Govt notifies ₹1,27,500-crore Semicon 2.0; spells out eligibility norms, sops for chip ecosystem

The government on Monday (August 31, 2026) notified the Semicon 2.0 scheme, setting in motion the ₹1,27,500-crore plan that seeks to deepen India’s semiconductor ambitions — from chip manufacturing to a full-stack ecosystem encompassing indigenous design and IP, equipment, materials, advanced packaging, R&D and talent development.

The move comes at a time when semiconductors have emerged as a critical strategic resource globally, with the AI boom driving unprecedented demand for advanced chips and memory. At the same time, growing concerns over supply-chain vulnerabilities and shifting geopolitics have pushed global players to expand semiconductor capacities and reduce dependence on concentrated production hubs.

The Semicon 2.0 scheme was approved by the Union Cabinet on July 15, 2026. The notification on Monday (August 31, 2026) spells out the contours of the new programme detailing how the ₹1,27,500-crore outlay will be implemented, and how incentives will be structured, and the eligibility criteria for various categories.

“Now the time is ripe to move to next stage to develop semiconducor ecosystem through Semicon 2.0. The objective of the scheme is self reliance and fostering a globally competitive industry,” IT Secretary S. Krishnan said at a briefing.

For design of chips for commercial sector, the eligibility will be startups, and companies owned by Indian citizens or OCI.

For startups, financial support will be in the form of grant and equity co-investment, and for companies it would be in the form of royalty financing or equity co-investment.

When it comes to setting up more fabs, the new scheme will provide 40% fiscal support for silicon fabs and 35% for compound, display (LCD, OLED, micro LED), and other specialised fabs.

For strengthening ATMP/OSAT, (Assembly, Testing, Marking and Packaging/Outsourced Semiconductor Assembly and Test), it supports advanced and legacy packaging with an incentive of 35% of capex for advanced packaging and 25% of capex for conventional packaging.

Previously, under the first phase of the programme, the government had approved 12 semiconductor projects across six states, with three facilities — Micron’s ATMP plant, Kaynes Semicon and CG Semi OSAT facility — having commenced commercial production earlier this year.