India Semiconductor Mission 2.0: What It Means for Indian Exporters
The 28th of February, 2026 PM Modi opened Micron Technology's semiconductor assembly testing, and packaging plant at Sanand, Gujarat -- the first chipmaker with a US headquarters to make its products on Indian soil. A few days later, the Union Budget 2026-27 launched India Semiconductor Mission 2.0 with an allocation of Rs 1,000 crore. On March 31st the Kaynes Semicon OSAT facility in Sanand started operations.
India has changed its policy on semiconductors to production. This shift is important for Indian exporters of components, electronics, industrial products, and the supply chain of ancillary goods that supply these factories.
This article will explain the basics of what ISM 2.0 is, what is actually being developed and in operation currently, and the particular commercial opportunities it will open for Indian exporters in India chip manufacturing 2026.
What India Semiconductor Mission 2.0 Is
The initial India Semiconductor Mission launched in December 2021 with a 76,000 crore incentive structure. The goal was to draw fabrication facilities as well as assembly and testing facilities as well as chip design and manufacturing operations to India by providing fiscal assistance of up to 50 percent of the project's capital expenditure. You can review the official scheme details on the India Semiconductor Mission portal.
ISM 1.0 delivered more than analysts had expected. In May 2026, 13 semiconductor projects had been accepted across 7 states. They include fabrication facilities, OSAT units, ATMP facilities, as well as modern packaging processes. Total committed investment totalled Rs 1.60 lakh crore.
India Semiconductor Mission 2.0, introduced in Union Budget 2026-27, shifts the mission's emphasis. Where ISM 1.0 focused on attracting individual factories, ISM 2.0 for Indian exporters targets the surrounding ecosystem -- semiconductor manufacturing equipment, production of materials, full-stack Indian chip design IP, supply chain resilience, and industry-led research and education centers. The broader Modified Programme for Semiconductor and Display Manufacturing received Rs 8,000 crore in FY 2026-27, with ISM 2.0 funded at Rs 1,000 crore specifically for ecosystem development. The full programme notification is available on the Ministry of Electronics and IT (MeitY) website.
The government's stated goal is for India's semiconductor market to reach $100--110 billion by 2030.
What Is Actually Built and Operational Right Now
Knowing what is operational versus what is planned matters when exporters are evaluating short-term commercial opportunities.
Operational as of June 2026:
Micron Technology's ATMP facility in Sanand, Gujarat, inaugurated on February 28, 2026. It is the first functioning semiconductor plant under the mission, producing India's first commercially available manufactured-in-India semiconductor memory modules. Details on Micron's India investment are on record with Invest India.
Kaynes Semicon's OSAT facility in Sanand was officially opened on March 31, 2026. A dedicated semiconductor assembly, marking, testing, and packaging operation running alongside Micron, making Sanand a concentrated ATMP OSAT facility in India.
Sahasra Semiconductors' ATMP/OSAT facility in Bhiwadi, Rajasthan, inaugurated on May 15, 2026. The first semiconductor unit created outside ISM under the SPECS scheme, situated within an existing electronics production cluster. The SPECS scheme is administered by MeitY.
In construction, operational before end of 2026:
Electronics Minister Ashwini Vaishnaw confirmed four plants are expected to be operational by end of 2026, with two more in 2027. The CG Power, Renesas, and Stars Microelectronics OSAT joint venture in Sanand is part of this pipeline.
Flagship projects:
The Tata-PSMC partnership in Dholera, Gujarat -- the largest full fabrication facility -- is the core of ISM 2.0's long-term plan. Tata Electronics signed an agreement with ASML on May 16, 2026 to establish India's first front-end fabrication facility on the site. It is expected to be operational in 2028.
Tata Electronics' ATMP facility in Assam is slated for a Rs 27,000 crore investment, targeting operational readiness in the near term.
What It Means for Indian Exporters: Sector by Sector
Electronics Component Exporters
India has introduced an extended Electronics Components Manufacturing Scheme in 2026 that covers PCBs, display units, and semiconductors. The manufacturing of electronics in India has increased from 1.9 lakh crore in 2014-15, to 11.3 lakh crore by 2024-25, nearly sixfold increase. India Semiconductor Mission 2.0 accelerates this trajectory.
For electronics component exporters, this opens two distinct opportunities. Domestic supply chain demand from operating ATMP and OSAT facilities is live now -- Micron's Sanand plant and Kaynes Semicon both require local suppliers of packaging components, materials, logistics services, and ancillary equipment. This is real-time demand from facilities currently producing.
As Indian-made semiconductor modules reach commercial export scale, demand for export documentation, logistics, testing, and compliance services grows in parallel. Electronics component exporters with strong B2B profiles will be visible to procurement teams at these facilities.
Chemicals, Gases, and Materials Exporters
ISM 2.0 for Indian exporters in chemicals and industrial gases specifically targets semiconductor manufacturing equipment and materials -- one of the weakest links in ISM 1.0's supply chain. India currently imports the specialty chemicals, gases, and high-purity materials that semiconductor manufacturing requires. ISM 2.0 provides direction and financial incentive to grow domestic supply.
For India semiconductor exports 2026, companies supplying specialty chemicals, high-purity gases, solvents, and precision materials have a short-term opportunity to be considered as preferred suppliers to operational plants. The proximity of Gujarat's semiconductor cluster to Mundra and Kandla ports supports logistics for both domestic supply and import substitution.
ISM 2.0's focus on gases, ingots, and raw material support is a clear government signal. Exporters who engage early with facility procurement teams hold a first-mover advantage before ISM 2.0's domestic manufacturing program creates a formalised vendor pipeline.
Engineering and Industrial Equipment Exporters
Semiconductor fabs and ATMP units are large industrial installations. They require precision engineering equipment, clean-room infrastructure, electronic systems, and facilities management services. The Tata-PSMC Dholera facility alone represents a Rs 91,000 crore capital investment -- a substantial portion directed at infrastructure and equipment suppliers.
For engineering goods exporters, the ISM 2.0 pipeline represents a long procurement cycle. Two additional semiconductor projects were approved in Gujarat in May 2026. Further approvals in Odisha, Punjab, and Andhra Pradesh totalling Rs 4,600 crore extend the procurement geography beyond Gujarat. State-level investment facilitation is coordinated through Invest India.
IT Services and Design Exporters
The Design Linked Incentive (DLI) scheme under ISM supported 24 semiconductor design startups as of January 2026, attracting Rs 430 crore in venture capital. Around 67,000 students and more than 1,000 startup engineers are active on the Indian Electronic Design Automation platform, which has logged 2.25 crore hours of tool usage. The DLI scheme is administered through MeitY.
ISM 2.0 expands this by focusing on full-stack Indian chip IP. For IT services and design exporters, this opens potential domestic clients -- chip design startups require ancillary testing, software, and services -- as well as direct export opportunities when Indian chip designs reach international markets.
The Global Context That Makes ISM 2.0 Strategically Urgent
ISM 2.0 didn't emerge in isolation. Three forces made accelerating India's semiconductor capacity a top national priority in 2026.
First, the Strait of Hormuz disruption. IEA analysis shows that helium -- essential for heat management in semiconductors, with no substitute -- faces supply threats from Middle East conflict that affect chip production globally. India's semiconductor expansion reduces dependence on supply chains in a geopolitically volatile region.
Related reading: Strait of Hormuz Impact on Indian Exporters 2026: What You Must Know Now -- if you export chemicals, industrial gases, or energy-linked products, this is directly relevant to your supply chain risk in 2026.
Second, US-China decoupling. US export bans on advanced chips towards China as well as US tariffs have changed the global supply chains bringing semiconductor investments to more stable manufacturing sites. India due to the U.S.-India BTA being in place, as well as the iCET partnership expanding, is poised to attract investment that was previously destined to Taiwan and South Korea.
Third, demand from India. The market for Indian semiconductors was estimated at $52.2 billion in 2024-25, and is projected to grow by 25 percent CAGR until 2028. Consumer electronics, electric vehicles, IoT devices, defense systems and even telecom infrastructure depend on chips. A country that imports the majority of its requirements for semiconductors at this level has a huge incentive to develop its own manufacturing capacity. India Semiconductor Mission 2.0 is how it is done.
How Indian Exporters Should Position Now
The opportunity in India chip manufacturing 2026 is real, not theoretical. Three ATMP OSAT facilities in India are operational. Four more are scheduled to go live by December 2026. The Tata-PSMC Dholera facility sets a new benchmark for 2028.
Exporters of chemicals, electronic components, industrial equipment, and logistics services should identify procurement contacts at operational facilities now -- before ISM 2.0's national supplier development program establishes a formal vendor qualification process that favours early entrants.
Electronics and semiconductor-adjacent exporters benefit from updating their B2B profiles to reflect ISM 2.0 Indian exporter relevance. International buyers -- particularly from Japan, the US, and South Korea, all active in India's semiconductor buildout -- are looking for Indian supply chain partners across ATMP, OSAT, and fab-adjacent categories. Tata Electronics signed its ASML agreement on May 16, 2026. Japanese-Indian semiconductor industry activity accelerated sharply from March to April 2026. These are active contracting relationships, not future signals.
India's semiconductor market is not yet self-sufficient. But the combination of operating facilities, an Rs 8,000 crore programme budget, global supply chain partners already on the ground, and a 25% CAGR trajectory means the time to enter the supply chain is now -- not when the Dholera fab opens in 2028.