The Union Cabinet approved ₹1.27 lakh crore for the second phase of the India Semiconductor Mission (ISM 2.0) on Wednesday. Union IT Minister Ashwini Vaishnaw announced the funding aimed at enhancing domestic chip production capabilities and attracting investment in the sector.
Key Details
The new initiative will provide incentives to companies supplying raw materials used in chip manufacturing. Vaishnaw stated,
We will be self-reliant in the production of indigenous chips by the end of this programme.
This comes amid a global memory chip shortage, with the government seeking to boost production capacity to meet rising demands, particularly for artificial intelligence devices.
Background
The first phase of the ISM had an outlay of ₹76,000 crore, which has already attracted investments totaling around ₹1.64 lakh crore across 12 approved projects. The majority of this investment has come from Tata Electronics and its semiconductor arm. In addition to the Semiconductor Mission, the Cabinet also approved the Mobile Phone Manufacturing Scheme and the National Investment Policy for Urea-2026, with the total outlay for all approved projects reaching ₹2,19,353 crore.
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The approval of the Semiconductor Mission is likely to boost investments in the technology sector, particularly in semiconductor production. This could positively influence related stocks and sectors, including technology and manufacturing, as companies ramp up production capabilities. Investors will watch for updates on project implementations and their impact on domestic chip supply chains.