India approved a semiconductor incentive program, Semicon 2.0, with financial assistance of about US$13.3 billion (₹1.28 trillion) to boost domestic chip production and create a local semiconductor ecosystem, the Union Cabinet announced on July 15, 2026 [1, 2, 3, 4, 5, 6, 7].
Semicon 2.0 expands the earlier 2021 scheme, Semicon 1.0, which was worth roughly US$10 billion and helped launch at least 12 semiconductor manufacturing and design projects, with three entering commercial production [1, 3, 4, 5, 7]. The previous scheme offered support covering up to half the cost of setting up chip projects and attracted companies such as Micron Technology and Tata Group [1, 4, 5, 6, 7].
The new program targets chip design, fabrication, manufacturing equipment, materials, research and development, and talent creation to build a self-sufficient semiconductor supply chain in India, spanning chip design, manufacturing, packaging, and testing [1, 2, 3, 4, 5, 6, 7]. Five Indian semiconductor companies expected to benefit include Kaynes Technology India Ltd, CG Power and Industrial Solutions, MosChip Technologies, Dixon Technologies, and Tata Elxsi [7].
Alongside Semicon 2.0, the government also approved a ₹625 billion (around US$6.5 billion) Mobile Phone Manufacturing Scheme to promote local smartphone manufacturing with incentives based on sales and local sourcing [1, 2, 3, 7]. The scheme will run for five years offering incentives ranging from 2.25% to 5% on eligible sales plus an additional 1.5% for local component sourcing [2].
India currently accounts for 18% of global smartphone production, compared to China’s 63%, while Apple assembles about 25% of its iPhones in India, working with suppliers like Foxconn and Tata Group [1, 2]. IDC Associate Vice President Navkendar Singh said, "India has excelled at final assembly while remaining reliant on imported components" [2].
India aims to grow its chip market from US$38 billion in 2023 to US$45-50 billion by 2024-25, targeting US$100-110 billion by 2030 to become a global semiconductor and electronics manufacturing hub [4, 5, 6].
The government expects Semicon 2.0 to attract global semiconductor firms to establish manufacturing and R&D facilities in India, reducing import dependence amid geopolitical and supply chain challenges [1, 4, 5, 7].
