Finance Ministry panel to clear ₹1.25 lakh crore outlay for India Semiconductor Mission 2.0
The Budget, in February, had sought to give a big boost to the country’s manufacturing prowess announcing, among various measures
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Context
The Expenditure Finance Committee under the Finance Ministry is set to approve a ₹1.25 lakh crore outlay for the (ISM 2.0). This increased allocation, significantly higher than the ₹76,000 crore for ISM 1.0, aims to boost indigenous chip design, manufacturing, and supply chain resilience, signaling a strong push for self-reliance in a critical technology sector.
UPSC Perspectives
Economic
The allocation of ₹1.25 lakh crore for highlights a strategic shift from basic assembly to comprehensive ecosystem development. ISM 1.0 laid the groundwork, but 2.0 focuses on indigenous intellectual property and resilient supply chains. This massive capital expenditure is designed to attract private investment, creating a multiplier effect on the economy. By establishing and supporting projects, India aims to reduce import dependence, improve its balance of trade, and capture a share of the global semiconductor market, which is crucial for modern electronics, automotive, and defense industries. UPSC questions often focus on the economic rationale behind such massive subsidies and the challenges of competing with established players like Taiwan and South Korea.
Governance
The structured approach of the (MeitY) through the demonstrates a targeted governance strategy for industrial policy. The shift towards ISM 2.0 reflects an adaptive policy framework, learning from the initial phase to prioritize indigenous design and equipment manufacturing. This involves complex coordination between multiple stakeholders—government agencies, private corporations, and academic institutions—to build a specialized workforce. The approval process involving the Expenditure Finance Committee (EFC) before Cabinet approval illustrates the procedural checks in large-scale public spending. The success of this mission depends on regulatory stability, efficient disbursement of incentives under schemes like the , and ensuring ease of doing business for complex manufacturing setups.
Strategic
Semiconductors are the foundational technology of the modern era, and the is fundamentally a strategic initiative for technological sovereignty. Heavy reliance on imported chips creates significant vulnerabilities, especially given geopolitical tensions and supply chain disruptions. By fostering an indigenous semiconductor ecosystem, India is addressing a critical national security concern, particularly regarding components used in defense and critical infrastructure. The emphasis on advanced nodes and indigenous chip design tools is crucial for securing the technology stack. For UPSC, this connects to broader themes of self-reliance (Atmanirbhar Bharat), India's role in global supply chains, and the strategic implications of technological dependence.