India May Extend Semiconductor Mission 2.0 with Higher Outlay, Longer Tenure

The Centre is considering extending the tenure of the second phase of the India Semiconductor Mission (ISM) from 5 years to as long as 12 years, according to Business Sandard report citing government officials.  

The proposal is being discussed as the semiconductor sector requires longer timelines for investment, production, and supplier development. 

Focus on Supply Chain Development 

The second phase of ISM is expected to have an outlay of nearly ₹1.5 trillion. Unlike the first phase, which focused on fabrication and packaging plants, the next phase is likely to give more attention to companies producing gases, ingots, and other materials used in semiconductor manufacturing. 

The government is to support domestic chip design firms, particularly companies that keep intellectual property rights in India 

Changes in Incentive Structure 

The incentive structure under ISM 2.0 may also be revised. Financial support for semiconductor fabrication, outsourced semiconductor assembly and testing (OSAT), and assembly, testing, marking and packaging (ATMP) units could be reduced to 30% from the 50% incentive offered under the first phase. 

The India Semiconductor Mission was approved by the Union Cabinet in December 2021 with a total outlay of ₹76,000 crore. Since then, the government has approved 12 semiconductor manufacturing and packaging projects involving investments of around ₹1.64 trillion. 

Recent Project Approvals 

The first project approved under the scheme was Micron Technology’s $2.75 billion ATMP facility in Sanand, Gujarat, in June 2023. Later, the Centre cleared the Tata Group and Taiwan-based Powerchip Semiconductor Manufacturing Corporation’s fabrication project, involving investments of around ₹91,000 crore. 

Earlier this month, the government approved two more semiconductor projects worth nearly ₹4,000 crore. Crystal Matrix Limited will manufacture Gallium Nitride semiconductor wafers used in LED display modules.  

Suchi Semicon Limited, which already operates an OSAT unit in Surat, received approval for semiconductor chip packaging used in appliances including refrigerators and air conditioners. 

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Conclusion  

With fabrication and packaging projects already approved under the first phase, the next stage of the semiconductor mission may focus on expanding domestic manufacturing capacity across supporting industries. 

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