Micron’s Gujarat chip plant nears first output as India rolls out Semiconductor Mission 2.0

India is nearing a symbolic milestone in its long-sought bid to build a domestic semiconductor industry: the first commercial batch of chips from Micron Technology’s new plant outside Sanand, Gujarat, is expected to roll off the line by the end of February.

The timing intersects with a fresh policy push in New Delhi. In her Feb. 1 Union Budget speech for 2026–27, Finance Minister Nirmala Sitharaman announced what the government is calling India Semiconductor Mission 2.0 (ISM 2.0)—a revamped effort that broadens support beyond greenfield fabrication plants to the wider semiconductor ecosystem.

Together, the factory floor in Gujarat and the fine print in the Budget highlight a shift in India’s approach: from a narrow emphasis on chip fabs to a “full-stack” industrial strategy spanning equipment, materials, design and talent. But the initiative’s scale may ultimately depend on a proposed—yet still unapproved—support package of more than 1 trillion rupees.

ISM 2.0 is on the books—big funding is not

A background note issued by the Press Information Bureau on Feb. 7 formally labeled the initiative “India Semiconductor Mission 2.0,” calling it a “decisive moment” in India’s semiconductor push.

According to the note, ISM 2.0 will focus on:

• Manufacturing semiconductor equipment and materials in India
• Developing “full-stack” Indian semiconductor intellectual property
• Strengthening domestic and global supply chains
• Creating industry-led research and training centers to build a skilled workforce

Budget allocations underscore the distinction between what is already funded and what remains aspirational. For the current fiscal year, the Budget sets aside 8,000 crore rupees for the existing Modified Programme for Development of Semiconductor and Display Manufacturing Ecosystem in India, the incentive framework behind the original mission. A separate allocation of 1,000 crore rupees has been made for ISM 2.0 itself.

However, there is no Union Budget line item for the much larger fund that officials and media reports have discussed in recent weeks, and no Cabinet-approved scheme has been notified.

The proposed 1-trillion-rupee package remains under discussion

Officials in the Ministry of Electronics and Information Technology (MeitY) have sought “over 1 lakh crore rupees”—more than 1 trillion rupees—in fresh support for ISM 2.0, in addition to the 76,000-crore-rupee semiconductor program approved in 2021, according to people familiar with the matter.

A March report in The Economic Times, citing unnamed officials, said the government planned to unveil a fund of more than 1 trillion rupees within two to three months to support local chipmaking, including subsidies for design, manufacturing equipment and supply-chain development.

MeitY Secretary S. Krishnan has indicated that the original incentive pool is close to fully committed. Speaking at a semiconductor conference in September 2025, he said “almost the entire funding” under the 2021 program had been committed, and estimated that combined central and state fiscal support for semiconductors would reach about $30 billion.

At an artificial intelligence summit in New Delhi in February, Krishnan said India’s “first commercial semiconductor production” would begin by the end of the month at Micron’s assembly, test, mark and pack (ATMP) facility in Sanand. He also linked ISM 2.0 to a more ambitious goal: enabling the domestic design of AI-based chips.

What the first mission funded—and what comes next

The original India Semiconductor Mission, cleared by the Union Cabinet in December 2021, created a 76,000-crore-rupee program to support chip and display manufacturing. After subsequent modifications, it offered up to 50% central fiscal support for projects including silicon fabs, display fabs, compound semiconductors, and assembly and test facilities.

A separate Design Linked Incentive (DLI) scheme, with an outlay of 1,000 crore rupees, targeted fabless design startups with support of up to 15 crore rupees per company.

By the end of 2025, the government had approved 10 projects worth 1.6 lakh crore rupees across six states. The list includes Micron’s ATMP plant; Tata Electronics’ planned wafer fabrication facility in Gujarat; an advanced packaging facility by Tata in Assam; and projects involving CG Power and Industrial Solutions with Renesas Electronics, Kaynes Technology, SiCSem, 3D Glass Solutions, Vama Sundari Investments, Continental Device India and Advanced System in Package Technologies.

Planning documents for 2026–27 set targets for one additional fab, nine new assembly and compound-semiconductor units, and 30 design companies to be supported under the DLI scheme. The government estimates those projects alone could create about 4,500 direct jobs during the year.

From “fabs” to “full-stack”

Officials and industry executives say ISM 2.0 is meant to address perceived limitations of the first phase, which critics described as overly focused on headline fab announcements and too slow to catalyze local suppliers of tools and materials.

In public remarks, MeitY joint secretary Sushil Pal has described ISM 2.0 as a shift from “fabs to full-stack capability,” with a stronger emphasis on ancillary industries and small and medium-sized enterprises—for example in clean-room equipment, gases, chemicals and specialty materials.

The government has also tied the mission to its indigenous DIR-V program supporting open-source RISC-V–based processors such as SHAKTI and AJIT, with the aim of integrating Indian-designed cores into industrial, consumer and defense systems.

A broader tech and supply-chain push

The semiconductor measures sit alongside other Budget moves aimed at strengthening India’s technology base, including:

• Higher outlays for electronics components manufacturing, raised to 40,000 crore rupees
• Tax incentives for data centers and AI computing
• New “rare earth corridors” in states such as Odisha and Andhra Pradesh to secure inputs for batteries, electronics and electric vehicles

Big ambitions, late start

India’s semiconductor market was estimated at about $38 billion in 2023 and is projected by official estimates to reach $100 billion to $110 billion by 2030. The country currently imports roughly 95% of its chip requirements.

Policy documents say the government wants 70% to 75% of chips used in domestic applications to be designed and manufactured in India by 2029, and has set a longer-term ambition of ranking among the world’s leading semiconductor nations, including at process nodes of 3 nanometers and below.

But India is entering a crowded global race. The United States has enacted a $52 billion package under the CHIPS and Science Act, and the European Union, Japan and South Korea have each announced multibillion-dollar programs. Taiwan remains dominant, holding a majority share of global semiconductor manufacturing and a near-monopoly on leading-edge logic nodes.

Analysts say India’s decision to begin with mature-node fabs and packaging plants—while building equipment and materials capacity under ISM 2.0—reflects both practical constraints and a phased strategy. Projects such as Tata’s planned fab with Taiwan’s Powerchip Semiconductor Manufacturing Corp., and compound-semiconductor ventures in Odisha and Gujarat, target autos, power electronics and communications rather than leading-edge smartphone processors.

Design choices for the fund could determine the outcome

How the proposed 1-trillion-rupee fund is structured could determine whether the new mission moves beyond that base. People briefed on internal discussions say options include a mix of direct subsidies, interest subsidies, guarantees and equity support channeled through ISM and other financial institutions over several years.

Key questions include how risk will be shared between the state and private investors, what conditions will be attached to disbursements, and whether there will be claw-back provisions if projects miss milestones.

Local constraints: water, power and land

Beyond fiscal and technical hurdles, chip projects bring local and environmental pressures. Fabs and advanced packaging plants consume large volumes of water and electricity, raising concerns about resource stress in regions such as Gujarat and Assam.

Land acquisition and the impact on nearby communities have drawn less national attention than investment announcements so far, but may come into sharper focus as construction accelerates.

What to watch next

For now, tangible progress is concentrated in a handful of sites. Gujarat is emerging as a nascent chip cluster anchored by Micron and Tata. Assam, Odisha, Uttar Pradesh, Punjab and Andhra Pradesh are positioning themselves for packaging, compound semiconductors and discrete devices.

On the talent front, initiatives such as Chips to Startups and semiconductor-focused university curricula aim to train tens of thousands of engineers in design and manufacturing.

The coming months will show whether the government can match ISM 2.0’s ambition with the scale, structure and speed of funding officials have signaled—and whether India can turn a single ATMP line in Sanand into a broader, sustainable semiconductor industry.