Athira Sethu
Kochi, 8 September 2025
The Indian government is preparing to urgently clear the next phase of its chip manufacturing plan, India Semiconductor Mission 2.0 (ISM 2.0). The plan would be referred to the cabinet for approval before the end of October, say officials.
What is ISM 2.0?
This new plan will be far larger than the initial one. It will fund many more aspects of the chip-making process. This encompasses not just silicon chip plants (known as wafer fabs), but also compound semiconductor factories, advanced chip packaging plants, display screens, chip-making equipment, specialty chemicals and gases, and fabless chip design firms. In plain language, the plan will fund the whole chip-making chain from end to end.
Industry demands doubling of funds
Most of the top business leaders are requesting the government to double the amount of money to $20 billion (approximately ₹1.76 lakh crore). The initial iteration, ISM 1.0, had $10 billion. But due to the depreciating value of the rupee and increased demand from overseas, they assert that additional funds are necessary in order to attract more companies and projects.
During the recent Semicon India 2025 conference, Prime Minister Narendra Modi sat down for a private meeting with the leading chip company executives. They discussed what was done and what needs to be done now. One attendee in the meeting reported, “The government has assured going at a fast pace. Industry captains are demanding almost double the support of ISM 1.0.”
Support for all kinds of projects:
As ISM 2.0 will encompass numerous fields, the level of subsidy (government support funds) will vary based on project type. Silicon chip factories, the most expensive to construct, will receive the maximum assistance. Smaller projects, such as compound semiconductor plants, will receive less assistance.
There would be special funds to support small chip design startups as well as MSMEs (small and medium enterprises) so that the ecosystem covers not only the large ones, but also small innovators.
What’s Next?
A top official stated that the plan is nearly finalized. The cabinet note will be tabled by the end of October, and the funding application will be later this year. This move shows how serious India is about becoming a global chip-making hub.
