India's ISM 2.0 Set for May Launch With Up to ₹1.2 Lakh Crore Outlay

NEW DELHI — India is preparing to launch an expanded semiconductor initiative — ISM 2.0 — likely by May, with a proposed outlay of between ₹1 lakh crore and ₹1.2 lakh crore, according to an NDTV Profit report.

Inter-ministerial consultations are currently underway, with the Ministry of Electronics and Information Technology (MeitY) awaiting final clearance from the Finance Ministry. The proposed allocation marks a significant step up from the ₹76,000 crore earmarked for the first phase of the India Semiconductor Mission.

A Broader Scope This Time Around

Where the first phase focused primarily on chip fabrication and design, ISM 2.0 is set to widen its remit considerably.

The expanded programme will extend support to semiconductor equipment, raw materials, and other critical inputs. It will also focus on building full-stack intellectual property and strengthening supply chain resilience — a direct response to the disruptions that global chip shortages and geopolitical tensions have exposed in recent years.

Ancillary players — including gas suppliers, specialty chemical manufacturers, and MSMEs — are expected to play a more prominent role under the revamped framework.

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Design-Linked Incentives Get an Upgrade

A major feature of ISM 2.0 is a redesigned Design-Linked Incentive scheme — DLI 2.0 — which is expected to allow foreign firms to partner with Indian companies for semiconductor research and development within the country.

The initiative aims to accelerate domestic innovation and support the growth of up to 50 fabless semiconductor design firms in the coming years.

Phase One: 10 Projects, Six States

The first phase of the mission has already approved 10 semiconductor projects worth approximately ₹1.6 lakh crore across six states, covering fabrication, assembly, testing, and packaging facilities.

Finance Minister Nirmala Sitharaman announced ISM 2.0 in the Union Budget 2026–27, noting that investment commitments under the mission had already reached double the original target. She indicated the outlay would be raised to ₹40,000 crore to build on that momentum — with the larger ₹1–1.2 lakh crore figure representing the fuller programme now being finalised through inter-ministerial consultations.

The 2030 and 2035 Targets

Officials say ISM 2.0 is aligned with India's long-term goal of reducing dependence on imported chips.

By 2030, India is projected to meet nearly 75 per cent of its domestic semiconductor demand — a market MeitY Secretary S. Krishnan said at India's first Nano Electronics Roadshow in March 2025 could grow to $110 billion. The roadmap also targets advanced manufacturing at 3-nanometre and 2-nanometre nodes, with an ambition to place India among the world's top semiconductor nations by 2035.

The push comes as the US, European Union, Japan, and South Korea all accelerate efforts to localise chip production and reduce concentration risk in global supply chains.