India Semiconductor Mission & PLI

Imagine a government deciding it wants a completely new industry to exist inside the country within a decade, one that took Taiwan and South Korea forty years and hundreds of billions of dollars each to build. The only realistic lever left is money, offered early enough and in large enough size that a global chipmaker chooses India over a dozen other countries also writing similar cheques. That is the entire logic of the India Semiconductor Mission.

The Mission was approved in December 2021 with an outlay of 76,000 crore rupees, covering fiscal support across every layer of the value chain in one shot. Fabrication plants and display manufacturing units, compound semiconductor and ATMP or OSAT facilities, and chip design companies each got their own dedicated scheme, because a chip industry does not work if only one layer of the stack is subsidised while the rest remains commercially unviable.

Roughly a dozen projects have been approved so far, with cumulative committed investment near 1.6 lakh crore rupees spread across six states. Three plants have already reached commercial production, Micron in Sanand from February 2026, Kaynes from March 2026, and CG Power's CG Semi from July 2026, while Tata's much larger Dholera fab remains under construction, targeted for commissioning around 2028. The Design Linked Incentive scheme runs in parallel, offering chip design startups up to 15 crore rupees in product development support plus a royalty style payout of 6 to 8 percent of net sales for five years, an attempt to build an Indian design ecosystem alongside the manufacturing one.

The Union Budget for 2026-27 marked a clear shift from initial seeding to deliberate scale up. The Cabinet cleared a combined 1.9 lakh crore rupees across two new schemes, Semicon 2.0 with a 1.27 lakh crore rupee outlay for further design and manufacturing capacity, and a separate 62,500 crore rupee Mobile Phone Manufacturing Scheme that formally replaced the older mobile PLI programme. Alongside this, ISM 2.0 was launched with its own budget allocation of 8,000 crore rupees for the year, this time aimed further upstream at semiconductor equipment, specialty materials and indigenous chip design IP, the layers of the value chain that even the first phase of the Mission had not fully addressed.

The scale of subsidy here is unusual even by India's own industrial policy history, larger than what automobiles or advanced battery cells received under earlier PLI rounds. That size is itself a signal of how much strategic weight the government is putting on not being dependent on imported chips for everything from a car's dashboard to a defence radar, at a time when chip supply has repeatedly proven itself a genuine geopolitical vulnerability rather than a purely commercial one.