a minimum investment of ₹10,000 crore and revenue of ₹5,000 crore, while micro LED projects need investment of at least ₹1,500 crore and revenue of ₹600 crore.Semicon 2.0 offers 30% capex support across equipment, semiconductor-grade raw materials and testing facilities, with equipment manufacturing also eligible for 2-10% production-linked incentive (PLI).
Advanced packaging, including 2.5D/3D packaging, wafer-level chip-scale packaging, heterogeneous integration and advanced substrates, will receive fiscal support of 35% of eligible capex, while legacy packaging will get 25%.
Both require a minimum investment of ₹1,000 crore and revenue of ₹200 crore in any of the three preceding financial years, with applicants required to own or possess production-grade licensed technology.
Industry sees upto ₹5 lakh cr investmentIndia Electronics and Semiconductor Association (IESA) said it sees the potential for the programme to catalyse more than ₹5 lakh crore of cumulative private and industry investment over the next five to seven years, across fabs, ATMP/OSAT, equipment and materials, design, R&D and the wider supply chain.
“R&D focus on 7-3 nm pathway, Silicon Photonics, micro LEDs, compound semiconductors and support to OCI and large corporates in fabless sector and manufacturing-related skilling are notable differentiations,” said Ashok Chandak, president, IESA and SEMI India.
Pankaj Mohindroo, chairman of the India Cellular and Electronics Association (ICEA), said that states that move first will lock in a first-mover advantage by attracting the ecosystem as a whole: fabs, packaging, suppliers, design houses and talent and not a standalone plant. “Companies, investors, start-ups and states should move with speed to convert this framework into projects, products and globally relevant intellectual property.”Jaya Jagadish, senior vice president & country head (silicon design engineering), AMD India, said in a statement that ISM 2.0 will boost semiconductor sector talent.
“India also needs a clear design-to-commercialization pipeline that moves ideas from IP creation through prototyping to globally competitive products,” Jagadish said. “AMD’s experience in India shows what can be achieved when strong talent is matched with the right investment environment. ISM 2.0 can help establish this environment at scale.”
The scheme lays out a complete ecosystem approach, strengthening the entire value chain and marking an imperative step in India’s journey to build a self-reliant and globally competitive semiconductor industry, said Arjun Malhotra, co-founder of HCL and chairperson of the EPIC Foundation. He added that opening the scheme to companies owned by Overseas Citizens of India (OCIs) is a positive decision.
“The Semicon 2.0 scheme notification marks a decisive shift from building semiconductor capacity to creating a globally competitive semiconductor ecosystem in India,” said Paritosh Prajapati, CEO, GX Group.
