India has taken another major step toward becoming a global semiconductor manufacturing hub after the Finance Ministry's Expenditure Finance Committee (EFC) approved a proposed outlay of ₹1.25 lakh crore for the second phase of the India Semiconductor Mission (ISM 2.0). The proposal is expected to be placed before the Union Cabinet for final approval, marking a significant milestone in the country's long-term strategy to strengthen its electronics and semiconductor ecosystem.

The proposed allocation is substantially larger than the ₹76,000 crore budgeted for the first phase of the India Semiconductor Mission. The increased investment reflects the government's growing focus on building a self-reliant semiconductor industry at a time when global demand for chips continues to rise across sectors such as smartphones, electric vehicles, artificial intelligence, data centres, telecommunications, and defence.

India Semiconductor Mission 2.0 is designed to go beyond setting up fabrication and packaging facilities. The new phase aims to support the complete semiconductor value chain, including chip design, manufacturing equipment, raw materials, indigenous intellectual property, advanced packaging technologies, and resilient supply chains. By creating a more comprehensive ecosystem, India hopes to reduce its dependence on imported semiconductors while attracting global technology companies and investors.

The government's semiconductor push has already begun to show progress. Under the first phase of the mission, several semiconductor manufacturing and packaging projects have been approved, with investments worth more than ₹1.6 lakh crore. Multiple facilities have either started commercial production or are expected to become operational this year, indicating that policy announcements are gradually translating into on-ground manufacturing capabilities.

Apart from manufacturing, India is also investing heavily in semiconductor design and innovation. Through initiatives such as the Design Linked Incentive (DLI) Scheme, the government has supported numerous domestic startups and technology firms working on advanced chip design. This approach is expected to create a stronger pipeline of homegrown semiconductor intellectual property while generating high-skilled employment opportunities for engineers, researchers, and technology professionals.

Industry experts believe the expanded funding could help India emerge as a credible alternative in the global semiconductor supply chain. The disruptions experienced during the COVID-19 pandemic highlighted the risks of relying on a limited number of chip-producing countries. As multinational companies diversify their manufacturing bases, India is positioning itself as an attractive destination with policy support, a large talent pool, and growing infrastructure.

The semiconductor sector is also expected to have a multiplier effect on the broader economy. Strong domestic chip manufacturing can accelerate growth in electronics manufacturing, automotive technology, consumer devices, renewable energy systems, industrial automation, and emerging AI applications. Over time, this could reduce import costs, improve supply chain resilience, and strengthen India's competitiveness in high-value manufacturing.

While the approval by the Finance Ministry panel is a significant development, the proposal still requires clearance from the Union Cabinet before the next phase of the mission is formally implemented. If approved, the ₹1.25 lakh crore investment would represent one of India's biggest commitments to building a world-class semiconductor ecosystem and could play a crucial role in transforming the country into a major player in the global chip industry over the coming decade.