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Cabinet clears ₹1.9 lakh cr semiconductor push

The Union Cabinet has approved a ₹1.9 lakh crore incentive package to strengthen India’s semiconductor and mobile phone manufacturing ecosystem, marking a major step towards making the country a global electronics hub.

The package includes ₹1.27 lakh crore for Semicon 2.0 and ₹62,500 crore for a new Mobile Phone Manufacturing Scheme (MPMS). Together, the schemes are expected to attract fresh investments, expand domestic production, create jobs and increase exports.

Semicon 2.0 builds on the India Semiconductor Mission launched in 2021. The new programme focuses on developing the entire semiconductor value chain, including chip design, fabrication, packaging, materials, equipment, research and skilled workforce development. The government hopes this will reduce import dependence and strengthen India’s position in the global chip supply chain.

The Cabinet also approved the new mobile manufacturing scheme, which will replace the existing Production Linked Incentive (PLI) programme. The scheme will encourage companies to increase local value addition, source more components from India and boost exports.

According to the government, India has become the world’s second-largest mobile phone manufacturer by volume, with smartphones emerging as the country’s largest export category. Officials believe the new schemes will help sustain this growth and attract nearly ₹4 lakh crore in investments over the coming years.

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India plans $11 bn fund for domestic chip industry

The government is planning to launch a new fund worth about $11 billion (around ₹1 trillion) to strengthen the country’s semiconductor industry and encourage local chip manufacturing. The proposed fund is part of India’s long-term strategy to reduce reliance on imported semiconductors and build a strong domestic electronics ecosystem.

The initiative is expected to support companies involved in chip design, fabrication, packaging, and supply chain development. Officials familiar with the plan say the fund may be announced within the next few months, although final details are still being discussed.

India has been actively pushing to expand its semiconductor capabilities in recent years. In 2021, the government introduced a major incentive programme offering subsidies of up to 50% for companies setting up semiconductor and display manufacturing plants in the country. That policy helped attract investments from global firms and large Indian conglomerates.

Projects backed under the earlier scheme include semiconductor-related investments by companies such as Micron Technology and Tata Group. These projects are expected to play an important role in building India’s chip manufacturing base, which is still at an early stage compared with major global producers.

Semiconductors are essential components used in a wide range of products including smartphones, computers, cars, artificial intelligence systems, telecommunications equipment and consumer electronics. As global demand for chips continues to grow, many countries are investing heavily in domestic manufacturing to secure supply chains and reduce geopolitical risks.

India currently imports most of the semiconductors it uses, despite having a large electronics manufacturing sector and a strong pool of engineering talent. The government hopes the new funding initiative will encourage both domestic and international companies to set up more chip-related operations in the country.

Officials believe the additional financial support could help accelerate the development of a full semiconductor ecosystem in India, covering everything from research and design to manufacturing and advanced packaging.

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