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Why India Semiconductor Mission 2.0 might be extended to 12-years
20 May 2026

The Indian government is mulling an extension of the second phase of the India Semiconductor Mission (ISM) to up to 12 years, senior officials have told Business Standard.

The proposed change would be a major shift from the current five-year period, and is aimed at bolstering firms supplying raw materials and components to semiconductor fabrication and packaging units.

Domestic suppliers need longer support to compete globally
Support strategy

The extended timeline is expected to help domestic suppliers scale their operations and meet global standards set by semiconductor manufacturers.

An official told Business Standard, "Our aim is to develop as many domestic MSMEs (micro, small and medium enterprises) as possible into suppliers for the world's largest semiconductor companies."

The official added that these firms need guidance and support over a longer period to compete on quality and scale.

Next phase to focus on chip design ecosystem
Financial emphasis

The second phase of the ISM is expected to have an outlay of nearly ₹1.5 lakh crore and could focus more on financial and non-financial support for composite semiconductor units.

This includes manufacturers of gases, ingots, as well as other raw materials used in chip fabrication and packaging.

The next phase might also prioritize strengthening India's chip design ecosystem, especially for firms that retain intellectual property rights within the country.

Incentive support for chip fabrication, packaging projects to be reduced
Incentive adjustment

The Centre is likely to reduce the overall incentive support for chip fabrication, outsourced semiconductor assembly and testing (OSAT), and assembly, testing, marking and packaging (ATMP) projects to 30% from a flat 50% offered under the first phase of ISM.

The revised framework will cover both traditional and advanced semiconductor packaging technologies.

Two semiconductor projects cleared recently
Project approvals

Under ISM 1.0, the government has approved 12 chip manufacturing and packaging projects with a total investment of ₹1.64 lakh crore.

The focus now is on completing the ecosystem with raw material suppliers and improving design capabilities, which will require an increased financial outlay.

Recently, two more semiconductor projects were cleared under the first phase of ISM: Crystal Matrix Limited's Gallium Nitride semiconductor wafer manufacturing unit and Suchi Semicon Limited's lead-frame and wire-bond semiconductor chip packaging facility.