Union Cabinet's Manufacturing Initiatives
The Union Cabinet has approved two major initiatives with a combined outlay of nearly ₹1.9 trillion aimed at expanding India's semiconductor ecosystem and mobile phone manufacturing capabilities.
India Semiconductor Mission (ISM) 2.0
- Budget Allocation: ₹1.27 trillion allocated for ISM 2.0.
- Focus Areas: Attracting semiconductor design firms, manufacturers of materials, equipment, and specialty chemicals.
- Incentives:
- Incentives disbursed on a pari passu basis, with detailed guidelines to follow.
- Grant-plus-equity funding for startups in strategic and commercial semiconductor chip design.
- Co-investment or royalty-linked funding for medium and large companies in chip design.
- Flat incentives up to 30% for manufacturers of equipment, chemicals, gases, and materials.
- Adjusted incentives for semiconductor fabrication units.
- Investment Goals:
- Overall investment under ISM expected to reach ₹4 trillion.
- Semiconductor production of ₹2 trillion and exports of ₹1 trillion.
- Support for R&D: Up to 75% of project cost for companies and startups in advanced semiconductor technologies and design talent development.
- Progress: 12 approved semiconductor projects with a cumulative investment of over ₹1.60 trillion as of July 15, 2026.
Mobile Phone Manufacturing Scheme (MPMS)
- Budget Allocation: ₹62,500 crore for the revamped scheme.
- New Framework: Replaces the existing incremental sales and production-linked incentive framework.
- Eligibility: Incentives for companies investing in mobile phone design and R&D in India.
- Requirements for Indian Brands:
- Global market presence and technical sovereignty.
- Development of indigenous IP through patents, R&D, and innovation.
- Production and Export Goals:
- Targeting mobile phone production worth ₹39 trillion over six years.
- Mobile phone exports projected to reach ₹15 trillion over the same period.
- Expected to generate 60,000 additional jobs in the sector.
The initiatives aim to strengthen India's position as a global electronics manufacturing hub and build a sustainable semiconductor and mobile phone ecosystem.
