Overview
On 15 July 2026, the Union Cabinet cleared the second phase of the ISM and the MPMS. The outlays are ₹1.27 lakh crore for ISM and ₹62,500 crore for MPMS. The government expects the combined programme to attract ₹4 lakh crore in investment, generate ₹2 lakh crore in production and earn ₹1 lakh crore in exports over the next five years.
Key Developments
- Phase‑2 funding: ₹1.27 lakh crore for ISM and ₹62,500 crore for MPMS.
- Targeted outcomes: ₹4 lakh crore of private investment, ₹2 lakh crore of domestic production, and ₹1 lakh crore of exports by 2031.
- Capital subsidy reduced to 30‑40% (down from 50%) as the sector becomes more attractive.
- Land support shifted to states, which are now offering land at token prices and additional incentives.
- Scope broadened to include chip design talent, capital machinery, semiconductor‑grade chemicals and gases, and dedicated R&D.
- MPMS incentives range from 2.25% to 5% depending on the proportion of locally designed components in a handset.
Important Facts from Phase‑1
Phase‑1, approved in December 2021, earmarked ₹76,000 crore. Twelve units were cleared with a committed investment of ₹1.64 lakh crore. Nine of these are semiconductor packaging units located in Gujarat, Uttar Pradesh, Punjab, Assam, Odisha and Andhra Pradesh. The remaining units include one silicon fab and a gallium‑nitride micro‑LED display fab. The Tata Electronics fab is slated for commercial production in 2028. A design‑linked incentive programme approved 24 projects and provided free access to expensive design software for universities and start‑ups. The revamped Semiconductor Lab in Mohali now helps students and researchers “tape‑out” chips.
Technology Focus
The government is initially targeting