Budget 2026–27: India Lines Up Semiconductor Mission 2.0 to Push Deeper Into Chip Value Chain

In a bid to be self-reliant in critical components and parts, India will launch the India Semiconductor Mission (ISM) 2.0, as the government looks to move beyond initial chip manufacturing into equipment, materials, and intellectual property, Finance Minister Nirmala Sitharaman said in her Budget 2026–27 speech.

The new phase intends to build on Semiconductor Mission 1.0, which helped kickstart India’s presence in chip fabrication and packaging. ISM 2.0 will now expand to include locally produced semiconductor equipment and materials, the development of full-stack Indian chip IP, and the strengthening of supply chains that have been strained globally in recent years.

The semiconductor push is being reinforced by rising interest in electronics manufacturing. Sitharaman said the Electronics Components Manufacturing Scheme, launched in April 2025 with an outlay of Rs. 22,919 crore, has already attracted investment commitments exceeding twice the original target. To sustain the momentum, the government will increase the scheme’s allocation to Rs. 40,000 crore.

The global automotive industry faced significant disruption post-COVID due to dependence on semiconductor chips from key markets, disrupting car manufacturing. The Semiconductor Mission 1.0 kicked off India’s endeavour to reduce dependency and become self-reliant. The expansion to 2.0 will further attract new investment, increase local manufacturing self-reliance, and eventually enable entry into global markets. 

Sitharaman said the government will support industry-led research and training centres to accelerate technological development and address the growing need for skilled semiconductor talent.

The move comes as global chipmakers and governments rethink supply chains amid geopolitical tensions, export controls, and efforts to reduce overreliance on a few manufacturing hubs.