Govt Unveils Rs 1.9 Lakh Cr Push for Semiconductor, Mobile Manufacturing
New Delhi : India is set to significantly boost its electronics manufacturing capabilities with the Union cabinet's approval of two massive initiatives, the Rs 1.27 lakh crore Semicon 2.0 programme and the Rs 62,500 crore Mobile Phone Manufacturing Scheme, aiming to establish the nation as a global hub for semiconductor and mobile phone production.
The Union cabinet approved the Rs 1.27 lakh crore Semicon 2.0 programme and the Rs 62,500 crore Mobile Phone Manufacturing Scheme (MPMS).
The semiconductor programme aims for self-reliance in indigenous chip production, focusing on design, equipment, fabrication, packaging, R&D, and talent development.
The government expects the semiconductor scheme to attract Rs 4 lakh crore in investments and yield Rs 2 lakh crore in production.
The MPMS offers production-linked incentives from 2.25% to 5% over five years, targeting Rs 39 lakh crore in cumulative production and 60,000 direct jobs.
India has already become the world's second-largest mobile phone manufacturer, with 99.2% of domestic phones now made locally, and mobile phones were the largest export category in 2025.
The Union cabinet on Wednesday approved two major manufacturing initiatives with a combined outlay of nearly Rs 1.9 lakh crore ($22 billion) to expand India's semiconductor ecosystem, scale up mobile phone production and strengthen its position as a global electronics manufacturing hub.
The government approved the Rs 1.27 lakh crore Semicon 2.0 programme to accelerate semiconductor design and manufacturing capabilities, alongside the Rs 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.
Semicon 2.0: Boosting Chip Production : The semiconductor programme builds on the first phase of the India Semiconductor Mission and will focus on six key areas - chip design, semiconductor equipment and materials, fabrication facilities, advanced packaging and testing, research and development, and talent development.
"We will be self-reliant in the production of indigenous chips by the end of this programme," Minister for Electronics and Information Technology Ashwini Vaishnaw said at a news briefing.
The government expects the new scheme to attract investments of around Rs 4 lakh crore and lead to semiconductor production worth Rs 2 lakh crore during the scheme period.
Semicon 2.0 aims to encourage the development of semiconductor intellectual property, commercial and strategic chip designs, and manufacturing capabilities for critical components required across sectors.
The programme will provide support to companies involved in semiconductor machinery, materials, chemicals and gases while seeking to attract additional fabrication plants to India.
A government statement issued after the Cabinet meeting said the initiative would strengthen supply chain resilience and help establish India as a key semiconductor design and manufacturing destination.
The country's first semiconductor fabrication unit is expected to begin operations in 2028.
The programme also seeks to expand Assembly, Testing, Marking and Packaging (ATMP) and Outsourced Semiconductor Assembly and Test (OSAT) capabilities, while advancing research into more sophisticated chip technologies.
Mobile Phone Manufacturing Scheme : The Union Cabinet also approved a Rs 62,500 crore Mobile Phone Manufacturing Scheme to provide production-linked incentives to manufacturers over five years from fiscal year 2026-27 to 2030-31, Vaishnaw said.
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 mobile phone scheme to drive cumulative production of around Rs 39 lakh crore during its tenure, significantly increase exports and generate about 60,000 direct jobs.
India's Growing Electronics Sector : India has emerged as the world's second-largest mobile phone manufacturer by volume, with 99.2 per cent of mobile phones used domestically now manufactured within the country.
Mobile phones became India's largest exported product category in 2025, overtaking traditional export segments such as diesel fuel and cut diamonds.
India's semiconductor push has already resulted in approvals for 12 manufacturing projects with a combined investment of more than Rs 1.64 lakh crore.
These include a silicon fabrication plant, a silicon carbide facility, an integrated gallium nitride micro-LED display unit and nine packaging facilities, catering to sectors such as automobiles, telecommunications, consumer electronics, aerospace and industrial equipment.
Three approved projects by Micron, Kaynes and CG Semi have begun commercial production, while another facility is expected to start operations in 2026. The first phase has also supported 24 semiconductor design projects by startups and MSMEs, with 105 companies receiving access to industry-standard Electronic Design Automation tools.
The government said electronics manufacturing has expanded significantly since 2014-15, with production increasing sevenfold and exports growing elevenfold, driven largely by mobile phone manufacturing under the Make in India initiative.
The combined semiconductor and mobile manufacturing programmes are part of India's broader strategy to build domestic capabilities in critical technologies, reduce import dependence and integrate more deeply into global electronics supply chains.
Aisha Ali Hussaini, Semiconductor Tax Partner, EY India, "ISM 2.0 marks a pivotal step in India's semiconductor journey. With anchor investments secured in fabrication and packaging, and commercial production now 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 sector development.
"With significant incentives across key segments, ISM 2.0 has the potential to position India not just as a manufacturing destination, but as a globally competitive hub for semiconductor innovation."
