Semicon 2.0 Approved with Rs 1.27 L Crore Outlay; Check Stocks in Focus

Mumbai, July 16: Semicon 2.0, the second iteration of the policy framework to bolster India’s semiconductor design and manufacturing ecosystem has been approved. The policy has a total budget outlay of Rs 1,27,500 crore and seeks to build upon the achievements of Semicon 1.0. 

“The thrust of this scheme is to provide sustained and long-term support to strengthen India’s semiconductor design and manufacturing ecosystem and enable India to take a definitive stride towards becoming a significant player on the world semiconductor map,” Cabinet Minister J.P. Nadda said during a briefing after the Union Cabinet led by Prime Minister Narendra Modi approved the.  

Officials speaking on the condition of anonymity said Semicon 2.0 aims to move away from incentivising standalone fabs and instead look at creating a fully-fledged, self-reliant semiconductor ecosystem covering the entire value chain from design to materials (such as chemicals and gases), fabs, packaging and research and talent development. 

Semicon 2.0 is structured around six pillars, each focused on a component of the semiconductor supply chain: 

1. Design: Building on the early success ofSemicon1.0, under which 105 startups have launched chip development efforts, this pillar aims to create full chip and system IP to help India emerge as a semiconductor design destination. 
2. Machines and materials: Incentivise companies manufacturing machines used for chip development, along with chemicals and gasesrequiredin fabs. 
3. Setting up morefabs: Siliconfabs, compound semiconductor fabs (image sensors, Wi-Fi chips, etc), discrete component (high voltage, high frequency, etc.) and display fabs (as part of TRIDEV). The country’s first fab under this programme is expected to come online in calendar year 2028. 
4. Strengthening ATMP/OSAT: ATMP is advanced assembly and testing platform while OSAT refers to foundries that provide advanced packaging, testing, handlingservicesand equipment. 
5. Research and development: Expanding beyond the 28nm-110nm technologies India initially focused on during the early days of chip development.
6. Talent development: Refers to expanding training programmes beyond the 315 universities that have already trained some 68,000 students in chip design.

As of June 2023, under phase 1 of the India Semiconductor Mission (ISM 1.0), twelve manufacturing units had been approved for setting up, with committed cumulative investment of over Rs 1.64 lakh crore. These include one silicon fab, one silicon carbide fab, one integrated gallium nitride micro LED display fab, and nine packaging units targeting consumer appliances and electronics, industrial electronics, automobiles, power electronics, telecom and aerospace. Of the twelve fabs, Micron, Kaynes and CG Semi have already begun commercial production and one more unit is likely to join them before the end of this calendar year. 

On the design side, twenty-four projects led by startups and MSMEs have been financially supported while 105 startups and MSMEs have been provided with access to industry standard EDA design tools for developing chips for satellite communication, drones, surveillance systems, IoT devices and telecom equipment. 

Semiconductor companies with exposure to different pillars under Semicon 2.0 

India currently doesn’t have a pure-play chip fab trading on the local exchanges. Investors looking at Semicon 2.0 related stocks should instead look at three buckets of companies including those offering semiconductor design services and software (chips & system IP), assembly and testing companies and companies expected to benefit from new fab construction. 

These include chip designers and software companies like Tata Elxsi and HCL Technologies, which are expected to benefit from policy support extended to the design pillar. Moschip Technologies and ASM Technologies are smaller bets exposed to the design pillar. 

On manufacturing, packaging and testing Dixon Technologies is an EMS provider moving into components, while Kaynes Technology is building an OSAT facility through its Kaynes Semicon unit in Gujarat. SPEL Semiconductor, an IC packaging and testing player, and CG Power & Industrial Solutions, which is setting up an OSAT unit in Sanand, should also benefit from policy support extended to companies offering ATMP/OSAT services. 

Tata Electronics, part of the Tata group, will soon start production at its fab being set up in Gujarat. While the Tata group doesn’t have a pure-play semiconductor hardware company listed on exchanges, investors can buy Tata group stocks like Tata Consultancy Services (TCS), Tata Steel and Tata Motors for indirect exposure to Tata Electronics’ fab.  

Vedanta and Bharat Electronics are two other large enterprises setting up fabs in Gujarat and Pune respectively and building indigenous chip designs for use in core sectors such as defence. Bharat Electronics’ fab will also produce chips for defence communications. Micron’s India operations are central to the India Semiconductor ecosystem coming together, but Micron is only traded on the US exchanges. 

Among pure-play hardware plays, Infra.e Services provides equipment, facilities and services for chip production and researchers at Axis Securities believe the entire chain will benefit from upcoming policy announcements. 

In power semiconductors and other adjacent categories, RIR Power Electronics provides indirect exposure to the second pillar (machines/materials) as a manufacturer of power semiconductor devices. ABB India supplies automation and cleanroom infrastructure to fabs and runs two fabs of its own in India. 

“We have checked with experts who track the space, and there is no NSE or BSE semiconductor index,” said a market participant requesting anonymity.  

Tracking execution on announcements made under each pillar, as well as capacity ramp ups and fresh order wins will be important for investors looking to capitalise on the trillion-rupee semiconductor push over the coming quarters, rather than focussing only on the headline policy outlay numbers. 

Source:

• PIB, Union Cabinet briefing, July 15, 2026.
• Company mentions are for illustrative purposes only.