Semicon 2.0 Expands India’s Chip Support Plan

Semicon 2.0 Expands India’s Semiconductor Support Framework

Why in the News ?

The Union Government has notified Semicon 2.0, reducing financial support for eligible silicon fabrication projects from 50% to 40% while expanding assistance for semiconductor packaging, display fabrication, equipment, materials, chip design, research and talent development.

Key Changes Under Semicon 2.0

• Under Semicon 1.0, launched in 2022, eligible silicon fabrication units could receive government support equivalent to 50% of project cost.
• Semicon 2.0 reduces this support to 40% of eligible capital expenditure.
• IT and Electronics Minister Ashwini Vaishnaw termed the revised assistance “globally competitive”, arguing that growing investor confidence in India justified a lower subsidy.
• The renewed scheme has a total financial outlay of ₹1.27 lakh crore.
• It is organised around six major pillars, covering chip design, semiconductor equipment and materials, expanded fabs, advanced packaging, R&D and talent development.
• Support for the semiconductor ecosystem has also been broadened beyond conventional fabrication facilities.

Boosting Innovation, Design and Domestic Capability

• Semicon 2.0 seeks to strengthen India’s semiconductor value chain rather than focusing exclusively on fabrication.
• Commercial chip-design startups and MSMEs can receive seed funding of up to ₹15 crore.
• Larger eligible companies may access royalty financing or equity co-investment, while equity support will also be available for smaller innovators.
• The expanded framework aims to promote domestic manufacturing, reduce dependence on imported semiconductor inputs and develop indigenous technological capabilities.
• Support for R&D and talent development is intended to address skill shortages and strengthen India’s semiconductor workforce.
• The government believes India has moved from being viewed cautiously by global semiconductor companies in 2022 to becoming a more credible destination for long-term semiconductor investment.
• The broader objective is to establish a resilient end-to-end semiconductor ecosystem, spanning design, manufacturing, packaging, equipment, materials and skilled manpower.