SEMICON 2.0 PORTAL AND ECMS APPROVALS: INDIA'S CHIP PUSH EXPLAINED

Why In News?

The Union Ministry of Electronics and Information Technology (MeitY) launched the Semicon 2.0 Web Application Portal and announced 12 approved applicants under the Electronics Components Manufacturing Scheme (ECMS). 

What Is Semicon 2.0?

• Second Phase Of ISM: Semicon 2.0 is the second phase of the India Semiconductor Mission (ISM).   

• Approval And Notification: The Union Cabinet approved it in July 2026.

• Outlay: It has an outlay of about ₹1,27,500 crore, to be spent over six years.  

• New Portal: The Semicon 2.0 Web Application Portal lets companies, startups and institutions apply online for support. 

Six Pillars

Fiscal Support

• Silicon Fabs: 40% of eligible capital expenditure.  

• Compound, Photonics And Sensor Fabs: 35% of eligible capital expenditure.  

• Equipment Makers: Production-linked incentives of 2% to 10% on eligible sales.  

Shift In Strategy

• From Factories To Ecosystem: The minister described Semicon 1.0 as "setting the foundation" and Semicon 2.0 as getting the ecosystem in place around the factories. 

• Investment Interest: The government has received investment commitments of about $11–12 billion under Semicon 2.0, covering equipment, materials, gases, chemicals, packaging and substrates.  

What Did Semicon 1.0 Achieve?

• Launch: The first phase, approved in December 2021, had an outlay of ₹76,000 crore.  

• Projects: It approved 12 semiconductor projects with cumulative investment of more than ₹1.64 lakh crore.

• Production Begins: Three units were already making chips by 2026. 

Major Projects

What Is The Electronics Components Manufacturing Scheme?

• Aim: ECMS supports domestic manufacturing of electronic components and sub-assemblies, moving India beyond assembling finished devices. 

• Approval: The Union Cabinet approved ECMS in March 2025 with an initial outlay of about ₹22,919 crore.  

• Budget Boost: Budget 2026–27 raised the scheme's allocation to ₹40,000 crore.  

• Sector-Agnostic: It covers components for mobile phones, IT hardware, wearables, automobiles and other digital applications. 

Why Are These Initiatives Significant?

Economic Significance

• Reduce Imports: India imports most of its semiconductors and electronic components, which costs billions of dollars every year. 

• Value Addition: Making components at home raises the value India captures from electronics production.  

• $500 Billion Goal: The government aims for $500 billion in electronics manufacturing by 2030–31.  

Strategic Significance

• Supply Chain Security: The COVID-19 chip shortage showed the risks of depending on a few countries for chips. 

• China Plus One: Global companies seeking alternatives to China see India as a partner. 

• Technology Sovereignty: Chips are essential for defence, telecom, AI and electric vehicles.  

Employment

• Jobs: Fabs, packaging units and component plants create high-skill jobs.

What Are The Key Challenges?

High Costs And Complexity

• Expensive Fabs: A modern fab costs billions of dollars and needs years to break even.  

• Partnership Risks: Large projects can fall through if partners disagree.  

• Example: In 2023, Foxconn withdrew from its proposed semiconductor joint venture with Vedanta, showing how difficult it is to set up chip manufacturing. 

Ecosystem Gaps

• Weak Supply Chain: India lacks a deep supply of specialty gases, chemicals, equipment and substrates. 

• Limited Design Capability: The minister has flagged weak design-led localisation and quality standards among component makers. 

Infrastructure Needs

• Water And Power: Fabs need large amounts of ultra-pure water and uninterrupted power. 

Talent

• Skill Shortage: India needs many more trained fab engineers and technicians. 

Global Competition

• Rival Subsidies: Other countries offer large incentives to attract chip investments.  

• Example: The United States' CHIPS and Science Act (2022) provides about $52.7 billion for domestic semiconductor manufacturing and research, competing for the same investments. 

What Is The Way Forward?

Build The Full Ecosystem

• Attract Suppliers: Bring in makers of equipment, gases, chemicals and substrates through Semicon 2.0 incentives.  

• Learn From Leaders: Successful chip hubs depend on dense ecosystems.  

• Example: Taiwan, home to TSMC, built a dense network of suppliers, universities and research institutes around its fabs over decades, making it the world's leading chip manufacturer. 

Strengthen Design And R&D

• Design Support: Expand support for chip design startups.  

• Research Partnerships: Link industry with IITs and research labs. 

Skill Development

• Train Talent: Train engineers and technicians through university programmes and industry partnerships. 

Policy Stability

• Predictable Policies: Keep incentives stable and approvals fast to build investor confidence.  

Conclusion

The Semicon 2.0 portal and new ECMS approvals mark India's shift from building individual chip factories to developing a full semiconductor and electronics ecosystem. Success will depend on strong supply chains, design capability, skilled talent and stable policies to make India a trusted global electronics hub.

Source: PIB