India Launches ISM 2.0 to Deepen India's Semiconductor Ecosystem

India is doubling down on its chip-making ambitions. Finance Minister Nirmala Sitharaman announced in the Union Budget 2026 the second phase of India's strategic push into the semiconductor sector. To kick things off, the budget allocates a handsome amount to the industry, in hopes of aiding India to become a hub for semiconductors.

India Semiconductor Mission 2.0 Gets Budget 2026 Backing

Besides the focus on Artificial Intelligence, the FY27 India budget will focus more on capturing more value in the semiconductor industry within the country. Finance Minister Nirmala Sitharaman revealed that Rs 1,000 crore will be designated to the industry for FY27.

While the first phase of the India Semiconductor Mission (ISM 1.0) was designed to establish foundational capabilities, ISM 2.0 will focus on more upstream and downstream aspects of the industry.

This includes producing semiconductor manufacturing equipment, designing Indian intellectual property (like ARM and Samsung) and securing raw materials to manufacture chips. The government also plans to establish training centres to address the shortage of skilled workforce in the industry.

Complementing the semiconductor push, the government also announced a massive Rs 40,000 crore outlay for the Electronics Components Manufacturing Scheme (ECMS).

For those unaware, ECMS was set up in April 2025 to boost local production of electronic components. This could lead to investments and generate high-quality employment in the technology sector.

ISM 1.0 was launched in 2021, backed by Rs 76,000 crore and has 10 projects under its umbrella right now. With India's semiconductor demand expected to rise to more than 10% of the global consumption over the next five years, deepening the investments in the sector appears to be the right thing to do.

However, given the slow growth despite massive investments and the fact that the flowers of these investments are yet to bloom, it will be interesting to see if this push boosts the industry and makes India a top-four semiconductor nation by 2032.