Semicon 2.0 Draws Nearly ₹1 Lakh Crore in Investment Proposals Across India’s Chip Supply Chain

India has received semiconductor investment proposals worth an estimated $11–12 billion, or roughly ₹1 lakh crore, under Semicon 2.0 as the country’s chip programme begins attracting projects in the specialised industries that supply and support semiconductor fabrication plants.

Union Electronics and Information Technology Minister Ashwini Vaishnaw disclosed the scale of the investment pipeline at SEMICON India 2026 in New Delhi on September 17. The proposals span semiconductor manufacturing equipment, materials, industrial gases, chemicals and substrates, marking a significant broadening of investor interest beyond fabrication and chip packaging.

The companies behind all the proposals have not yet been publicly identified. Vaishnaw said the prospective investors are completing their internal approval processes and are expected to announce their plans individually once those decisions are finalised. The $11–12 billion figure should therefore be treated as an investment pipeline rather than as committed or approved investment.

According to the minister, the proposed investments could materialise over the next two to three years. If a substantial portion proceeds to implementation, India would begin building more of the industrial infrastructure required around its emerging semiconductor fabs instead of depending overwhelmingly on imported equipment and production materials.

Semicon 2.0 Moves Beyond Fabs and Packaging

The investment pipeline reflects a deliberate change in the structure of India’s semiconductor policy. The first phase of the Semicon India programme concentrated heavily on attracting wafer fabrication and semiconductor assembly, testing and packaging facilities. Semicon 2.0 has been designed to extend government support much further into the industries that make those facilities possible.

Approved by the Union Cabinet in July 2026 with an outlay of ₹1,27,500 crore, Semicon 2.0 operates through six pillars covering semiconductor design, machines and materials, additional fabs, further expansion of ATMP and OSAT capacity, research and development, and talent development.

The machines and materials component is particularly relevant to the latest investment proposals. Under this pillar, companies manufacturing semiconductor equipment as well as the materials, chemicals and gases required by fabrication plants can receive government support.

The objective is to create domestic capacity around semiconductor manufacturing rather than simply locating individual fabs in India. A wafer fabrication plant depends continuously on specialised machinery, ultra-pure chemicals, industrial gases, wafers, substrates and precision components. Without those industries nearby, a large part of the manufacturing chain remains dependent on imports even when the chips themselves are fabricated domestically.

Why Equipment Manufacturing Matters

Semiconductor equipment is among the most technologically demanding parts of the global electronics industry. Fabricating a modern chip requires hundreds of tightly controlled processing stages using machines capable of manipulating materials at microscopic and increasingly atomic scales.

Lithography systems transfer circuit patterns onto wafers, while deposition equipment adds extremely thin layers of material. Etching systems remove selected material to create semiconductor structures, and ion implantation equipment alters the electrical properties of specific areas of the wafer. Metrology and inspection systems repeatedly examine the wafer to detect defects and verify that manufacturing processes remain within extremely narrow tolerances.

A semiconductor fab consequently depends on a large ecosystem of equipment suppliers long after the plant itself has been constructed. Machines require replacement components, maintenance, upgrades and engineering support throughout their operating lives.

India currently has limited domestic capability across many of these areas. Attracting equipment companies and developing Indian suppliers capable of manufacturing components for them would therefore deepen the country’s participation in the semiconductor industry beyond chip fabrication.

Applied Materials’ announcement at SEMICON India 2026 illustrates this emerging direction. The US semiconductor-equipment company has announced plans to invest $5 billion in India over the next decade, with the programme covering research and development, expansion of its Indian supply chain and workforce development.

Chemicals and Gases Are Equally Critical

The investment proposals disclosed by Vaishnaw also include semiconductor chemicals and gases, two parts of the supply chain that receive considerably less public attention than fabrication plants but are essential to their operation.

Chip manufacturing requires exceptionally pure process chemicals. Even extremely small quantities of contamination can damage wafers or reduce manufacturing yields. Semiconductor fabs therefore consume specialised acids, solvents, photoresists, cleaning agents and other chemicals produced to standards far beyond those required for ordinary industrial applications.

The same applies to gases. Semiconductor production uses high-purity gases during deposition, etching, cleaning and other manufacturing processes. Reliable access to these materials is necessary for continuous fab operations.

Building production capacity for these inputs in India could reduce logistical dependence on overseas suppliers while also creating opportunities for the country’s existing chemical and industrial-gas industries to move into higher-value semiconductor applications.

It would also improve the resilience of domestic fabs. Semiconductor supply chains have experienced repeated disruptions in recent years, demonstrating that shortages of relatively obscure materials can interrupt production even when the fabrication equipment and manufacturing capacity are already available.

Substrates Add Another Layer to the Ecosystem

Substrates are another category represented among the investment proposals. They play an important role in semiconductor packaging by providing the physical and electrical interface between a semiconductor die and the larger electronic system in which it operates.

As chip packaging becomes more sophisticated, substrates have become increasingly important. Advanced computing devices can combine several dies within a single package, requiring highly precise interconnections and increasingly complex packaging materials.

India’s semiconductor programme has already attracted substantial investment in ATMP and OSAT facilities. Developing a domestic substrate industry alongside those plants would allow more of the packaging value chain to be produced within the country rather than relying on imported materials.

This is particularly relevant as semiconductor packaging itself evolves from a relatively straightforward back-end manufacturing process into an important source of performance improvements. Chiplets, heterogeneous integration and other advanced architectures increasingly depend on sophisticated packaging and substrate technologies.

₹1.27 Lakh Crore Programme Targets the Entire Value Chain

The scale of Semicon 2.0 shows how India’s semiconductor policy has changed since the first incentive programme was introduced. The government has allocated ₹1,27,500 crore to the second phase, compared with the ₹76,000-crore programme originally established to build semiconductor and display manufacturing capacity.

Semicon 2.0 retains support for additional fabs and packaging facilities but adds explicit programmes for machines and materials, research, chip design and talent. The government says the objective is to create a complete semiconductor value chain rather than concentrate primarily on its final manufacturing stages.

India has already established a sizeable chip-design industry, while fabrication and packaging capacity is now under construction. The more difficult task is creating the dense industrial network connecting these activities.

A semiconductor manufacturing centre requires equipment manufacturers, component suppliers, specialty chemical companies, industrial-gas producers, substrate manufacturers, maintenance providers, research laboratories and thousands of specialised engineers. These companies in turn need customers and sufficient manufacturing volumes to justify establishing production locally.

The $11–12 billion proposal pipeline suggests that companies operating in these supporting industries are beginning to evaluate India as a viable manufacturing base.

Existing Semiconductor Projects Create Demand for Suppliers

The development of this supplier ecosystem is closely linked to the semiconductor plants already approved in India. Projects covering silicon fabrication, silicon carbide devices, memory packaging, advanced packaging and discrete semiconductors are being established across several states.

Tata Electronics is building a 300-mm semiconductor fab at Dholera in Gujarat and a large assembly and testing facility at Jagiroad in Assam. Micron has established semiconductor assembly and testing operations in Gujarat, while additional projects are being developed by companies including CG Power, Kaynes Technology and other Indian and international partners.

Each new manufacturing facility creates demand for equipment, materials and engineering services. As the number of fabs and packaging plants increases, the economic case for suppliers establishing Indian production becomes stronger.

This relationship works in both directions. Fabs are more attractive when they can rely on nearby suppliers, while equipment and materials companies are more likely to invest when there is a sufficiently large customer base. Building a semiconductor cluster therefore requires both sides of the industry to expand together.

Proposals Must Still Become Projects

The $11–12 billion figure should not be confused with investment already committed under Semicon 2.0. Vaishnaw described these as proposals from companies that are still completing their own approval procedures, and the government has not released a complete list identifying the investors or individual project values.

Some proposals may change in size, timing or structure before final investment decisions are taken. Others may proceed only after companies complete negotiations over incentives, locations, customers and supply-chain requirements.

The next two to three years will therefore determine how much of the current pipeline becomes operating manufacturing capacity.

What the figure does show is the direction in which investor interest is moving. India’s semiconductor programme is beginning to attract attention from companies whose businesses sit behind the fab itself: equipment makers, materials suppliers, chemical producers, gas companies and substrate manufacturers.

India’s Semiconductor Challenge Shifts to Industrial Depth

India’s first semiconductor challenge was attracting large fabrication and packaging investments. The next challenge is ensuring that those plants do not operate as isolated manufacturing islands dependent on imported equipment and materials for almost every critical process.

Semicon 2.0 has been structured around that problem. The ₹1.27 lakh crore programme extends incentives into the machinery, materials, research, design and skills needed to support manufacturing over the long term.

The nearly ₹1 lakh crore of proposals disclosed at SEMICON India 2026 are an early indication of how companies are responding to that strategy, but their significance will ultimately depend on how many proceed from corporate proposals to factories, laboratories and supplier operations on the ground.

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