The government has notified the six pillars of Semicon 2.0, expanding support beyond the first programme’s startup-focused approach to include larger Indian companies and firms owned by Overseas Citizens of India (OCIs).
This follows the Union Cabinet’s approval of the scheme, with a total budget outlay of ₹1,27,500 crore last month.
One key change in Semicon 2.0 is expanding the design support pool. Under the first programme, support largely targeted startups and MSMEs. Semicon 2.0 will also cover larger Indian companies and OCI-owned companies that establish operations in India.
The government will offer startups and MSMEs grants and equity co-investment alongside deeptech funds. Larger companies can choose between royalty financing and equity co-investment. The government will also have exit options from these investments.
“This is an expanded version of the DLI 1.0 scheme,” MeitY Secretary S. Krishnan said during a media briefing. He said the wider eligibility aims to help Indian companies build semiconductor products and become long-term suppliers to manufacturers.
Another new element is broader support for the semiconductor equipment and materials supply chain. The government said the earlier scheme had limited coverage in this area. Semicon 2.0 will cover equipment, chemicals, gases and materials, with funding support expanded considerably.
The government will support around 65% of capital expenditure for machines and materials. Its own contribution will account for 30% of capex on a pari-passu (ranked equally) basis. The programme also aims to build domestic suppliers for components used by larger semiconductor equipment manufacturers.
Semiconductor manufacturing units can require between 150–500 types of materials, depending on their manufacturing process. The government will support domestic production of high-purity materials for both Indian consumption and exports.
The fab incentive structure has also changed. Support for semiconductor fabs has been reduced from 50% of project cost under Semicon 1.0 to 40% under Semicon 2.0.
“The capex support is at a particular level which is globally competitive,” Krishnan said, reasoning that companies now also consider India’s talent, policy certainty, and ease of working.
The programme will support logic and memory fabs, as well as display and compound semiconductor facilities. Display fabs will receive 35% capex support, while advanced packaging projects will receive 35%. Regular ATMP and OSAT projects will receive 25%.
The government is also moving the technology target beyond the 28-nanometre level pursued under Semicon 1.0. It plans to develop an R&D pathway towards 7 nm to 3 nm technologies, alongside work on silicon photonics, MicroLED, and OLED technologies.
The country’s legacy SCL facility in Mohali currently operates at around 180 nm with an 8-inch wafer fab line. Meanwhile, the new Dholera Tata-PSMC fab is still under construction.
For chip design, the government plans to develop basic chips across six categories: compute, memory, radio frequency, power, networking, and sensors. An expert committee led by the principal scientific adviser and national security adviser will identify the priority chips.
The government expects Indian companies to work with multinational companies, academia, and startups on these designs. It may use established platforms such as Arm and IBM Power, alongside open-source platforms including RISC-V, to speed up development while retaining Indian intellectual property.
The sixth pillar targets 1 lakh design engineers over five years. The government will also fund manufacturing-related training, with support for training facilities extending up to 75% of their cost.
The India Electronics and Semiconductor Association (IESA) said the programme could catalyse more than ₹5 lakh crore in cumulative private and industry investment over the next five to seven years.
The government, however, did not provide a target for total investment under Semicon 2.0. Krishnan said investments would be disclosed as individual projects receive approval rather than being estimated in advance.
The new programme shifts the emphasis from establishing initial semiconductor facilities to building suppliers, design companies, advanced packaging capabilities, R&D capacity, and manufacturing talent around them. As Krishnan put it, the aim is for the ecosystem to develop roots that can sustain India’s semiconductor industry over the next 20–30 years.
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