Govt to launch India Semiconductor Mission (ISM) 2.0

• Finance Minister Nirmala Sitharaman announced the launch of India Semiconductor Mission (ISM) 2.0 in the Union Budget 2026-27.

• It will promote chip manufacturing ecosystem, covering equipment, materials, indigenous designs and other components that are required to produce the high-tech components.

• ISM 2.0 will also focus on industry-led research and training centres to develop technology and skilled workforce.

Importance of semiconductors

• Semiconductor is a foundational industry touching almost every aspect of life, powering everything from fridges to ACs and cars, aircraft to trains.

• Semiconductor chips are the essential building blocks of digital and digitised products. From smartphones and cars, through critical applications and infrastructures for healthcare, energy, communications and industrial automation, chips are central to the modern digital economy. 

• Recent global semiconductors shortages forced factory closures in a wide range of sectors from cars to health care devices. In the car sector, for example, production in some European countries decreased by one-third in 2021. This made more evident the extreme global dependency of the semiconductor value chain on a very limited number of actors in a complex geopolitical context.

• By 2030, the global semiconductor industry is expected to grow to $1 trillion.

• The Indian semiconductor market, worth $15 billion in 2020, is estimated to reach $63 billion by 2026.

• India currently imports most of its semiconductors, but the government wants to change that through domestic manufacturing. 

India Semiconductor Mission (ISM)

• India Semiconductor Mission (ISM) was launched in 2021.

• ISM aims to build a strong semiconductor and display ecosystem, positioning India as a global hub for electronics manufacturing and design, while serving as the nodal agency for the efficient and seamless implementation of semiconductor and display schemes.

• Its aim is to enhance semiconductor design and manufacturing capabilities within the country, fostering innovation, employment, and economic growth.

• The development of the semiconductor ecosystem in India will substantially increase domestic value addition in electronics manufacturing, reduce import dependency and integrate India electronics manufacturing ecosystem with global supply chains. 

• ISM 1.0 has expanded India’s semiconductor sector capabilities.

(The author is a trainer for Civil Services aspirants.)