India notified a $13.2 billion subsidy scheme on August 31 spanning chip design, equipment manufacturing, fabrication, assembly, packaging and testing. The allocation represents ₹1.27 trillion set aside to build domestic semiconductor capacity across six segments of the supply chain.
The Semicon 2.0 scheme expands on India's earlier $10 billion Semicon India initiative launched in 2021. That program offered incentives for fabrication plants and assembly sites; the new framework adds chip design and equipment manufacturing to its scope, broadening the government's target from final assembly to earlier stages of semiconductor production.
The notification covers capital subsidies for new fabs, equipment makers, and design centers, plus performance-linked incentives for packaging and testing operations. The six-segment structure addresses India's minimal market share in advanced chip design tools and manufacturing equipment, sectors dominated by Taiwan and South Korea.
India's semiconductor imports exceeded $25 billion in fiscal 2024, according to government trade data. Domestic production remains negligible; the country manufactures less than 2 percent of its chip consumption. Taiwan and South Korea supply roughly 45 percent of India's chip imports combined.
The scheme comes as geopolitical tension over Taiwan and US export controls on advanced chip technology have pushed governments worldwide to fund domestic semiconductor capacity. The US allocated $39 billion through the CHIPS Act in 2022. The European Union committed 43 billion euros to chip production in 2023. Japan and South Korea have each announced multi-billion-dollar programs since 2024.
India's combined Semicon India and Semicon 2.0 budgets now total $23.2 billion, positioning the country's chip investment behind the US, EU, Japan and South Korea but ahead of most other nations. Execution remains uncertain; the original Semicon India program has attracted commitments for multiple fabs and assembly plants, but several projects have faced delays in groundbreaking.
The measure to watch is whether India completes at least one greenfield fab and one equipment manufacturing facility within three years of project approval, a threshold needed to determine if subsidies can translate into operational capacity.
