India’s Semiconductor Revolution: Unveiling ISM 2.0

07 Feb India’s Semiconductor Revolution: Unveiling ISM 2.0

This article covers “Daily Current Affairs”  and India’s Semiconductor Revolution: Unveiling ISM 2.0

SYLLABUS MAPPING:

GS-3- Science and technology –India’s Semiconductor Revolution: Unveiling ISM 2.0

FOR PRELIMS

What is India Semiconductor Mission (ISM) 2.0 ?

FOR MAINS

What is the main focus of India’s Semiconductor Mission 2.0 (ISM 2.0)?

Why in the News? 

India’s semiconductor sector is entering a transformative era with the launch of India Semiconductor Mission 2.0 (ISM 2.0), unveiled in the Union Budget 2026-27. This next phase builds on the foundational successes of ISM 1.0, shifting the focus toward higher-value elements of the chip ecosystem. The initiative prioritizes domestic production of semiconductor equipment and materials, the creation of fully indigenous intellectual property (IP) for chip designs, and the reinforcement of resilient supply chains both at home and internationally. A dedicated allocation of ₹1,000 crore has been set aside for ISM 2.0 in FY 2026-27. This funding underscores a commitment to industry-driven research hubs and specialized training programs, aimed at fostering cutting-edge innovation and preparing a workforce equipped for tomorrow’s technological demands.

The Critical Role of Semiconductors in Today’s World

Semiconductors serve as the invisible engines driving modern life—from smartphones and laptops to electric vehicles, telecom networks, defense systems, AI applications, and critical infrastructure like power grids and healthcare devices. Global events, including the pandemic-induced chip shortages that disrupted industries worldwide, have highlighted the dangers of over-reliance on concentrated production hubs. Taiwan, for instance, dominates with over 60% of global output and nearly 90% of the most advanced nodes, exposing supply chains to geopolitical and natural risks. In response, nations like the US, EU, Japan, and South Korea have rolled out aggressive domestic chip strategies. India is carving its place in this reshoring trend, evolving from a major consumer to a strategic producer and innovator under the banner of Aatmanirbhar Bharat (Self-Reliant India).

Growth Trajectory of India’s Semiconductor Landscape

India’s domestic semiconductor market has shown impressive momentum. Industry projections place its value at around $45-50 billion in 2024-25 (up from $38 billion in 2023), with expectations to surge to $100-110 billion by 2030. This expansion aligns with the Make in India and Make for the World ethos, positioning the country as both a manufacturing powerhouse and a global exporter. The journey began with ISM 1.0’s approval in December 2021, backed by a ₹76,000 crore incentive package offering up to 50% fiscal support for fabs, compound semiconductor units, assembly/testing facilities, and design initiatives. By late 2025, this had attracted 10 major projects totaling ₹1.60 lakh crore in investments spread across six states. These encompass silicon fabs, silicon carbide facilities, advanced packaging, and specialized testing setups.
Looking forward, India targets the ability to design and produce chips for 70-75% of its domestic needs by 2029. ISM 2.0 accelerates this by outlining a path to 3nm and 2nm process nodes, with ambitions to rank among the world’s leading semiconductor players by 2035.
These developments will cater to booming sectors like consumer electronics, automotive, telecom, aerospace, industrial systems, and power electronics, while emphasizing indigenous assembly, testing, and packaging to cut import reliance.

Key Impacts and Targets for 2026-27

The revamped Modified Programme for Development of Semiconductor and Display Manufacturing Ecosystem carries a ₹8,000 crore outlay for 2026-27. This supports accelerated investments, premium job creation, and broader capabilities in fabrication, packaging, and design.
Projected achievements include:
Semiconductor Fabs Scheme (supporting 1 fab): ₹4,000 crore in investments and 1,500 jobs.
Compound Semiconductors, Silicon Photonics, Sensors, Discrete Fabs, and ATMP/OSAT Scheme (supporting 9 units): ₹11,000 crore in investments and 3,000 jobs.
Design Linked Incentive Scheme (supporting 30 companies): Development of 10 semiconductor IP cores and employment for 200 design professionals.
These goals highlight a balanced drive toward scaling production, enhancing design prowess, and building skilled talent.

Bolstering the Design Ecosystem

The Design Linked Incentive (DLI) Scheme, active since 2021, has been instrumental in cultivating a vibrant fabless sector. As of early 2026, it backs 24 startups that have drawn nearly ₹430 crore in venture funding. The national Electronic Design Automation (EDA) platform has logged 2.25 crore tool hours, benefiting around 67,000 students and over 1,000 startup engineers.
Academic efforts have yielded 122 tape-outs and 56 fabricated chips at 180nm via the Semiconductor Laboratory in Mohali, while startups achieved 16 tape-outs—including six at advanced nodes like 12nm. Institutions and companies have filed 75 and 10 patents, respectively, signaling rising innovation.
Plans call for scaling to at least 50 fabless firms in the coming phase, cementing India’s role as a global design powerhouse.

Pioneering Indigenous Processors

A cornerstone of strategic autonomy is the development of homegrown microprocessors. The recent launch of DHRUV64 a fully indigenous 64-bit dual-core processor from C-DAC operating at 1.0 GHz—marks a breakthrough. Built under the Microprocessor Development Programme and leveraging the open-source RISC-V architecture via the Digital India RISC-V (DIR-V) initiative, DHRUV64 offers enhanced efficiency, multitasking, and security for applications in 5G, automotive, IoT, industrial automation, and more.
It joins a line up including SHAKTI, AJIT, VIKRAM, and THEJAS, forming a robust Indian processor family. Upcoming variants like DHANUSH and DHANUSH+ SoCs will further boost R&D, prototyping, and talent opportunities while minimizing reliance on foreign designs—especially vital as India accounts for a significant share of global microprocessor consumption.

Building a Skilled Workforce

Sustaining growth requires talent at scale. Key efforts include:
Chips to Start up Programme: Providing EDA tools to 397 universities and start ups, enabling chip designs and fabrications (e.g., 56 chips from 46 universities at Mohali).
AICTE Programs: Specialized degrees, diplomas, and minors in VLSI and IC manufacturing.
SMART Lab at NIELIT Calicut: Training over 62,000 engineers toward a goal of one lakh.
Lam Research Partnership: Targeting 60,000 professionals in nanofabrication and advanced packaging over a decade.
Future Skills PRIME: Industry-aligned online courses for skilling in emerging tech, including semiconductors.
These programs ensure a pipeline of industry-ready experts across the value chain.

Consider the following statements regarding India’s Semiconductor Mission 2.0 (ISM 2.0):
1.ISM 2.0 focuses on domestic production of semiconductor equipment and materials.
2.A dedicated allocation of ₹1,000 crore has been set aside for ISM 2.0 in FY 2026-27.
3.ISM 2.0 aims to achieve 3nm and 2nm process nodes by 2035.
Which of the statements given above is/are correct?
(a) 1 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2 and 3

Answer: (b) 1 and 2 only

Mains Questions

Q. Analyze the role of indigenous processors like DHRUV64 in enhancing India’s strategic autonomy in technology. How do workforce development programs support this goal ?

                                                                                                                                                         (250 words, 15 marks)

• Author
• Recent Posts

ANIL SINGH BHADORIYA

Latest posts by ANIL SINGH BHADORIYA (see all)

• Artemis II: Humanity’s Return to Lunar Space and India’s Place in the New Moon Race - April 2, 2026
• A Missed Opportunity to Guarantee Minimum Wages - March 31, 2026
• ‘India’s Growth Claims, A Clash with Data Reality’. - March 30, 2026