Semiconductor companies under the India Semiconductor Mission (ISM) are set to invest ₹31,299 crore by FY27, according to reports from Business Standard. The scheme, launched in 2023, has already seen ₹15,799 crore invested by five companies till FY26. Meity has estimated that another ₹15,500 crore will be invested in FY27, with the government expecting ₹7,000 crore to be invested by semiconductor companies collectively in the upcoming financial year. Union Minister Ashwini Vaishnaw has indicated that both new companies and existing investors are likely to invest in India to manufacture memory chips, addressing the growing demand-supply gap in the segment. As per NDTV, Vaishnaw confirmed that new firms may invest in India to make memory chips while existing investors will scale up production to meet market requirements.
The semiconductor industry has achieved a significant milestone with Micron's first plant starting commercial production on February 28th this year, followed by the second plant starting commercial manufacturing on March 31st. As reported by Business Standard, this marks the first time the semiconductor industry has grown at such a rapid pace, creating a huge shortage of certain components required in AI data centres, particularly high bandwidth memory chips. The minister highlighted that there is a serious supply-demand mismatch in the case of memory, with strong demand for memory (data storage) cards and advanced chips tightening global supplies and supporting higher prices in past quarters. According to NDTV, Vaishnaw explained that for the first time in the way the semiconductor industry has grown at such a rapid pace, for the first time we are seeing a huge shortage of certain components which are required in the AI data centres, the high bandwidth memory chips. The higher memory chip prices have led to a rise in production costs for electronic products including smartphones and laptops.
The scheme operates on a 50:50:20 cost-sharing model where companies invest 50% of project costs, the central government covers 50%, and states contribute 20%. In the first two years under the scheme (FY25 and FY26), the five companies invested ₹5,692 crore in their projects while the rest was disbursed by the central and state governments. The bulk of investment under the scheme, ₹91,000 crore, is allocated to the Tata fab plant, which accounts for 55% of committed investment and is expected to be completed in 2028. The government plans to review investments in November this year, which could result in even higher investment levels. As per NDTV, Vaishnaw confirmed that the India Semicon Mission 1.0 could get about 48 startups to work on the tech products.
As reported by Business Standard, the bulk of FY27 investment will focus on purchasing equipment, which accounts for 65% of plant costs. A senior Meity official stated that large investments in buying and installing equipment will occur in the third and fourth year of projects. The government plans to add many more fabs (chip manufacturing plants) and ATMP (chip packaging) units, carrying forward progress in talent development from the first version of the semiconductor mission. The scheme has provided incentives of over ₹76,000 crore, supporting around 12 projects including two fab projects and 10 OSAT plants. According to NDTV, Vaishnaw emphasized that chip design will be the topmost priority in ISM 2.0, with the second biggest priority being machines used in semiconductor manufacturing, and the government will seriously look at getting equipment manufacturers to come to India for both designing and manufacturing equipment.
According to NDTV, work is in advanced stage for ISM 2.0, which is expected to have an even larger budget of around ₹1 trillion and will focus on building the ecosystem for raw-material vendors required to support fab and OSAT plants. Under ISM 2.0, chip design will be the topmost priority, with the second biggest priority being machines used in semiconductor manufacturing. The minister emphasized that the government will seriously look at getting equipment manufacturers to come to India for both designing and manufacturing equipment. The government will also focus on indigenous production of complex chemicals and gases used for manufacturing chips. As per NDTV, Vaishnaw said the government will also look at the indigenous production of complex chemicals and gases that are used for manufacturing chips. The minister emphasized that after decades of effort, India has been able to attract chip makers to the country under Prime Minister Narendra Modi's regime, as the India Semicon Mission 1.0 programme sets the foundation for a robust domestic semiconductor industry.
