The Union Cabinet has sanctioned Semicon India 2.0 with a budget allocation of Rs 1.27 lakh crore, representing a further step in the country's efforts to develop its semiconductor sector. Drawing in outside investment formed the central aim of the opening stage. The initiative covers chip architecture, fabrication facilities, next-generation packaging, research, workforce development, equipment, raw materials, and supply networks.
Some observers have described the change in focus as well-timed. Steps underway in India to develop a semiconductor manufacturing value chain are reflected in the opening of facilities such as the CG Semi OSAT plant in Gujarat. The broader challenge, as identified by industry analysts, lies in keeping these facilities internationally competitive once incentive programmes wind down, while also building an end-to-end industry ecosystem that supports chip development from the design phase through to full-scale manufacturing, rather than concentrating only on downstream functions such as testing or packaging.
Whether that outcome materialises will depend on the country's capacity to develop innovative products, proprietary technology, and enduring consumer demand at home. Qualcomm, Marvell, AMD, and Texas Instruments are among the technology corporations that employ large numbers of engineers from India. The country's forthcoming shift involves moving beyond a workforce known for technical skills toward developing homegrown products, platforms, and proprietary technology.
The Semicon India 2.0 policy outlines an ambition for the country to position itself as a reliable partner in global semiconductor value chains, spanning design, IP development, advanced packaging, AI infrastructure, and manufacturing, rather than simply replicating existing models from other regions. Developing intellectual property in the commercial semiconductor sector has been identified as a leading area of focus.
Modern chips are built by combining a set of standardised components — including processor cores, analogue circuits, accelerators, interface modules, and memory controllers. At present, the majority of these components are sourced from international suppliers under licensing arrangements. The initiative's emphasis on design and innovation within Semicon India 2.0 stands to benefit startups, academic institutions, and incubators engaged in semiconductor intellectual property development.
Generating intellectual property, however, represents just the beginning of the process. Establishing a domestically held library of hardware-verified processor, analogue, and accelerator intellectual property has been identified as a measure that could help lower the cost of chip development and reduce dependence on overseas licensing agreements.
Applied research ranks as the next area of focus. The nation holds a strong pool of educated talent but lacks the institutional frameworks needed to translate academic findings into viable commercial ventures. The Fraunhofer Institutes in Germany and Taiwan's ITRI offer examples of how commercially oriented research organisations can bridge the gap between laboratory development and deployable products.
Strengthening domestic capacity through the alignment of Semicon India 2.0 with the National Research Foundation and industry-driven research has been identified as a key objective, alongside demand generation as a third area of focus. Sustained domestic demand is what allows advanced design and manufacturing capacity to remain economically viable. Authorities have indicated that fostering domestic semiconductor development could involve prioritising the adoption of locally designed chip technologies across defence and other strategically sensitive industries.
The country's aspirations in artificial intelligence have been identified as a potential driver of domestic chip development. The exhibition's emphasis on equipment, specialty chemicals, gases, raw materials, consumables, and precision engineering reflects segments that industry analysts identify as contributors to value addition within the supply chain. Advancing these capacities has been cited as a pathway for India's small and medium enterprises to expand their role within worldwide semiconductor production networks.
Nurturing and advancing personnel capabilities forms another foundational pillar of the approach. Ongoing funding for highly trained workers has been identified as central to developing a chip industry capable of competing on the world stage. Projections placing global semiconductor manufacturing equipment expenditure at $230 billion by 2028 have been cited in assessments of India's potential to position itself as both a production base and a reliable technology collaborator. The Semicon India 2.0 policy document frames the achievement of its objectives as contingent on whether the country develops internationally competitive intellectual property, products, and semiconductor enterprises capable of sustaining themselves once government incentives are withdrawn.
