India Semiconductor Mission 2.0: Budget 2026 Launches Full-Stack Manufacturing Strategy with Rs 40,000 Crore Outlay

Union Budget 2026-27 launches India Semiconductor Mission 2.0 marking decisive shift from ecosystem creation to ecosystem deepening and full-stack semiconductor sovereignty. ISM 2.0 focuses on equipment manufacturing materials production full-stack design capabilities and development of Indian intellectual property directly addressing weakest layers of India's semiconductor value chain historically dependent on imports. Electronics Components Manufacturing Scheme launched April 2025 with Rs 22,919 crore outlay receives investment commitments at double the target prompting increased allocation to Rs 40,000 crore to capitalize on momentum. Mission aims to move India beyond chip assembly to complete self-reliant semiconductor ecosystem producing equipment materials and designing indigenous technology reducing foreign dependence. Strategic focus on industry-led research and training centers developing technology capabilities and skilled workforce essential for semiconductor manufacturing competitiveness. Semiconductor equipment chemicals and gases market estimated at USD 400 billion by 2030 presenting significant opportunity for India's manufacturing ambitions in strategic technology sector. ISM 2.0 announcement comes amid global supply bottlenecks due to increasing AI workloads creating favorable conditions for India's entry into critical semiconductor manufacturing. India aims to become top chip manufacturing hub by 2032 with several major projects underway and production expected to start in 2026 across fabrication and packaging facilities. Budget provides continuity of incentive structures with tailored approaches for large fabs packaging units and compound semiconductors used in electric vehicles defense and renewable energy applications. Industry experts emphasize need for 50% capital support for compound semiconductors stronger government facilitation for technology tie-ups and predictable application timelines critical for sustained investment confidence.