India’s second semiconductor incentive scheme could unlock ₹5-7 lakh crore of fresh investment in the coming years, according to Ashok Chandak, president of the India Electronics and Semiconductor Association (IESA).
The government had already cleared a ₹1.27 lakh crore outlay for the scheme, known as ISM 2.0, when the Union Cabinet approved it earlier this year. This week’s notification spells out exactly how that money will be split across the industry — from chip fabrication plants, or “fabs,” to chip design, packaging, materials, equipment, gases and chemicals, covering ten segments in total.
He said, “Based on the current pipeline and the broader scope of 2.0, there is a potential of ₹5-7 lakh crore of additional investment over next few years across the six verticals, those have been specified as a fabs, OSAT, equipment, material, design, R&D, talent, etc.”
“This strengthens India’s semiconductor flywheel,” he said, arguing that India is moving from being seen as a credible chip destination to being seen as a capable one — and, eventually, a global leader.
He pointed to the speed of the rollout as a signal in itself. The government moved from Cabinet approval to a full notification in a matter of months, which Chandak said matters to an industry that typically plans on 15-to-30-year horizons.Two specific additions in the notification stood out to him. One is a new push to develop chips using 7-nanometre to 3-nanometre technology — smaller, more advanced circuitry used in cutting-edge devices — through dedicated research funding. He called it an ambitious but necessary step for India’s long-term chip ambitions.
The other is support for silicon photonics, a technology that moves data using light instead of electricity, which will be needed to power data centres and AI hardware.
The scheme also now allows Overseas Citizens of India (OCIs) and larger companies to enter the fabless chip design business, something the industry had been asking for.
Pankaj Mohindroo, chairman of the India Cellular and Electronics Association (ICEA), said the lower fab subsidy is not a sign of reduced ambition but of India’s growing credibility with global chipmakers, who were sceptical of the country in earlier attempts to build the industry.Two specific additions in the notification stood out to him. One is a new push to develop chips using 7-nanometre to 3-nanometre technology — smaller, more advanced circuitry used in cutting-edge devices — through dedicated research funding. He called it an ambitious but necessary step for India’s long-term chip ambitions.
The other is support for silicon photonics, a technology that moves data using light instead of electricity, which will be needed to power data centres and AI hardware.
The scheme also now allows Overseas Citizens of India (OCIs) and larger companies to enter the fabless chip design business, something the industry had been asking for.
Pankaj Mohindroo, chairman of the India Cellular and Electronics Association (ICEA), said the lower fab subsidy is not a sign of reduced ambition but of India’s growing credibility with global chipmakers, who were sceptical of the country in earlier attempts to build the industry.
