What is Semicon 2.0?
Semicon 2.0, also referred to as India Semiconductor Mission 2.0, is a comprehensive national policy framework and financial incentive scheme notified in 2026 that extends fiscal support across the entire semiconductor value chain, building on the first phase of the India Semiconductor Mission which had an outlay of around Rs 76,000 crore.
The first phase focused heavily on attracting large fabrication and display plants, and by mid-2026 that outlay had been almost fully committed across a dozen or so approved projects. Semicon 2.0 is designed to broaden that support well beyond large fabs, deliberately reaching further down into design, equipment, materials, and talent development, which is exactly where most Indian MSMEs and startups can realistically participate.
The Six Pillars of Semicon 2.0
- Design: support for strategic semiconductor IPs, chips, systems on chip and modules, commercial-sector semiconductor design, and a deployment-linked incentive for qualifying products already in the market
- Machines and materials: capital support for plants manufacturing wafers, photomasks, photoresists, semiconductor-grade raw materials, test and characterisation facilities, and equipment assembly or refurbishment
- Fabs: support for setting up new silicon semiconductor wafer fabs, compound semiconductor facilities, photonics, sensors including MEMS, discrete semiconductors and display fabs
- ATMP and OSAT: support for advanced and legacy packaging facilities, covering assembly, testing, marking and packaging operations
- Research and development: support for advanced semiconductor technology R&D across the ecosystem
- Talent development: support for building specialised workforce skills across design, manufacturing, packaging and shop-floor roles
Where MSMEs and Startups Fit In
Can MSMEs and startups apply under Semicon 2.0?
Yes, different categories within the six pillars target different types of applicants, and the design pillar in particular is structured to include Indian startups and MSMEs seeking support for chip design work, while equipment and materials categories under the second pillar are also realistic entry points for smaller specialised manufacturers rather than only large fab operators.
The scheme’s own structure acknowledges this directly, since it separates categories meant for large capital-intensive fabs and display plants from categories meant for design-stage work and component or equipment manufacturing, where the capital thresholds are naturally lower and better suited to an MSME’s balance sheet.
Incentive Structure and Caps
| Support Mechanism | Applicable To |
|---|---|
| Seed funding and equity co-investment | Early-stage design and deep-tech semiconductor ventures |
| Royalty financing | Commercial-sector chip and IP design |
| Deployment-linked incentive | Qualifying products once deployed at scale |
| Production-linked incentive | Manufacturing-stage categories including fabs and ATMP/OSAT |
| Pari passu fiscal support | Capital-intensive categories such as fabs and display plants, typically up to 50 percent for silicon and compound semiconductor facilities |
For smaller design and component categories, incentives are capped per application and per company, including group companies, to keep the scheme accessible to a larger number of applicants rather than concentrating support in a handful of very large claims. Exact caps vary by category and are notified in the scheme’s detailed guidelines, so confirm the specific cap applicable to your category before finalising your project cost estimate.
Who Administers the Scheme
Semicon 2.0 is administered by the India Semiconductor Mission under the Ministry of Electronics and Information Technology, with the Centre for Development of Advanced Computing serving as the design and technical partner for evaluation and implementation support.
How to Prepare Your Application
- Identify which of the six pillars and ten categories genuinely matches your business, since applying under the wrong category wastes time in the evaluation process
- Prepare a detailed project report covering technical capability, capital cost, expected output and, where relevant, your existing manufacturing or design track record
- Ensure your company’s financial statements, GST filings and, if applicable, Udyam registration are current and consistent, since these get cross-checked during evaluation
- Where your category involves capital-intensive infrastructure, budget realistically for the portion of cost you will bear yourself, since even the highest fiscal support categories still require significant co-investment from the applicant
- Engage early with the India Semiconductor Mission’s application process rather than waiting, since detailed sector and category-specific guidelines continue to be notified progressively after the scheme’s initial notification
Key Takeaways
- Semicon 2.0 was notified on 31 August 2026 with an approved outlay of roughly Rs 1,27,500 crore, spanning six pillars and ten categories.
- The design pillar and the equipment and materials pillar are the most realistic entry points for Indian startups and MSMEs, as opposed to the capital-intensive fab and display categories.
- Incentive mechanisms include seed funding, equity co-investment, royalty financing, deployment-linked incentives, production-linked incentives and pari passu fiscal support depending on category.
- The scheme is administered by the India Semiconductor Mission under MeitY, with the Centre for Development of Advanced Computing as design and technical partner.
- Category-specific caps and eligibility details continue to be notified progressively, so confirm the latest guidelines for your specific category before applying.
FAQs
What is the total outlay under Semicon 2.0?
Semicon 2.0 has an approved outlay of approximately Rs 1,27,500 crore, notified by the Ministry of Electronics and Information Technology on 31 August 2026.
Can a small MSME apply under Semicon 2.0, or is it only for large fabs? MSMEs and startups can apply, particularly under the design pillar and the equipment and materials pillar, which are structured with categories suited to smaller applicants rather than only large capital-intensive fab or display plant projects.
How many pillars and categories does Semicon 2.0 cover?
Semicon 2.0 is structured across six pillars, namely design, machines and materials, fabs, ATMP/OSAT, research and development, and talent development, further divided into ten categories.
Who is the nodal agency for Semicon 2.0?
The India Semiconductor Mission under the Ministry of Electronics and Information Technology is the nodal agency, with the Centre for Development of Advanced Computing serving as design and technical partner.
What kind of financial support does Semicon 2.0 offer?
Support mechanisms include seed funding, equity co-investment, royalty financing, deployment-linked incentives, production-linked incentives and pari passu fiscal support, with the specific mechanism depending on the applicant’s category.
Is Semicon 2.0 a continuation of the earlier semiconductor scheme?
Yes, Semicon 2.0 builds on the first phase of the India Semiconductor Mission, which had an outlay of around Rs 76,000 crore and was focused primarily on large fabrication and display plants.
Talk to Growthora
Navigating which of Semicon 2.0’s ten categories actually fits your business, and preparing a credible project report for evaluation, is easier with a team that tracks these notifications closely. Book a free consultation with Growthora Advisory’s government funding team.
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