Can ISM 2.0 Fix The Chinks In India’s Semiconductor Armour?

by · Inc42

SUMMARY

  • Presenting the Union Budget 2026-27, finance minister Nirmala Sitharaman announced that ISM 2.0 will be launched “to produce equipment and materials, design fullstack Indian IP, and fortify supply chains”
  • With an uncertain geopolitical environment, the need for self-reliance across critical segments has never been greater. Through ISM 2.0, policymakers want to address this gap
  • Industry stakeholders told Inc42 that ISM 2.0, while holding onto India’s design and assembly strength, should promote the manufacturing of equipment
  • Added to Saved Stories in Login

Over four years after the India Semiconductor Mission (ISM) was announced with an outlay of INR 76,000 Cr – India’s largest policy bet on semiconductors, the country is now ready to take its next step to strengthen its presence in the critical segment. Presenting the Union Budget 2026-27, finance minister Nirmala Sitharaman announced that ISM 2.0 will be launched “to produce equipment and materials, design fullstack Indian IP, and fortify supply chains”.

While there is no doubt that the Centre’s vision to move beyond assembly and packaging to IP and equipment is noble and the obvious next step, the question is if India’s semiconductor ecosystem is ready to take on that leap.

As per Inc42’s ‘Annual Indian Startup Trends Report, 2025’, Indian semiconductor startups raised about $50 Mn in 2025. In 2024, this amount was $28 Mn+ and a mere $5 Mn+ in 2023. 

While capital inflows are clearly rising, the industry believes that there’s uncertainty around which segments of the semiconductor value chain should be the priority focus. Besides, nascent startups in the segment need long-term support so that they can become commercial viable entities.