12. Strategic Evolution: India Semiconductor Mission (ISM) 2.0

The Union Budget 2026–27 launched India Semiconductor Mission (ISM) 2.0, marking a transition from foundational infrastructure to ecosystem consolidation. With a specialized allocation of ₹1,000 crore for FY 2026–27 (under a broader ₹8,000 crore modified incentive outlay), ISM 2.0 targets advanced manufacturing nodes, indigenous intellectual property (IP), and the domestic production of semiconductor equipment and chemicals. • Broadened Ecosystem Scope: Unlike the fabrication-centric focus of ISM 1.0, the 2.0 phase prioritizes the \'entire value chain,\' including semiconductor-grade chemicals, gases, and specialized machinery— critical bottlenecks that are currently heavily import-dependent. • Technological Leap to Advanced Nodes: The mission sets a clear roadmap to move beyond legacy 28 nm nodes to cutting-edge 3 nm and 2 nm technology by 2035. This is essential for high-performance computing, AI, and advanced defense systems. • Sovereign Intellectual Property (IP): A major pillar of ISM 2.0 is the creation of a \'Full-Stack Indian IP\' repository. By fostering domestic \'fabless\' startups through the Design Linked Incentive (DLI) scheme, India aims to own the architectural designs of the chips it consumes. • Indigenous Processor Success: The development of the DHRUV64 (a 64-bit indigenous microprocessor) under the DIR-V (Digital India RISC-V) program illustrates the mission\'s success in building secure, homegrown alternatives to foreign proprietary architectures.• Industry-Led R&D and Talent: ISM 2.0 emphasizes industry-academia synergy. Programs like Chips to Startup (C2S) and partnerships with firms like Lam Research aim to create a pipeline of 1 lakh industryready engineers over the next decade. • Global Supply Chain Resilience: By localizing key stages of production, India is positioning itself as a \'trusted partner\' in the global \'China Plus One\' strategy, aiming to meet nearly 70–75% of domestic chip demand indigenously by 2029. Key Definitions • RISC-V (Reduced Instruction Set Computer - V): An open-standard instruction set architecture (ISA) that allows companies to design processors without paying high licensing fees to proprietary firms like ARM or Intel. • Semiconductor IP (Intellectual Property): Pre-designed and verified logic blocks (like a CPU core) that can be licensed and integrated into a larger System-on-Chip (SoC) design. • Nanometre (nm) Node: A term used to describe the size of transistors on a chip. Smaller nodes (e.g., 2 nm) represent more advanced technology with higher transistor density and better power efficiency. • Tape-out: The final stage of the design cycle before the chip\'s \'mask\' is sent to the foundry for actual physical fabrication on silicon wafers. Constitutional & Legal Provisions • Article 51A(h): Mandates the development of scientific temper and the spirit of inquiry, providing the philosophical basis for national R&D missions. • Semiconductor Integrated Circuits Layout-Design Act (SICLDA), 2000: The primary legal framework in India that protects the intellectual property of original layout-designs of integrated circuits for a period of 10 years. • National Policy on Electronics (NPE) 2019: The overarching policy that aims to position India as a global hub for Electronics System Design and Manufacturing (ESDM). • Foreign Direct Investment (FDI) Policy: Under the current regime, 100% FDI is allowed under the automatic route in the electronics and semiconductor sector, facilitating global partnerships. Additional Key Points • Market Projection: The Indian semiconductor market is expected to grow from $38 billion in 2023 to $100–110 billion by 2030, driven by the 5G, EV, and AI revolutions. • Investment Milestones: Under ISM 1.0, 10 major projects with a cumulative investment of ₹1.60 lakh crore have already been approved across states like Gujarat, Assam, and Odisha. • EDA Tools Access: The government provides national access to Electronic Design Automation (EDA) tools from global leaders like Synopsys and Cadence, drastically lowering the entry barrier for Indian startups. Conclusion ISM 2.0 represents India\'s transition from an \'aspirational\' player to a \'functional\' leader in the global semiconductor landscape. By focusing on \'Deep Tech\' and indigenous IP, the mission ensures that India\'s digital sovereignty is not just about manufacturing chips, but about designing the future of global technology. UPSC Relevance • GS Paper III (Economy): Industrial policy, indigenization of technology, and the role of the manufacturing sector in achieving a \'Viksit Bharat.\' • GS Paper III (S&T): Nanotechnology, computer hardware, and the strategic importance of semiconductors in defense and communication.• GS Paper II (Governance): Policy interventions for the development of the electronics sector and the impact of the \'Digital India\' vision.