India Semiconductor Mission (ISM) 2.0 to Boost Chip Self-Reliance

Key Facts

• The India Semiconductor Mission (ISM) was established in 2021 as a nodal agency under MeitY to drive semiconductor and display ecosystem development in India.
• ISM 2.0 was announced in the Union Budget of 2026-27 with an initial allocation of ₹1,000 crore to promote upstream semiconductor ecosystem capabilities including equipment, materials, and advanced design.
• India aims to achieve 70-75% self-sufficiency in domestic semiconductor chip demand by 2029.
• The mission targets development of cutting-edge 3 nanometer (nm) and 2 nm semiconductor manufacturing technology nodes by 2035.
• ISM 2.0 focuses on expanding India's semiconductor value chain encompassing chip design, fabrication, assembly, testing, marking, and packaging (ATMP or OSAT activities).
• Semiconductor chips are critical for sectors including consumer electronics, telecommunications, automotive electronics, aerospace, defense, and industrial electronics.
• The mission supports research & development, innovation, and creation of a skilled semiconductor workforce in India.

Background & Context

Semiconductors are materials with electrical conductivity characteristics between conductors and insulators and form the backbone of modern electronic devices. Historically, India has been dependent on semiconductor imports despite growing electronics manufacturing in mobile devices, consumer electronics, and automotive sectors. To reduce dependency and build a robust domestic semiconductor ecosystem, ISM 1.0 was launched in 2021 with a fiscal incentive package of ₹76,000 crore to attract investments into chip fabrication (fabs), assembly, testing, packaging, and design units. ISM 2.0 aims to move beyond subsidizing end-products towards strengthening the semiconductor manufacturing ecosystem itself, including indigenous production of semiconductor equipment and materials, robust supply chains, and comprehensive R&D infrastructure.

Why This Matters for Exams

The India Semiconductor Mission and its 2.0 phase represent significant steps in India’s technology and manufacturing strategy featured in recent Union Budgets and government policy frameworks. Understanding the timeline, budgetary allocations, strategic aims (self-reliance targets by 2029, 3 nm and 2 nm nodes by 2035), and sectors impacted is important for competitive exams covering technology, economy, and governance. These initiatives are often asked about in questions on contemporary government policies, industrial development, and India’s digital and technological sovereignty ambitions.

Points to Remember

• Ministry of Electronics and Information Technology (MeitY) is the nodal ministry implementing ISM.
• ISM 1.0 was launched in 2021 with a ₹76,000 crore incentive scheme, supporting 10 approved projects with investments over ₹1.6 lakh crore across six states.
• ISM 2.0, started in 2026, has a focus on semiconductor equipment and materials manufacturing, design IPs, supply chains, and R&D centers.
• Target of fulfilling 70-75% of domestic chip demand through indigenization by 2029.
• India aims to develop advanced chip manufacturing technology nodes of 3 nm and 2 nm by 2035 to be a top global semiconductor producer.
• Semiconductor value chain includes design, fabrication, assembly, testing, marking, and packaging (ATMP/OSAT).