Govt chips in with Rs 40,000-cr outlay for semiconductor industry
India Semiconductor Mission 2.0 to focus on producing equipment, designing Indian IP & fortifying supply chains
Riding the success of the ongoing semi-conductor making projects, Finance Minister Nirmala Sitharaman, in her Budget speech, today announced the next-phase of ‘chip-making’ strategy.
India Semiconductor Mission (ISM) 2.0 will produce equipment and materials, design full stack Indian IP and fortify supply chains, said the Finance Minister.
“We will also focus on industry-led research and training centres to develop technology and skilled workforce,” Sitharaman said, adding the ISM 2.0 would build on the progress made under the first phase of the mission, which focused on establishing chip fabrication and assembly capacity.
The Ministry of Electronics and Information Technology (MeitY) had been allocated Rs 21,633 crore with focus on AI and semiconductors. “On the ‘Electronics Components Manufacturing Scheme’, the minister said it was launched in April 2025 with an outlay of Rs 22,919 crore and has already attracted investment commitments twice the initial target. ‘We propose to increase the outlay to Rs 40,000 crore to capitalise on this momentum,’ she added.”
In the Budget, the largest increase is directed toward MeitY-specific schemes, particularly those focused on semiconductors, signalling a strategic shift toward emerging technologies such as artificial intelligence, semiconductor manufacturing, and electronics components.
According to Budget documents, central sector schemes and projects account for Rs 17,768 crore of the total allocation, with significant increase seen in semiconductor manufacturing, the IndiaAI Mission and electronics components manufacturing.
Key technology programmes have higher allocations, with the ‘modified semiconductor and display manufacturing programme’ receiving Rs 8,000 crore, up from Rs 4,300 crore this fiscal, while the IndiaAI Mission was allotted Rs 1,000 crore.
The Economic Survey, released on January 29, mentioned the need for assured supply of semi-conductors, saying India risked remaining a ‘service provider’ to the developed world unless it can ‘ignite’ the engine of innovation. It flagged risk of economic activity being hampered in the absence of a steady supply of semiconductors.
Meanwhile, MeitY Minister Ashwini Vaishnaw said semiconductors — which will power the growth of AI — are poised to significantly boost the economy. He added that data centres would serve as the backbone of the AI-led fifth industrial revolution.
“India will be one of the largest data centre hubs following today’s policy announcement. Data centres will have a 20-year tax holiday,” Vaishnaw said.
The electronics manufacturing sector employed about 25 lakh people while electronics manufacturing had grown six times, and electronics exports had grown eight times, said Vaishnaw as he lauded the vision of Prime Minister Narendra Modi. He also claimed that the creator economy would provide 20 lakh new employment opportunities and 15,000 high schools and 500 colleges would be connected through the creator labs.
He adds, “IT-based economy, IT services, electronics manufacturing, orange economy and the physical infrastructure of high-speed corridors as well as freight corridors will receive a major boost from this Budget,” he added.
