India Approves 1.275 Trillion Rupee Semiconductor 2.0 Plan, Focus on Mature Nodes and Advanced Packaging as

In mid-July, the Indian government approved a 1.275 trillion Indian rupee (about $13 billion) incentive plan named "Semiconductor 2.0" (ISM 2.0). The plan moves from the tentative exploration of the 1.0 era to full ecosystem coverage, as India seeks to complete its transformation from a consumption powerhouse to a manufacturing and design hub during the window of global chip supply chain restructuring.

In May 2026, India's NITI Aayog released a roadmap titled "The Future of India's Semiconductor Industry", the core of which is to abandon the blind pursuit of cutting-edge nodes and instead focus on mature-node wafer fabrication, advanced packaging, system integration, and chip design. At the end of June, the Indian finance ministry proposed an additional 1.25 trillion rupees to advance the plan, and the cabinet formally approved it on July 15, bringing the final total to 1.275 trillion rupees. The scope of fiscal support has expanded from wafer fabrication and advanced packaging to include semiconductor materials, specialty chemicals, manufacturing equipment, chip design, and talent development.

Under the "Semiconductor 1.0" framework, the Indian government has approved 12 semiconductor manufacturing projects, attracting investment of 1.64 trillion rupees (about $17 billion). In the design sector, 24 projects have received fiscal support under the "Design Linked Incentive" scheme, with 105 companies receiving funding. India has established a certain level of international competitiveness in the back-end of chip design.

Global giants are entering the market. Intel has signed a strategic agreement with Tata Electronics, becoming its first major customer. Micron Technology has built an assembly and testing facility in Sanand, Gujarat, which began production in 2026. Intel, in partnership with US-based 3D Glass Solution, is investing about $3.3 billion in a glass substrate manufacturing plant in Odisha. Japan's Renesas Electronics has launched two 3-nanometer chip design centers in Noida and Bangalore. Texas Instruments has based its smallest microcontroller chip design team in Bangalore.

India's semiconductor demand is growing at an average annual rate of about 19%, but import dependency stands at 90% to 95%. The $13 billion government allocation is not competitive compared with the $52 billion in the US CHIPS Act, the approximately 43 billion euros in the European Chips Act, and the $16.3 billion Japan has provided to Rapidus. India still faces challenges in the stability of its water, electricity, and land supply, logistics efficiency, and administrative approval speed. Currently, most semiconductor projects in production in India are in assembly and testing, while wafer fabrication capacity is still under construction.