India is entering the next phase of its semiconductor strategy with the proposed rollout of India Semiconductor Mission (ISM) 2.0, marking a strategic evolution from foundational capacity building to ecosystem deepening. According to government signals and policy commentary, the finance ministry has cleared an outlay of ₹1.20 lakh crore, with cabinet approval expected by mid-April, reinforcing continuity in India’s long-term semiconductor ambitions.

The first phase of the mission, ISM 1.0, represented a structural shift in India’s industrial policy by moving from intent to execution in a sector traditionally dominated by high capital requirements, long gestation cycles, and technological complexity. It helped establish a pipeline of 10 approved projects across semiconductor fabrication units, OSAT (Outsourced Semiconductor Assembly and Test) facilities, and specialised semiconductor infrastructure. Early production from some of these facilities is expected to begin as early as 2026, indicating that India has moved beyond policy announcements to tangible execution milestones.

As outlined in policy discussions and official briefings on the semiconductor roadmap, ISM 2.0 seeks to build on this base but with a decisive shift in priorities. The focus is expanding from a manufacturing-centric approach to a more comprehensive value chain strategy that includes chip design, research and development, materials, and equipment manufacturing. This marks a critical transition, as global semiconductor competitiveness is increasingly determined not just by fabrication capacity but by control over intellectual property, design capabilities, and supply chain resilience.

Government leadership has signalled strong commitment to this transition. Prime Minister Narendra Modi has emphasised the importance of creating a full-stack semiconductor ecosystem, including domestic capabilities in equipment and materials. This aligns with India’s broader objective of increasing domestic value addition as its semiconductor demand is projected to grow from approximately $50 billion currently to over $100 billion by the end of the decade.

Finance Minister Nirmala Sitharaman, in her Budget announcement, reinforced that ISM 2.0 will prioritise supply chain resilience, industry-led innovation, and training, while Electronics and IT Minister Ashwini Vaishnaw has outlined a three-pronged focus on design-led growth, ecosystem expansion, and talent development. Notably, the government is also signalling a gradual move toward advanced semiconductor nodes, including 2 nm technologies, though this remains a longer-term ambition.

From a technology standpoint, industry experts advocate a pragmatic roadmap. India is expected to prioritise mature nodes such as 28 nm to 65 nm, which cater to high-volume applications in automotive, industrial electronics, power systems, and communication technologies. This approach balances commercial viability with technological capability, allowing India to participate meaningfully in global supply chains without overextending into capital-intensive leading-edge manufacturing prematurely.

The layered structure of India’s semiconductor ecosystem further reflects this strategy. While fabrication plants remain the most capital-intensive and time-consuming components, OSAT and ATMP facilities are quicker to operationalise and are expected to be the first contributors to domestic output. Specialty semiconductor projects, including silicon carbide and advanced packaging, are also gaining traction, particularly due to their relevance in fast-growing sectors such as electric vehicles, telecom infrastructure, and industrial automation.

For India, ISM 2.0 carries significant implications across multiple sectors. The electronics manufacturing ecosystem stands to benefit directly, particularly companies involved in design services, embedded systems, and semiconductor-linked manufacturing. The push toward domestic supply chain development could also reduce import dependence over time, improving trade balances in high-value electronics.

The automobile and EV sectors are indirect beneficiaries, given the increasing semiconductor intensity in vehicles. Similarly, telecom and industrial automation sectors could gain from improved access to specialised chips and components.

From a capital markets perspective, the announcement reinforces the government’s commitment to long-term industrial policy, which may support investor sentiment in electronics manufacturing services (EMS), semiconductor design firms, and ancillary technology providers. However, the benefits are likely to accrue gradually given the long gestation cycles inherent in semiconductor investments.