India's ISM 2.0 Is Now Live. The Shift From Building Fabs to Building an Ecosystem Has Begun.

India Semiconductor Mission 2.0, announced in Budget 2026-27 on February 1, has moved from announcement to operational reality in April 2026 — as the first project approved under its framework, the Odisha 3D packaging unit, broke ground, and two additional semiconductor manufacturing units received Cabinet approval in May 2026.

₹1,000 Cr	₹8,000 Cr	10	24
ISM 2.0 allocation for FY 2026-27	Modified semiconductor programme outlay FY27	Semiconductor projects approved — 6 states	Chip design startups supported under DLI scheme

ISM 1.0: what was built

India Semiconductor Mission 1.0, launched in January 2022 with a total outlay of ₹76,000 crore, approved 10 semiconductor projects across six states: fabrication plants, OSAT/ATMP units, compound semiconductor facilities (including Silicon Carbide), and advanced packaging. Cumulative committed investment across these projects exceeds ₹1.6 lakh crore. The Micron Technology ATMP facility in Sanand, Gujarat — inaugurated by PM Modi in February 2026 — became the first commercial semiconductor assembly and testing plant to begin production in India. The Kaynes Semicon plant in Sanand was inaugurated in March 2026. These are early but real milestones: India is now a country where chips are packaged and tested commercially, not merely aspired to. For the detailed comparison of India's semiconductor trajectory against Taiwan — and an honest assessment of how far India still has to go — our ISM 2.0 Explained: India vs Taiwan remains the most thorough analysis we have published.

The Design Linked Incentive (DLI) Scheme, running alongside ISM 1.0, has supported 24 semiconductor design startups, which have attracted nearly ₹430 crore in venture capital funding. Advanced EDA (Electronic Design Automation) tools — the software used to design chips — have been accessed for approximately 2.25 crore tool hours under the national chip design platform. These are the upstream capabilities that determine whether India produces chip IP of its own, or remains a packaging and assembly destination for chips designed elsewhere.

What ISM 2.0 changes

ISM 2.0, announced in Union Budget 2026-27 by Finance Minister Nirmala Sitharaman, has a different emphasis from ISM 1.0. Where the first phase was about attracting global manufacturers and building foundational infrastructure, the second phase is explicitly focused on three areas: producing semiconductor equipment and materials domestically (reducing import dependence in the supply chain), designing full-stack Indian semiconductor intellectual property (creating Indian-origin chip designs), and fortifying supply chains (reducing single-country concentration risk). The ₹1,000 crore allocation for FY 2026-27 is accompanied by a modified programme for semiconductor and display manufacturing with a total outlay of ₹8,000 crore for the year — the combined envelope for deepening what ISM 1.0 started.

The supply chain problem ISM 2.0 is trying to solve

India's current semiconductor vulnerability is not only at the fab level — it runs through the entire supply chain. Specialty gases, photomasks, wafer fabrication equipment, and advanced packaging materials are overwhelmingly imported, primarily from Japan, the United States, and the Netherlands. For India to have a genuinely sovereign semiconductor capability rather than a dependency-substituting assembly line, it needs to begin producing these inputs domestically. ISM 2.0's focus on equipment and materials is the first formal acknowledgement that the supply chain, not just the factory floor, is the strategic frontier.

What 2026 has already delivered

In the space of the first quarter of FY 2026-27, India has: broken ground on its first 3D glass chip packaging facility in Odisha (April 19); seen the Micron ATMP facility become operational in Gujarat (February 2026); inaugurated the Kaynes Semicon plant in Sanand (March 2026); and received Cabinet approval for two more semiconductor manufacturing units with cumulative investment exceeding ₹3,900 crore (May 2026). The pace of implementation, long the missing link between India's semiconductor ambitions and its execution record, has visibly accelerated. Whether it sustains through the full 10-project pipeline is the open question.

Sources:

1. PIB — ISM 2.0 Budget 2026 announcement, Feb 1 2026 — https://www.pib.gov.in/PressReleasePage.aspx?PRID=2221522

2. PIB — ISM 2.0 explainer, Feb 7 2026 — https://www.pib.gov.in/PressReleasePage.aspx?PRID=2224839

3. ISM.gov.in — India Semiconductor Mission official site — https://ism.gov.in

4. Northeast Herald — What is ISM 2.0?, Feb 2 2026 — https://neherald.com/life/what-is-ism-2-0-budget-2026-expands-india-s-semiconductor-push