Archive · 2 Sep 2026
India’s Semicon 2.0 Broadens Chip Ecosystem; Three Stocks Watched
India is expanding its plan to build a semiconductor industry.
The new phase is called Semicon 2.0.
It has more money than the first phase and supports more parts of the chip business.
This includes designing chips, making them, packaging them, and training workers.
Some large factory projects will receive smaller incentives than before.
New support is being added for equipment, materials, research and design.
CLSA says CG Power, Kaynes Technology and HCL Technologies are important listed Indian companies to watch.
Several projects are already producing chips or are being built.
Their eventual success will depend on how well the projects are completed and operated.
Semicon 2.0 raises the programme’s outlay to Rs 1,27,500 crore from Rs 76,000 crore.
The expanded scheme covers chip design, fabrication, equipment, materials, testing, research and talent development.
Incentives for some fabrication, display and packaging projects have been reduced or made more targeted.
CLSA identifies CG Power, Kaynes Technology and HCL Technologies as the key listed Indian companies to watch.
Seven projects are listed, with progress ranging from Micron’s commercial production to facilities still under construction or commissioning.
- Who
- The Government of India, the India Semiconductor Mission, CLSA and companies including CG Power, Kaynes Technology, HCL Technologies, Micron Technology and Tata Electronics.
- What
- India is launching the broader second phase of its semiconductor programme, with expanded coverage and a Rs 1,27,500 crore outlay.
- When
- The article is based on CLSA’s India Semiconductor Mission 2.0 report dated August 31, 2026; specific project timelines range from February 2026 to 2028.
- Where
- Across India, including semiconductor projects in Gujarat, Assam, Uttar Pradesh and Odisha.
- Why
- The programme aims to build a broader semiconductor ecosystem after the first phase established an initial manufacturing base.
Broader Ecosystem Support
More Targeted Project Incentives
Programme scope
Broader Ecosystem Support
Semicon 2.0 expands support beyond factories to chip design, equipment, materials, testing, research and talent, addressing gaps identified under the first phase.
More Targeted Project Incentives
The revised framework reduces or targets incentives for several large fabrication, display and packaging projects rather than maintaining the earlier support levels.
Manufacturing incentives
Broader Ecosystem Support
New upstream support and wider value-chain coverage could help create domestic suppliers around approved manufacturing projects.
More Targeted Project Incentives
Fiscal support for silicon fabrication, compound fabrication, displays and packaging is lower than under Semicon 1.0, while some minimum investment and revenue thresholds have increased.
Project progress
Broader Ecosystem Support
CLSA says Semicon 1.0 was successful, with three approved projects already commencing production and additional facilities expected to come online.
More Targeted Project Incentives
Projects remain at different stages, from commercial production to construction, commissioning and future planned operations, making execution a key consideration.
- Semicon 2.0 outlay
- Rs 1,27,500 crore, compared with Rs 76,000 crore under Semicon 1.0.
- FY27 semiconductor allocation
- Rs 8,000 crore for semiconductor and display manufacturing, including Rs 1,000 crore for ISM 2.0.
- Upstream support
- Eligible equipment and materials projects can receive 30% capital-expenditure support and production-linked incentives over five years starting FY28.
- Chip-design support
- Includes a 9% deployment-linked incentive, electronic design automation access, multi-project wafer support, seed funding and equity co-investment.
- Research and talent support
- Up to 75% support is available for research and development and talent development.
- Listed Indian companies highlighted
- CG Power, Kaynes Technology and HCL Technologies.
- Projects in CLSA’s list
- Seven entities are associated with projects approved under ISM 1.0.