India Semiconductor Mission 2.0: A push for Chip manufacturing and jobs

India Semiconductor Mission 2.0 marks a major shift in India’s strategy for chip manufacturing and technology jobs. On 1 February 2026, Union Finance Minister Nirmala Sitharaman unveiled the India Semiconductor Mission (ISM) 2.0 in her ninth consecutive Budget speech, indicating a radical change in the Indian approach to technology and manufacturing. The announcement was one of the key Union Budget 2026 technology announcements focused on long-term industrial growth. The government is currently interested in developing an entire semiconductor ecosystem rather than chip assembly only, which encompasses equipment, materials and intellectual property design, and might radically change the role of China in the global supply chain of technology.

How ISM 2.0 plans to build India’s full chip supply chain

Under ISM 2.0, the government aims to build a full semiconductor ecosystem covering equipment, materials and chip design. The new mission will also include an increased allocation of Rs40,000 crore scheme of Electronics Component Manufacturing Scheme (ECMS) which is an increase in the initial allocation of Rs22,919 crore which was initiated back in 2025. The ECMS scheme India will play a crucial role in reducing dependence on imported electronics parts.

Sitharaman said in the Parliament that the first phase will amplify the capacity of the country in the semiconductor sector, but the second phase will involve making semiconductor equipment and materials, cultivating full- stack Indian IP and strengthening critical supply chains. She insisted on the establishment of industry-based research and training facilities to come up with advanced technology and a skilled labor force. The Electronics Component Manufacturing Scheme has been expanded to support local production of key chip components.

From Assembly to innovation

The shift highlights the government’s plan to strengthen semiconductor manufacturing in India beyond simple assembly units. According to the ISM 1.0, India accepted a number of semiconductor fabrication projects, outsourcing assembly and testing facilities (OSAT), and compound fabrication plants in various states with the investment commitment cumulative of about Rs1.6 lakh crore. The initial steps contributed to setting up a base of domestic production and decreased strategic reliance on imports.

Nevertheless, the world is still facing an upsurge in semiconductor demand because of artificial intelligence, electric vehicles and connected devices. The shift to ISM 2.0 is an intentional act to get out of low-value assembly and modular production, and high-value activities like capital equipment production, materials production and intellectual property development. When declaring the mission, Sitharaman emphasised the importance of industry-academia collaboration in the development of a generation of workforce that will be able to sustain long-term technological growth.

Building a skilled workforce

ISM 2.0 is expected to generate thousands of chip manufacturing jobs in India across fabrication, testing and design roles. One of the elements of the mission is the establishment of centres that will be a synthesis of academic research and practical needs of the industry. The point of these training centres is to prepare engineers and technicians with the specialised knowledge needed to produce semiconductors - be it designing and testing of the chip or in the field of complex materials science. This type of capacity building will be essential not just in production but in creating innovation in the tech ecosystem of India as well.

New semiconductor training centres in India will help engineers gain skills in chip design and advanced materials. Professionals have been enthusiastic about the initiative and have seen it as the point of investment and creation of employment. Most of the projects that are currently in the pipeline will promote job creation in manufacturing, design, testing and supply-chain processes with the growth of the ECMS and strong interest by the industry. The estimated production scale and employment creation opportunities of the scheme, which is partially manifested in the almost 51000 direct employment opportunities associated with the approved electronics component projects

Long term economic impact

With the recent development of semiconductor capability in India, the time has arrived when countries around the globe are looking to diversify their bases of chip supply outside the centres. India is positioning itself as an alternative base in the global semiconductor supply chain through policy support and incentives.According to analysts, India has an opportunity to be a major player in areas including low- to mid-complexity equipment, wafer handling, and packaging tools and silicon carbide materials that are important in future technologies with proper incentive. The goal is to create a self-reliant semiconductor ecosystem in India that supports innovation and large-scale manufacturing.

Even though there are still issues, such as the need to scale infrastructure and enhance local supply chains, ISM 2.0 provides a roadmap on how to transform India into one of the leading technological manufacturing regions. Through the combination of policy support with industry implementation, the government is expected to create a high-quality job environment, less reliance on imports and establishment of a competitive semiconductor ecosystem that will attract local industry and foreign investment. These reforms could transform the India chip industry into a key pillar of economic growth. The new India semiconductor policy focuses on moving from assembly to high-value innovation.