India Plans Rs 7,100 Crore Semiconductor Incentive Push to Accelerate Chip Manufacturing Ecosystem 

The Indian government is reportedly considering a fresh incentive package of around ₹7,100 crore for the semiconductor sector during the financial year 2026–27, as it continues efforts to build a strong domestic semiconductor and electronics manufacturing ecosystem.

The proposed allocation is currently under discussion and has not yet been formally announced by the Ministry of Electronics and Information Technology (MeitY) or the Ministry of Finance.

According to reports, the Department of Expenditure has suggested that MeitY extend support under the modified semiconductor incentive programme to one semiconductor fabrication facility, nine semiconductor manufacturing projects, and around 30 chip design companies.

Under the proposed plan, nearly ₹2,000 crore could be allocated towards a semiconductor fabrication unit, which is expected to attract investments of around ₹4,000 crore and create approximately 1,500 jobs.

Another ₹5,000 crore is expected to support projects in areas such as compound semiconductors, silicon photonics, sensors, discrete semiconductor fabrication, and semiconductor assembly, testing, marking, and packaging (ATMP). These projects are estimated to attract around ₹11,000 crore in investments and generate nearly 3,000 employment opportunities.

The remaining ₹100 crore could be directed towards the Design Linked Incentive (DLI) scheme, supporting around 30 semiconductor design companies, including intellectual property (IP) core development and hiring of approximately 200 design professionals.

If approved, the proposed incentives could help facilitate investments of nearly ₹15,000 crore and create thousands of jobs across semiconductor manufacturing, packaging, and design segments.

The development comes as India’s semiconductor programme moves from project approvals towards execution. Under the India Semiconductor Mission, the government has approved multiple semiconductor projects with cumulative investment commitments of around ₹1.64 lakh crore.

Among the approved projects, commercial production has begun from some facilities, while additional projects are progressing towards operationalisation. These include semiconductor assembly and testing facilities, chip manufacturing units, and ecosystem projects aimed at strengthening India’s position in the global semiconductor supply chain.

The semiconductor push is being implemented under the broader Semicon India Programme, which focuses on developing capabilities across chip design, fabrication, assembly, testing, packaging, and electronics manufacturing.

In the Union Budget 2026–27, the government also announced India Semiconductor Mission 2.0, aimed at expanding focus beyond fabrication facilities to areas including semiconductor equipment, raw materials, domestic intellectual property development, supply-chain resilience, research, and workforce development. A separate allocation of ₹1,000 crore has been proposed for the next phase of the mission.

India’s semiconductor strategy has gained importance due to rising demand from sectors such as automobiles, consumer electronics, telecommunications, artificial intelligence, industrial automation, and defence technologies. Building domestic chip capabilities is seen as critical for reducing dependence on global supply chains and strengthening India’s position in the electronics manufacturing ecosystem.

However, industry experts note that the success of India’s semiconductor ambitions will depend not only on attracting investment commitments but also on timely execution of projects, development of supporting infrastructure, availability of semiconductor-grade materials, advanced packaging capabilities, and creation of a skilled workforce.

The proposed ₹7,100 crore incentive package, once approved, would represent another step in India’s long-term semiconductor roadmap. The focus will now shift towards converting approved projects into operational facilities and building a complete semiconductor ecosystem spanning manufacturing, design, materials, equipment, and advanced technologies.