India Plans Massive Expansion Of Semiconductor Incentives
India is preparing a major expansion of its semiconductor incentive programme as the government considers nearly doubling direct financial support for the sector to around $20 billion. The proposed increase could position India alongside leading Asian semiconductor hubs such as South Korea, Japan, Malaysia, Vietnam and Singapore in terms of financial incentives for chip manufacturing.
The move highlights India’s growing ambition to become a global semiconductor manufacturing destination amid rising geopolitical tensions and increasing global demand for supply chain diversification.
Government Exhausts Most Funds Under Initial ISM Scheme
The government has already utilised most of the funds allocated under the initial $10 billion India Semiconductor Mission (ISM), which provides support of up to 50% of the upfront project cost for semiconductor manufacturing facilities.
The scheme has already approved 14 semiconductor projects across fabrication, assembly and testing segments. Key projects include Tata Electronics’ semiconductor fabrication plant along with multiple OSAT and ATMP units focused on semiconductor packaging and testing infrastructure.
The government has also supported compound semiconductor fabrication and assembly projects for mini and micro LED display manufacturing.
ISM 2.0 Signals Long-Term Semiconductor Ambitions
In the latest Union Budget, the government announced ISM 2.0 and allocated a provisional ₹1,000 crore for FY27 while the revamped semiconductor incentive framework is being finalised.
Industry experts believe the expanded programme could significantly strengthen India’s position in the global electronics manufacturing ecosystem. Countries worldwide are aggressively increasing semiconductor subsidies as chips become strategically important across artificial intelligence, automotive, defence and consumer electronics industries.
India’s larger incentive push is also expected to attract global chipmakers looking for alternative manufacturing destinations beyond China and Taiwan.
If implemented at scale, the proposed $20 billion support package could become one of India’s biggest industrial policy initiatives aimed at building a self-reliant semiconductor supply chain and positioning the country as a competitive global technology manufacturing hub.
