New Delhi: The Government of India on Wednesday approved two major manufacturing initiatives with a combined outlay of nearly ₹1.9 lakh crore (USD 22 billion) to expand the country's semiconductor ecosystem, scale up mobile phone production and strengthen India's position as a global electronics manufacturing hub.
The Union Cabinet approved the ₹1.27 lakh crore (USD 14.6 billion) Semicon 2.0 programme to accelerate semiconductor design and manufacturing capabilities, along with the ₹62,500 crore Mobile Phone Manufacturing Scheme (MPMS) aimed at increasing domestic production, boosting exports and deepening local value addition in the mobile phone industry.
The Semicon 2.0 programme builds on the first phase of the India Semiconductor Mission and focuses on six key areas: chip design, semiconductor equipment and materials, fabrication facilities, advanced packaging and testing, research and development, and talent development.
"The Union Cabinet under the leadership of Prime Minister Narendra Modi has approved ₹1.27 lakh crore for Semicon 2.0," Union Electronics and Information Technology Minister Ashwini Vaishnaw said at a press briefing.
The government expects the new semiconductor scheme to attract investments of around ₹4 lakh crore and generate semiconductor production worth ₹2 lakh crore during its implementation period.
India is also expected to export semiconductor products worth ₹1 lakh crore.
"The guidelines for the schemes will be published in about 20 days," Vaishnaw said.
He added that the programme would support indigenous production of chips designed and owned by Indian companies.
Unlike the previous scheme, the new programme will provide incentives in the form of grants linked to equity participation or royalty-based funding.
"The government will match the investment proposals made by private investors in chip firms," a Ministry of Electronics and Information Technology (MeitY) official said.
The government has reduced incentives for setting up new chip plants from 50 per cent to 40 per cent for silicon fabrication units and from 50 per cent to 35 per cent for other fabrication facilities.
₹62,500 crore scheme for mobile phone manufacturing
The Union Cabinet also approved the ₹62,500 crore Mobile Phone Manufacturing Scheme (MPMS), which will provide production-linked incentives to manufacturers over five years from 2026-27 to 2030-31.
"We expect to more than double mobile phone exports to around ₹15 lakh crore under the new scheme, compared with around ₹7.5 lakh crore achieved under the previous scheme," Vaishnaw said.
The incentives will range from 2.25 per cent to 5 per cent on eligible mobile phone sales, with additional support for domestic sourcing of key components and for Indian companies investing in product design and research.
The government expects the scheme to generate cumulative mobile phone production worth around ₹39 lakh crore, significantly boost exports and create nearly 60,000 direct jobs.
India has emerged as the world's second-largest mobile phone manufacturer by volume, with 99.2 per cent of mobile phones used in the country now being manufactured domestically.
Mobile phones became India's largest export product category in 2025, overtaking traditional export segments such as diesel fuel and cut diamonds.
Semicon 2.0 also seeks to promote semiconductor intellectual property, commercial and strategic chip design, and manufacturing capabilities for critical components used across industries.
The programme will support companies manufacturing semiconductor machinery, materials, chemicals and gases while encouraging additional fabrication plants to be established in India.
According to a government statement issued after the Cabinet meeting, the initiative will strengthen supply chain resilience and help establish India as a leading global semiconductor design and manufacturing destination. The country's first semiconductor fabrication unit is expected to begin operations in 2028.
The programme also aims to expand Assembly, Testing, Marking and Packaging (ATMP) and Outsourced Semiconductor Assembly and Test (OSAT) capabilities while advancing research into next-generation chip technologies.
India's semiconductor mission has already approved 12 manufacturing projects with a combined investment of more than ₹1.64 lakh crore.
These include a silicon fabrication plant, a silicon carbide facility, an integrated gallium nitride micro-LED display unit and nine semiconductor packaging facilities catering to sectors such as automobiles, telecommunications, consumer electronics, aerospace and industrial equipment.
Commercial production has already begun at three approved projects by Micron, Kaynes and CG Semi, while another facility is expected to commence operations in 2026.
The first phase of the programme has also supported 24 semiconductor design projects by startups and MSMEs, with 105 companies receiving access to industry-standard Electronic Design Automation (EDA) tools.
Broadband equipment maker GX Group CEO Paritosh Prajapati described Semicon 2.0 as a transformative initiative for building a globally competitive semiconductor ecosystem.
"While the policy strengthens India's capabilities across advanced electronics manufacturing, it also creates a stronger foundation for enabling technologies such as photonics and optical communications," he said.
India Cellular and Electronics Association (ICEA) Chairman Pankaj Mohindroo said the earlier production-linked incentive (PLI) scheme helped India achieve scale, attract global companies, expand exports and emerge as the world's second-largest mobile phone manufacturer.
"MPMS builds on this foundation by enabling large-scale mobile phone production, deepening the domestic value chain and strengthening the component ecosystem. Our vision is to increase India's share of global mobile phone production to 35-40 per cent, and this policy will be a major step in that direction," he said.
Aisha Ali Hussaini, Semiconductor Tax Partner at EY India, said Semicon 2.0 marks a significant milestone in India's semiconductor journey.
"With anchor investments secured in fabrication and packaging, and commercial production already underway, India has moved decisively from ambition to execution.
"The programme's focus on strengthening the broader ecosystem, including equipment, materials, design IP, R&D and supply chain capabilities, reflects the next stage of the sector's development. With significant incentives across key segments, Semicon 2.0 has the potential to position India not only as a manufacturing destination but also as a globally competitive hub for semiconductor innovation," she said.
