Cabinet Approves Semicon 2.0, MPMS
Two major announcements were made on the same afternoon, and if you're anywhere near India's electronics or chip-making ecosystem, both are worth paying close attention to. On 15 July 2026, the Union Cabinet approved Semicon 2.0 and the Mobile Phone Manufacturing Scheme (MPMS). The two announcements were released separately by PIB on the same day.
The two schemes are closely connected. Semicon 2.0 focuses on strengthening semiconductor manufacturing in India. MPMS focuses on expanding mobile phone manufacturing using those components, which already happen to be India's single biggest electronics export. Together, the two schemes aim to strengthen both semiconductor production and finished electronics manufacturing in India: from semiconductor production to mobile phone manufacturing.
Here's a summary of what the Cabinet approved, what each scheme covers, and why it matters for a manufacturer, a startup, an investor, or just someone tracking where India's electronics story is headed.
📋 Semicon 2.0 and MPMS — At a Glance
| Detail | Information |
|---|---|
| Semicon 2.0 Outlay | Rs. 1,27,500 crore |
| MPMS Outlay | Rs. 62,500 crore |
| MPMS Scheme Tenure | 5 years — FY 2026-27 to FY 2030-31 |
| Semicon 1.0 Manufacturing Units Approved | 12 units, over Rs. 1.64 lakh crore investment |
| Semicon 1.0 Design Startups Supported | 105 startups given access to EDA tools |
| First Fab Commissioning | Expected 2028 |
| Universities Training Chip Designers | 315 universities, ~68,000 students trained so far |
| India's Global Mobile Manufacturing Rank | 2nd largest by volume |
| Domestically Made Phones Used in India | 99.2% |
| MPMS Expected Direct Jobs | ~60,000 |
| MPMS Projected Cumulative Production | Approx. Rs. 39,00,000 crore over scheme tenure |
🎯 Semicon 2.0 — The Six Pillars Explained
Semicon 2.0 is more than a single incentive scheme. It is built around six pillars, each targeting a different weak spot in India's chip ecosystem. Here's what each one actually covers:
| Pillar | What It Covers | Real-World Example |
|---|---|---|
| 🎨 Design | Deepening India's chip and IP design ecosystem, building on 105 startups already active | A Bengaluru fabless startup designing an IoT sensor chip can now access subsidised EDA tools and funding to take its design from prototype to production-ready |
| ⚙️ Machines and Materials | Incentivising companies making fab equipment, chemicals and gases used in chip manufacturing | A domestic company producing ultra-pure etching chemicals for fabs — instead of importing from Japan or the US — gets incentive support to scale up |
| 🏭 Setting Up More Fabs | Attracting silicon, compound semiconductor, discrete component and display fab investments | With the first fab going live in 2028, global players already building in Gujarat and Assam are being courted for a second and third wave of fabs |
| 📦 ATMP/OSAT Strengthening | Growing India's chip assembly, testing, marking and packaging capacity | An ATMP unit that currently does basic packaging could get support to bring in advanced packaging tech used for AI and high-performance chips |
| 🔬 Research & Development | Moving beyond the current 28nm–110nm nodes toward more advanced process nodes | A university-industry collaboration working on next-gen node research gets funding to compete with global R&D centres instead of relying solely on them |
| 🎓 Talent Development | Deepening chip-design training across 315 universities and expanding hands-on fab exposure | Engineering students who learned chip design on EDA software in class now get exposure to real clean-room and fab-construction training before graduating |
Each pillar on its own sounds incremental. But taken together, they're trying to fix the same problem India has had with electronics manufacturing for years — strong at assembly, weak at the deeper layers like design IP, equipment, and materials. Semicon 2.0 is a direct attempt to move up that chain.
📊 ISM 1.0 Progress — What's Already on the Ground
Before getting excited about Semicon 2.0's promises, it's worth looking at what the first phase, ISM 1.0, has actually delivered so far. This isn't just policy on paper — real fabs and packaging units are already running.
| Category | Details |
|---|---|
| Manufacturing Units Approved | 12 units — cumulative investment over Rs. 1.64 lakh crore |
| Unit Types | 1 silicon fab, 1 silicon carbide fab, 1 integrated Gallium Nitride Micro LED display fab, 9 packaging units |
| Sectors Served | Consumer appliances, industrial electronics, automobiles, power electronics, telecom, aerospace |
| Companies in Commercial Production | Micron, Kaynes, CG Semi — already producing; a fourth expected to start in 2026 |
| Design Projects Funded | 24 semiconductor design projects from startups and MSMEs |
| EDA Tool Access Granted | 105 startups/MSMEs |
| Design Focus Areas | Satellite communication, drones, surveillance cameras, IoT devices, LED drivers, AI systems, telecom equipment, smart meters |
So when the government talks about "deepening the design ecosystem" under Semicon 2.0, it's not starting from zero — it's building on 105 companies that are already mid-way through designing real products, several of which are expected to move into deployment once prototyping wraps up.
📱 MPMS — What's Actually in the Scheme
The Mobile Phone Manufacturing Scheme is the follow-up act to the Production Linked Incentive Scheme for Large Scale Electronics Manufacturing (PLI-LSEM), which officially wound down on 31 March 2026. MPMS picks up where PLI-LSEM left off, but with a sharper focus — not just making more phones, but building Indian brands and deepening how much of each phone is actually made in India.
| MPMS Feature | Detail |
|---|---|
| Total Outlay | Rs. 62,500 crore |
| Scheme Duration | FY 2026-27 to FY 2030-31 (5 years) |
| Base Incentive on Eligible Sales | 2.25% to 5%, differentiated by category |
| Additional Incentive — Domestic Component Sourcing | Up to 1.5% extra |
| Additional Incentive — Indian Brand Design & R&D | 3% extra on eligible sales |
| Predecessor Scheme | PLI-LSEM (ended 31 March 2026) |
To understand how this works in practice, consider this example about the incentive stack. Say a manufacturer produces phones in India, sources key components — like camera modules or PCBs — domestically instead of importing them, and also invests in an in-house R&D team designing an Indian smartphone brand. That company isn't just getting the base 2.25%–5% incentive — it can stack the additional 1.5% for domestic sourcing and another 3% for design and R&D on top. A company chasing the full stack has a real incentive to move manufacturing, component sourcing, and R&D all onto Indian soil, rather than just doing final assembly here while importing everything else.
This matters because from the earlier PLI-LSEM structure, which was more focused on production volumes. MPMS is nudging companies toward depth — not just building more phones in India, but building more of each phone in India.
📈 What These Schemes Are Expected to Deliver
Over the five-year run of MPMS, cumulative mobile phone production in India is projected to touch roughly Rs. 39,00,000 crore, with a meaningful jump in exports and around 60,000 direct jobs created along the way. Semicon 2.0 doesn't come with a single output number in the same way — its payoff is more structural: more fabs, deeper design capability, and a stronger base for advanced chip nodes over the next several years.
🌍 The Bigger Picture — Why This Matters Now
Since FY 2014-15, electronics manufacturing in India has grown roughly sevenfold, and exports elevenfold, largely riding on the back of mobile phone production. India is now the world's second-largest mobile phone manufacturer by volume, and about 99.2% of phones sold in the country are also made here. In 2025, smartphones overtook diesel fuel and cut diamonds to become India's single largest export category — a genuinely remarkable shift for a sector that was mostly assembling imported components a decade ago.
That success is also exactly why the government is now trying to build the semiconductor layer underneath it. Right now, a large share of the chips going into "Made in India" phones are still imported. Semicon 2.0 is the government's bet that if India can build fabs, design chips, and train enough engineers domestically, the next phase of electronics growth won't just be assembly — it'll be genuine manufacturing depth.
✅ What This Means for You — Practical Takeaways
- 🏭 Electronics manufacturers — If you're already in mobile phone production or considering entering it, MPMS's stacked incentives make domestic component sourcing and in-house R&D worth evaluating now, not later. Check your eligibility under the differentiated 2.25%–5% base rate before FY 2026-27 begins.
- 💡 Chip design startups — With 105 startups already using EDA tools under ISM 1.0, Semicon 2.0's design pillar is a signal that funding and IP support will keep expanding. If your startup works on IoT, satellite comms, or AI system chips, this is a good moment to explore support channels.
- 🧪 Equipment and materials suppliers — Companies making fab-grade chemicals, gases, or manufacturing equipment domestically should watch the "Machines and Materials" pillar closely — this is a segment India has historically imported almost entirely.
- 🎓 Engineering students and educators — With 315 universities and 68,000+ students already trained, deeper clean-room and fab-construction exposure is coming. Worth tracking which institutions get selected for expanded training programmes.
- 📦 ATMP/OSAT operators — If your unit currently does basic packaging, this is the moment to explore upgrading toward advanced packaging technologies, which Semicon 2.0 is actively trying to attract to India.
- 💰 Investors tracking the sector — With 12 manufacturing units already at Rs. 1.64 lakh crore investment and three companies (Micron, Kaynes, CG Semi) already in commercial production, the sector has moved past the announcement stage into execution — worth factoring into any India electronics thesis.
In practice, companies that invest early in domestic sourcing could gain a stronger competitive position once the incentives begin.
The approvals are only the first step. The real impact will depend on how quickly manufacturers expand production, invest in design capabilities, and increase domestic sourcing over the next few years
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Disclaimer: All information in this post is sourced from official PIB press releases dated 15 July 2026, Ministry of Electronics & IT, Government of India (Release IDs: 2284796 and 2284792). Figures and scheme details are based on publicly available government announcements. Readers should verify scheme-specific eligibility and incentive structures through official Ministry notifications before making business decisions. This post is for informational and awareness purposes only.