India has taken a major step forward in its semiconductor policy with Semicon 2.0, the second phase of its national program to build a homegrown chip industry. In July, the government approved a budget of 1.275 trillion rupees (about €13 billion) to widen the effort from fabs and packaging into design, Indian intellectual property, materials, manufacturing equipment, and research. The country already has 12 approved industrial projects and three facilities producing chips.
India’s semiconductor push in 30 seconds
- India has approved 1.275 trillion rupees for Semicon 2.0, around €13 billion at current exchange rates.
- The first phase had a budget of 760 billion rupees and focused mainly on attracting fabs and packaging plants.
- The country now has 12 approved manufacturing projects across six states, and three are already producing chips.
- Tata Electronics is building India’s first major silicon wafer fab in Gujarat.
- Semicon 2.0 widens support to design, intellectual property, materials, equipment, research, and training.
The figure needs a caveat: the roughly €13 billion doesn’t correspond to a single factory or to private investment already committed. It’s the public budget approved for Semicon 2.0, meant to support different parts of the value chain over the coming years. The earlier program, Semicon India, has already mobilized much larger private commitments across individual projects.
Nor is the goal to turn India into an immediate alternative to Taiwan or South Korea at the most advanced manufacturing nodes. The strategy starts by building an industrial chain that barely existed in the country until a few years ago, leaning on a strength India has held for a long time: a large base of engineers focused on semiconductor design.
From designing chips for others to manufacturing them in India too
India’s government launched its first major semiconductor initiative in late 2021, with a budget of 760 billion rupees.
That first phase offered subsidies that could cover up to 50% of the cost of certain manufacturing projects, compound semiconductors, Assembly, Testing, Marking and Packaging (ATMP), Outsourced Semiconductor Assembly and Test (OSAT), and design.
Four years later, the industrial map looks different.
By June 2026, the government counted 12 approved manufacturing projects, with a combined investment portfolio close to 1.64 trillion rupees. The mix included one silicon semiconductor fab, two compound-semiconductor facilities, and nine packaging plants.
Three facilities were already producing chips as of July, according to the Ministry of Electronics and Information Technology (MeitY).
One of the most significant projects belongs to Tata Electronics in Dholera, Gujarat.
The company is building a fab valued at roughly 915.26 billion rupees together with Taiwan’s Powerchip Semiconductor Manufacturing Corporation (PSMC). Its planned capacity is around 50,000 wafers a month.
The government notified the special economic zone that will host the project in April. It will span 66.166 hectares, and authorities estimate it could generate around 21,000 direct and indirect jobs.
India also has another major Tata Electronics project in Assam dedicated to semiconductor packaging. Its planned investment stands at 271.2 billion rupees, with a projected capacity of 48 million units a day.
Micron is another notable name. Its facility in Gujarat is dedicated to assembling and testing DRAM and NAND products, with an announced investment of 225.16 billion rupees and capacity of around 14 million units a week.
The list also includes projects from CG Power, Kaynes Technology, SiCSem, Continental Device India, and other companies.
| Project | Planned investment | Activity |
|---|---|---|
| Tata Electronics, Gujarat | ₹915.26 billion | Wafer fabrication |
| Tata Electronics, Assam | ₹271.2 billion | Packaging |
| Micron, Gujarat | ₹225.16 billion | DRAM/NAND assembly and testing |
| CG Power, Gujarat | ₹75.84 billion | Assembly and testing |
| Kaynes, Gujarat | ₹33.07 billion | Chip packaging |
| SiCSem, Odisha | ₹20.66 billion | SiC and packaging |
These projects aren’t all at the same stage of execution, and they don’t represent equivalent technological capabilities. A packaging plant shouldn’t be confused with a fab that produces circuits on silicon wafers, either.
Building a more complete chain is precisely one of the goals of the second phase.
Semicon 2.0 widens the goal beyond building fabs
India’s Union Cabinet approved Semicon 2.0 on July 15, 2026, with a total budget of 1.275 trillion rupees.
The first mission proved that incentives could attract industrial projects. The new one aims to cover the pieces still missing around those fabs.
The program is structured around six pillars, and one of the first is chip design.
India already has a sizable semiconductor engineering industry, but much of that talent works for foreign multinationals. Semicon 2.0 aims to increase the number of companies capable of developing their own intellectual property and turning local designs into commercial products.
The government says 105 startups are developing chips within the new ecosystem. Before Semicon 2.0 was approved, the Design Linked Incentive (DLI) initiative had already selected 24 design projects for financial support.
As of June, 105 companies had also gained access to advanced Electronic Design Automation (EDA) tools, and 23 tape-outs had been completed — the moment a finished design is sent to a foundry to manufacture its first wafers.
Semicon 2.0 aims to push further in that direction by developing full-stack Indian intellectual property, rather than limiting the country’s role to providing engineering services.
The second major front is equipment and materials.
A chip fab depends on lithography, deposition, etching, metrology, and testing machinery, as well as wafers, gases, chemicals, and numerous specialized materials. Building a fab within the country doesn’t remove foreign dependence if practically all of those inputs still come from abroad.
That’s why the 2026 budget already framed ISM 2.0 around three priorities: manufacturing equipment and materials, developing Indian intellectual property, and strengthening supply chains.
Industry-led research and training centers are also planned to increase the availability of specialized staff.
India still has the hardest part ahead
The volume of investment could place India in a different position within the global industry, but manufacturing semiconductors at scale poses difficulties that financial incentives don’t solve automatically.
Fabs need stable electricity, large quantities of ultrapure water, specialized logistics chains, and a network of suppliers able to meet extremely strict manufacturing requirements.
They also take years to reach competitive yields.
India also starts at a disadvantage compared with Taiwan, South Korea, Japan, the United States, and China, countries that have spent decades building their supply chains.
That’s why it matters that Semicon 2.0 isn’t focused solely on announcing new fabs.
The government has even floated a path toward more advanced processes. Official documentation published in early 2026 pointed to a future roadmap for developing capabilities related to 3nm and 2nm nodes, though that should be understood as a long-term industrial goal and not as production capacity currently available.
The domestic market could work in the country’s favor.
India has a huge consumer electronics industry and is one of the world’s leading mobile phone manufacturing hubs. According to official data, electronics production grew from about 1.9 trillion rupees in fiscal year 2014-15 to around 12 trillion rupees in 2024-25. Electronics exports rose over the same period from 380 billion to about 3.3 trillion rupees.
That growth generates domestic demand for chips used in automotive, telecommunications, industrial electronics, appliances, mobile devices, energy systems, and data centers.
The government has set a target for India’s semiconductor market to reach $200 billion by 2035. That’s a goal, not a guaranteed forecast, and it will depend both on demand growth and on projects currently under construction reaching competitive commercial output.
The jump from Semicon 1.0 to Semicon 2.0 shows, in any case, a shift in approach. India started by offering incentives to get foreign and domestic companies to build facilities. Now it’s also trying to develop what surrounds those fabs: design, intellectual property, suppliers, materials, equipment, and skilled workers.
That’s where much of the outcome of the €13 billion push will be decided. Having fabs on Indian soil still isn’t the same as having a complete Indian semiconductor industry. Semicon 2.0 is trying to close precisely that gap.
Frequently asked questions
How much money is India putting into Semicon 2.0?
The government approved a budget of 1.275 trillion rupees, roughly €13 billion. The figure is public funding to develop the ecosystem, not a single industrial investment.
How many semiconductor fabs has India approved?
As of mid-2026, the government counted 12 manufacturing and packaging projects across six states, with three facilities already producing chips.
Is India already manufacturing advanced 2nm or 3nm chips?
No. The government has mentioned a roadmap toward 3nm and 2nm nodes as part of its long-term goals, but India doesn’t currently have domestic commercial production at those processes.
What’s the largest chip fab being built in India?
One of the flagship projects is the Tata Electronics and PSMC fab in Dholera, Gujarat, with a planned investment of ₹915.26 billion and projected capacity of about 50,000 wafers a month.