Cabinet Approves ₹1.27 Lakh Crore ISM 2.0 To Expand India’s Semiconductor Value Chain

The Union Cabinet on July 15 approved the second phase of the India Semiconductor Mission (ISM 2.0) with an outlay of ₹1.27 lakh crore, raising the scale of government support from the ₹76,000 crore allocated under the first phase.

ISM 2.0 will focus on building a wider semiconductor ecosystem in India, with the government seeking to develop domestic capabilities in semiconductor equipment, speciality chemicals, critical raw materials and advanced packaging technologies. The new phase is intended to reduce dependence on imported inputs and strengthen the supply chain supporting electronics manufacturing.

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

The move expands the scope of the semiconductor programme beyond attracting fabrication projects and focuses on developing supporting industries across the value chain.

Government Targets Broader Semiconductor Capabilities

The second phase will also place greater emphasis on semiconductor design, startups, testing and talent development. Electronics and IT minister Ashwini Vaishnaw has said the next stage of the mission will focus on companies capable of taking chip designs and products to market, alongside the development of equipment, materials and testing capabilities.

The government has also indicated that India aims to gradually develop capabilities in advanced semiconductor nodes, including 2-nanometre technology.

Prime Minister Narendra Modi, speaking on March 31, said India’s objective was to build a complete semiconductor ecosystem and create stronger partnerships across domestic and global supply chains. He said India’s semiconductor market is expected to grow from around $50 billion to more than $100 billion by the end of the decade.

ISM 2.0 To Support Supply Chain Development

Finance minister Nirmala Sitharaman had announced the second phase in the Union Budget for FY27, identifying equipment, materials, full-stack design capabilities and supply chain resilience as key priorities.

The expanded programme comes as India seeks to increase its role in the global semiconductor industry. The government is looking to develop capabilities across several stages of production rather than relying primarily on imported equipment and materials.

For companies tracking semiconductor-related stocks, the ISM 2.0 announcement could bring greater attention to businesses operating across electronics manufacturing, chip design, packaging and related industrial segments. However, the impact on any individual stock price share price would depend on company-specific developments and announcements.

International Interest In India’s Semiconductor Plans

Companies from the U.S., Europe and Japan have shown interest in the second phase of the mission, according to reports. Ashok Chandak, president of the India Electronics and Semiconductor Association, said engagement with the U.S., Europe, Japan and Singapore was progressing through government discussions, industry partnerships and trade negotiations.

With the Cabinet now approving the ₹1.27 lakh crore framework, the next phase of India’s semiconductor policy will focus on translating investment support into a broader domestic manufacturing and technology ecosystem.