The Union finance minister has announced the India Semiconductor Mission (ISM) 2.0 with a Rs 40,000 crore outlay, which experts believe will further boost Gujarat’s semiconductor industry. This move is expected to encourage more investments from semiconductor supplier companies into the state, building on existing investments of at least Rs 1.25 lakh crore and India’s first Semicon City in Dholera.
Sudhir Naik, chairman of the India Electronic and Semiconductor Association (IESA) (west zone), stated that the Budget proposals will reinforce India’s transition from policy intent to large-scale execution. He added that the provisions will enable more investments from semiconductor supplier companies coming into Gujarat.
According to Naik, the state is well placed to gain because of its early investments in infrastructure, power reliability, logistics, and single-window clearances. Industry estimates suggest that each semiconductor fab typically leads to the creation of five to seven ancillary units across chemicals, gases, precision engineering, and logistics. This process generates thousands of direct and indirect jobs.
“The arrival of allied industries will be key for the growth of the industry because it will ensure reliable supply of key components and also create new employment opportunities here,” Naik further commented. A top official from a semiconductor company expressed optimism, noting that some of their vendors are already in the process of setting up a base in Gujarat. This announcement, they believe, will boost confidence in the sector.
Gujarat is already home to India’s first planned semiconductor manufacturing cluster at Dholera. Here, Tata Electronics is establishing a semiconductor fabrication facility in partnership with Taiwan’s PSMC, involving an investment exceeding Rs 90,000 crore. The state has also attracted significant outsourced semiconductor assembly and testing (OSAT) projects, including one from Micron Technology.
With projected sharp growth in semiconductor demand across the automotive, electronics, defence, and renewable energy sectors, industry players anticipate that Gujarat could anchor a substantial portion of India’s semiconductor value chain over the next decade. The ISM 2.0 aims to accelerate this development by providing significant financial backing and policy support. The focus on large-scale execution is seen as crucial for translating policy intentions into tangible industrial growth.
The existing infrastructure and business-friendly environment in Gujarat are expected to attract further foreign and domestic investment in the semiconductor ecosystem. The development of ancillary industries is considered vital for the self-sufficiency and competitiveness of India’s semiconductor manufacturing capabilities. This comprehensive approach is designed to create a robust and integrated semiconductor value chain within the country.
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