Law Updates

Subject

Summary: India’s scheme for incentivizing the semiconductor industry has advanced to its next stage. The Ministry of Electronics and Information Technology (MeitY), in its notification dated 31 August 2026, introduced the Semicon 2.0 Scheme for Development of Semiconductor Design and Manufacturing Ecosystem in India. What makes this scheme important is its breadth. It is not limited to companies planning multi-billion-rupee wafer fabs. Support has been extended across chip design, semiconductor intellectual property, equipment, raw materials, testing, silicon and compound semiconductor fabrication, displays, ATMP/OSAT, advanced research and talent development. The scheme has been divided into 6 pillars and 10 categories, and each category works differently. Some offer support linked to capital expenditure. Others focus on access to design infrastructure, seed funding, equity investment, royalties, or sales-linked reimbursement.  For businesses, the starting point is therefore not “How much subsidy can we get?” The first question is simpler: Which Semicon 2.0 category actually fits the proposed project? Semicon 2.0 Notification at a Glance Particular Details Scheme Semicon 2.0 - Scheme for Development of Semiconductor Design and Manufacturing Ecosystem in India Ministry Ministry of Electronics and Information Technology Division IPHW Division Notification date 31 August 2026 File number F. No. W-38/6/2025-IPHW Policy background National Policy on Electronics 2019 and earlier Semicon India Programme Structure 6 pillars and 10 categories Nodal agency India Semiconductor Mission Main areas Design, equipment, materials, fabs, displays, packaging, R&D and talent Application period Initially 3 years Project duration Project-specific, preferably up to 6 years Application route Nodal Agency portal during application windows Evaluation Technical and financial appraisal Detailed guidelines To be issued separately by MeitY The notification provides the overall structure of the scheme, but it does not contain every application form, documentary requirement, timeline, or disbursement detail. MeitY has expressly provided for separate scheme guidelines.  What exactly is Semicon 2.0? Semicon 2.0 is a Government support scheme designed to develop more parts of India's semiconductor industry inside the country. That distinction matters. It is not a licence that every semiconductor business must obtain. Nor is it a general law imposing one compliance requirement on all electronics companies. Instead, it provides different kinds of fiscal and infrastructure support to eligible projects. A fabless chip-design startup, for example, may need access to expensive design software, prototyping, or seed funding. A silicon wafer fab needs large-scale capital support. A company making semiconductor-grade gases or substrates has an entirely different cost structure. A university or research institution may need support for R&D or training infrastructure. Semicon 2.0 creates separate routes for each of these areas. The Government's stated objective is to build a self-reliant and globally competitive semiconductor design and manufacturing ecosystem, strengthen supply-chain resilience, and support technological leadership in critical sectors.  Why Has Semicon 2.0 Been Introduced? The notification links Semicon 2.0 with the National Policy on Electronics 2019 and the experience gained from the first Semicon India Programme. According to MeitY, approvals under the earlier programme generated interest in semiconductor manufacturing and also created demand for upstream products in the semiconductor ecosystem. The new scheme takes that idea further by extending support to more parts of the value chain.  That is an important policy shift from a business point of view. A semiconductor fab cannot operate independently. It depends on design companies, specialised machinery, wafers, gases, chemicals, substrates, testing, packaging, research capability, and skilled workers. If most of those inputs continue to come from outside the country, adding fabrication capacity alone does not create a deep domestic semiconductor ecosystem. Semicon 2.0 tries to address that gap. How Does Semicon 2.0 Cover the Semiconductor Value Chain? A useful way to understand the scheme is to look at the semiconductor value chain from start to finish. Stage Support Under Semicon 2.0 Chip and IP design Categories 1 and 2 Commercial deployment of chips Category 3 Equipment and semiconductor-grade materials Category 4 Silicon wafer fabrication Category 5 Compound semiconductors, photonics, MEMS and discrete fabs Category 6 OLED, Micro LED and LCD display fabs Category 7 Assembly, testing and packaging Category 8 Advanced semiconductor R&D Category 9 Semiconductor workforce and training Category 10 This is why Semicon 2.0 cannot be evaluated using a single incentive percentage. The commercial and eligibility conditions depend heavily on where the applicant sits in this chain. What are the 6 Pillars and 10 Categories under Semicon 2.0? The notification divides eligible activities into six broad pillars. Pillar Category Area Pillar 1 - Design 1 Semiconductor IPs, chips, SoCs and modules of national importance Pillar 1 - Design 2 Semiconductor IPs, chips and SoCs for commercial use Pillar 1 - Design 3 Deployment-Linked Incentive Pillar 2 - Machines and Materials 4 Semiconductor manufacturing ecosystem Pillar 3 - More Fabs 5 Silicon semiconductor wafer fabs Pillar 3 - More Fabs 6 Compound semiconductor, photonics, MEMS, sensor and discrete fabs Pillar 3 - More Fabs 7 Display fabs Pillar 4 - ATMP/OSAT 8 Assembly, testing, marking and packaging Pillar 5 - R&D 9 Advanced semiconductor technologies Pillar 6 - Talent 10 Semiconductor talent development The structure expressly covers 6 pillars and 10 categories.  Category 1: Semiconductor Design for National Importance and Strategic Priorities The first category is meant for semiconductor technologies connected with national importance and strategic or critical infrastructure. Its scope includes semiconductor IP cores, chips, System-on-Chips or SoCs, and modules. A System-on-Chip combines several electronic or computing functions on one integrated chip instead of using multiple separate components. Eligibility under this category is fairly specific. The applicant must be: Incorporated in India,  Headquartered in India,  Substantially operational in India,  Supported by a significant domestic manpower presence, and  Owned and controlled by Indian citizens.  The company can participate on its own or through a consortium involving global companies, R&D organisations or academic institutions.  There are also strategic conditions that businesses should not overlook. The implementing company has to support and maintain the semiconductor solution over the long term. Government directions relating to security, export controls, foreign acquisition or control, and other strategic matters must also be followed. The intellectual-property arrangement is unusual. IP developed under this category is to be co-owned by the applicant and C-DAC. C-DAC cannot commercially use that jointly owned IP unless the applicant fails to meet its contractual obligations.  Projects under this category are expected to be taken up through an RFP issued by C-DAC. Technical and financial evaluation forms part of that process.  For companies working on strategic semiconductor technology, this is therefore not a simple subsidy application. IP structure, long-term support, security conditions, and the RFP terms are central to the project. Category 2: Commercial Semiconductor IP, Chips and SoCs Category 2 deals with semiconductor designs meant for commercial products. It is especially relevant to fabless semiconductor companies. A fabless company designs chips but does not necessarily own the fabrication facility where those chips are physically manufactured. Eligible companies must be incorporated and headquartered in India and have significant operations and manpower in the country. Unlike Category 1, ownership and control may be with Indian citizens or Overseas Citizens of India. Eligible companies may also work in consortium with global companies, R&D organisations and academic institutions.  Another important condition is that the IP rights and all associated design and development files must remain within India. Eligible applicants may also access benefits under the Research, Development and Innovation Scheme where applicable.  Financial support under Category 2 is split mainly between Design Infrastructure Support and Product Design Linked Incentive. Design Infrastructure Support: What Does DIS Offer? Chip design is expensive even before manufacturing begins. Engineering teams need specialised Electronic Design Automation software, access to fabrication for prototypes, existing IP blocks, and tools for validating the chip after it has been manufactured. Design Infrastructure Support, or DIS, addresses some of these needs. Eligible organisations can receive access to facilities such as: The national EDA tools grid,  Multi-Project Wafer fabrication services,  Semiconductor IP cores,  Compute Sub-Systems,  And post-silicon validation services.  An EDA tool is specialised software used by semiconductor engineers to design, simulate, and verify chips. A Multi-Project Wafer, or MPW, allows multiple chip designs to share the same wafer fabrication run. This can be particularly useful during development because a company does not have to bear the full cost of an entire wafer run for one early design. Indian academic institutions and eligible startups and MSMEs are expressly included for specified DIS support.  P-DLI Seed Funding for Startups and MSMEs The Product Design Linked Incentive is likely to attract attention from young semiconductor companies because it includes a specific seed-funding route. Eligible startups and MSMEs may receive milestone-linked advance seed funding equal to: 50% of project cost or 15 crore rupees, whichever is lower. The limit applies per application.  The words “whichever is lower” matter. A startup cannot assume that every approved application will receive 15 crore rupees. A 12 crore rupees project, for instance, would first be restricted by the 50% project-cost condition. Funding is also milestone-linked. It should therefore be treated as conditional project support rather than unrestricted cash. For founders assessing semiconductor startup funding in India, this distinction is important when preparing financial projections or speaking to investors. Equity Co-Investment under Semicon 2.0 Eligible startups and MSMEs may also move beyond the seed-funding stage through equity co-investment. The notification provides for co-investment in companies that have secured funding from Venture Capital or Private Equity investors. The Government investment is to be made on terms and conditions similar to those offered by those VC or PE investors.  That is different from a normal subsidy. With equity financing, ownership and valuation matter. Companies should therefore consider the Government's participation alongside their existing cap table, future fundraising and exit plan. Royalty Financing for Other Eligible Companies Eligible Category 2 companies other than startups and MSMEs can use royalty financing. Under this route, financial support is provided on a co-investment basis. The beneficiary company pays 5% of the net revenue of the relevant product or technology until 1.5 times the financial support has been recovered.  In simple terms, the Government's recovery is linked to the commercial performance of the supported product. This structure may reduce immediate repayment pressure, but it creates a continuing obligation against product revenue. Companies comparing grant support, equity and royalty financing should therefore model each option separately. What Happens if a Company Exits P-DLI Funding? The scheme allows an exit, but an exit does not mean the financial obligation disappears. Funding Route Exit Requirement Seed funding/equity co-investment Aggregate seed funding plus market value of Government equity, or 1.5 times total financial support, whichever is higher Royalty financing: exit within 4 years of last disbursement Repay 1.5 times financial support Royalty financing: exit after 4 years Repay 2 times financial support These provisions apply where the beneficiary decides to exit or ceases to meet eligibility or other scheme conditions.  For founders and investors, this is not a minor clause. It can affect exit economics, valuation discussions, and decisions around changing the business model after receiving support. Category 3: Deployment-Linked Incentive The third design category deals with commercial deployment rather than the initial design stage. It covers semiconductor IP cores, chips, and SoCs that are launched for the first time after the scheme announcement and had no prior sales by the applicant before that announcement. Applicants eligible under Categories 1 and 2 can apply. The incentive is: 9% reimbursement on net sales for five years. The ceiling is: 30 crore rupees per application, and  120 crore rupees in total per company, including group companies, across multiple eligible products.  This is not the same as P-DLI. P-DLI supports product development through financing. DLI comes later and links support to the sales of the eligible product. DIS vs P-DLI vs DLI Feature DIS P-DLI DLI What it mainly supports Design infrastructure Product development financing Commercial deployment Form of support Access to tools/services Seed funding, equity, royalty Sales-linked reimbursement Stage Design/prototyping Development Post-launch Key limit Access subject to scheme/vendor terms Funding-specific conditions 9% for 5 years Important ceiling Depends on support type Seed: 50% of project cost or 15 crore rupees, whichever is lower amount applies 30 crore rupees/application; 120 crore rupees/company For companies planning a semiconductor-design project, mixing these three concepts can lead to incorrect funding assumptions. They apply at different stages and use different financial mechanisms. Category 4: Semiconductor Equipment, Materials and Testing One of the most commercially useful parts of Semicon 2.0 is Category 4. The scheme recognises that domestic fabs will also need a domestic supplier base. Eligible activities include: R&D for semiconductor equipment,  Semiconductor-grade raw materials,  Wafers,  Photomasks,  Photoresist,  Substrates,  Chemicals,  Gases,  Display-fab glass,  Semiconductor testing and characterisation,  Equipment manufacturing,  Refurbished equipment,  Sub-assemblies,  And components.  Except for semiconductor testing and characterisation facilities, applicants are expected to own or possess licensed technologies for the proposed unit.  Investment, Revenue and Support Sub-Vertical Minimum Investment Minimum Revenue Support Semiconductor equipment R&D 300 crore rupees 120 crore rupees 30% eligible CAPEX Semiconductor-grade raw materials 50 crore rupees 20 crore rupees 30% eligible CAPEX Test and characterisation 100 crore rupees 40 crore rupees 30% eligible CAPEX Equipment, refurbished equipment, sub-assemblies and components 300 crore rupees 120 crore rupees 30% eligible CAPEX + applicable PLI The revenue condition includes group companies and applies to any one of the three financial years before the year of application.  This category creates a meaningful opening for businesses that may never build a fab themselves but can supply the fabs that are being developed. PLI for Domestic Semiconductor Equipment and Components Certain equipment-related projects under Category 4 also receive a Production-Linked Incentive. The PLI is based on the value of the Bill of Materials sourced from domestic manufacturers. The rates decline over five years: 10% → 8% → 6% → 4% → 2% The benefit starts from FY 2028-29 and is subject to an overall ceiling of 50% of eligible CAPEX.  A Bill of Materials, usually shortened to BoM, is the list and value of parts and materials used to make a product. This incentive makes domestic sourcing relevant to the financial model of an eligible equipment project, not merely to its procurement strategy. Category 5: Silicon Semiconductor Wafer Fabs Category 5 is aimed at large silicon semiconductor fabrication projects. The financial and technical entry conditions are high. Requirement Condition Wafer size 300 mm Installed capacity 40,000 wafer starts/month or more Technology Production-grade owned or licensed technology Minimum capital investment 20,000 crore rupees Minimum revenue 7,500 crore rupees Revenue test Any one of the 3 FYs before application; group/JV included Fiscal support 40% of eligible CAPEX on pari-passu basis These conditions are expressly provided in the notification.  The 40% support looks substantial on paper, and it is. But a project of this scale still needs very large promoter funding, credible technology, execution capability, suppliers, utilities, manpower and customers. The subsidy does not replace the underlying business case. Category 6: Compound Semiconductors, Photonics, MEMS and Discrete Fabs Category 6 provides a route for specialised fabs that do not fall within the large 300 mm silicon-fab framework. Technology Minimum Wafer Size Sensors, including MEMS 200 mm Compound semiconductors 150 mm Discrete semiconductor fabs 150 mm Photonics 100 mm Minimum wafer sizes differ by technology: The minimum installed capacity is 500 wafer starts per month. Applicants must own or possess production-grade licensed technology for the proposed process. Other key thresholds are: Minimum investment: 500 crore rupees  Minimum revenue: 200 crore rupees  Fiscal support: 35% of eligible CAPEX on a pari-passu basis  This category is relevant to specialised semiconductor manufacturing, but it remains a serious industrial investment. Smaller scale than a silicon mega-fab does not mean low-cost entry. Category 7: OLED, Micro LED and LCD Display Fabs Display manufacturing has its own set of thresholds. Technology Minimum Capacity Minimum Investment Minimum Revenue Support OLED - Generation 6 or above 30,000 panels/month 10,000 crore rupees 5,000 crore rupees 35% eligible CAPEX Micro LED 500 sq. m. panel area/month 1,500 crore rupees 600 crore rupees 35% eligible CAPEX LCD - Generation 8 or above 60,000 panels/month 10,000 crore rupees 5,000 crore rupees 35% eligible CAPEX The applicant must also own or possess production-grade licensed technology for the relevant process.  Micro LED has a much lower investment threshold than OLED or LCD, but 1,500 crore rupees remains a large project. Technology, scale, and access to licensed processes will therefore matter as much as subsidy availability. Category 8: ATMP and OSAT Support Semiconductor fabrication produces dies, but those dies are not ready to go straight into electronic products. They still need assembly, testing, marking, and packaging. ATMP stands for Assembly, Testing, Marking, and Packaging. OSAT means Outsourced Semiconductor Assembly and Test. Semicon 2.0 divides this category into advanced and legacy packaging. Advanced Packaging The notification includes: 2.5D packaging,  3D packaging,  Wafer-level chip-scale packaging,  Heterogeneous integration,  And advanced substrates.  Advanced Packaging vs Legacy Packaging Requirement Advanced Packaging Legacy Packaging Minimum investment 1,000 crore rupees 1,000 crore rupees Minimum revenue 200 crore rupees 200 crore rupees Technology Production-grade owned/licensed Production-grade owned/licensed Fiscal support 35% eligible CAPEX 25% eligible CAPEX Advanced packaging therefore receives a higher support percentage despite having the same stated investment and revenue thresholds.  For applicants considering an ATMP or OSAT project, correctly classifying the proposed packaging technology can directly affect the incentive available. Category 9: R&D for Advanced Semiconductor Technologies Research and development has been made a separate pillar rather than being treated as an incidental part of manufacturing. The notification covers technologies such as: Advanced CMOS-based fabrication,  Silicon photonics,  Display fabrication,  Chiplet-based technologies for advanced packaging,  And other advanced semiconductor technologies.  Semiconductor companies can apply independently or in consortium with academic institutions or R&D organisations. Support may be up to 75% of project cost, including State incentive, and may cover eligible CAPEX as well as OPEX. Part-funding from the Research, Development and Innovation Scheme may also be included where necessary.  Again, “up to 75%” is a maximum, not a promised rate for every proposal. Detailed eligibility and funding conditions are to come through separate guidelines. Category 10: Talent Development Building semiconductor plants is only part of the problem. India also needs people who can design chips, operate fabrication equipment, work in packaging plants, process laboratories and support specialised manufacturing. Category 10 therefore covers talent from undergraduate and postgraduate education through doctoral research and shop-floor technicians. On the design side, it can support access to: Advanced chip-design tools,  MPW fabrication,  Post-silicon validation,  And capacity-building projects.  On the manufacturing side, the scheme supports training infrastructure, hands-on shop-floor training, and the strengthening of national nanofabrication and process laboratories.  Eligible institutions include Indian academic institutions, R&D organisations, laboratories, scientific societies and domestic training institutions. Fiscal support can be up to 75% of project cost, including State incentive, covering eligible capital and operating expenditure.  Complete Semicon 2.0 Investment and Revenue Comparison Project Minimum Investment Minimum Revenue Support Equipment R&D 300 crore rupees 120 crore rupees 30% eligible CAPEX Raw-material manufacturing 50 crore rupees 20 crore rupees 30% eligible CAPEX Testing/characterisation 100 crore rupees 40 crore rupees 30% eligible CAPEX Equipment/components 300 crore rupees 120 crore rupees 30% CAPEX + applicable PLI Silicon wafer fab 20,000 crore rupees 7,500 crore rupees 40% eligible CAPEX Compound/photonics/MEMS/discrete fab 500 crore rupees 200 crore rupees 35% eligible CAPEX OLED display fab 10,000 crore rupees 5,000 crore rupees 35% eligible CAPEX Micro LED fab 1,500 crore rupees 5,000 crore rupees 35% eligible CAPEX LCD display fab 10,000 crore rupees 5,000 crore rupees 35% eligible CAPEX Advanced packaging 10,000 crore rupees 200 crore rupees 35% eligible CAPEX Legacy packaging 1,000 crore rupees 200 crore rupees 25% eligible CAPEX The figures show why category selection matters. A business cannot look at the 35% or 40% support figure in isolation. Eligibility may first depend on investment, revenue, installed capacity, and technology. Which Semicon 2.0 Category May Fit Your Business? Business Type Likely Category Fabless semiconductor startup Category 2 Strategic semiconductor design company Category 1 Company deploying a newly launched eligible chip Category 3 Semiconductor raw-material company Category 4 Equipment or component manufacturer Category 4 Silicon wafer fab Category 5 MEMS/sensor manufacturer Category 6 Photonics manufacturer Category 6 Compound semiconductor manufacturer Category 6 OLED/Micro LED/LCD manufacturer Category 7 ATMP/OSAT company Category 8 Advanced semiconductor R&D business Category 9 University/R&D institution Category 9 or 10 Semiconductor training organisation Category 10 Can Foreign or Global Companies Participate? The answer depends on the category. Under Categories 1 and 2, eligible Indian companies may participate through consortium arrangements with global companies, R&D organisations and academic institutions. That does not mean any foreign company can apply directly on identical terms. For Category 1, the eligible company itself must be Indian incorporated, headquartered in India and owned and controlled by Indian citizens. For Category 2, Indian citizens as well as OCIs are recognised in the ownership and control condition.  A proposed joint venture or consortium should therefore be checked against the specific category rather than relying on a general assumption about foreign participation. Why Technology Licensing Deserves Early Attention Several manufacturing categories require the applicant to own or possess production-grade licensed technology for the proposed process. That is a deeper condition than purchasing equipment. A company may have enough capital to build a plant but still fail to meet the scheme conditions if it does not have legally usable technology for the intended manufacturing process. For this reason, technology agreements, licensing rights and long-term process access should ideally be reviewed alongside financial planning. Waiting until the application stage can create problems if the commercial arrangement with the technology provider does not match the project submitted to ISM. What Does Pari-Passu Support Mean? A number of Semicon 2.0 manufacturing categories use the expression pari-passu. In practical terms, it means Government support is linked with eligible project spending according to the approved funding structure rather than functioning as an unconditional upfront payment of the full incentive amount. The notification does not prescribe one identical instalment schedule for every category. Applicants should therefore avoid assuming that 35% or 40% support will automatically be received at the beginning of construction. Actual release will depend on approval conditions and detailed scheme guidelines. How to Apply for Semicon 2.0 The scheme will initially remain open for applications for three years, and applications have to be submitted through the portal of the Nodal Agency during the relevant application window.  Before filing, a business should practically work through a few checks: Identify the correct Semicon 2.0 category.  Match the project with the category's eligibility conditions.  Check ownership and control requirements where applicable.  Review technology ownership or licensing.  Verify capital-investment and revenue thresholds.  Confirm required production capacity.  Understand the exact financial-support mechanism.  Review royalty, equity, or exit obligations where applicable.  Prepare technical and financial project information.  Track the ISM application window and subsequent MeitY guidelines.  Not every step above is prescribed word-for-word as a statutory application sequence. Several are practical preparation measures based on the conditions that the applicant will eventually need to demonstrate. How Long Can a Semicon 2.0 Project Run? The three-year application period should not be confused with project duration. The notification says supported projects will be given a duration on a project-to-project basis, preferably up to six years.  Different incentive mechanisms may also have their own periods. For instance: DLI runs for five years on eligible net sales.  The Category 4 domestic-BoM PLI starts in FY 2028-29 and runs for five years.  The overall project itself may have a longer implementation period.  Financial models should therefore keep the application period, project implementation period, and incentive period separate. What Does India Semiconductor Mission Do? The India Semiconductor Mission (ISM) is the nodal agency for the scheme. Its responsibilities include: Inviting applications,  Carrying out technical appraisal,  Carrying out financial appraisal,  Recommending applicants for selection,  And performing other functions assigned by MeitY.  ISM can also implement the three design and deployment categories relating to IPs, chips and SoCs with C-DAC's assistance.  This makes ISM the central operational body for companies planning to participate in Semicon 2.0. How Will Applications Be Evaluated? Submitting an application does not automatically lead to incentive approval. The notification says the nodal agency will evaluate applications on an ongoing basis. Factors expressly mentioned include: Process technology,  Project implementation capacity,  Operating capability,  Offtake,  Financial parameters,  And technical parameters.  “Offtake” broadly relates to the market or customer arrangements for the output of the project. For large manufacturing proposals, this means a technically impressive facility may still need to show a credible route to customers and operations. Businesses should avoid relying on unofficial evaluation scorecards unless later guidelines introduce them. Who Approves Semicon 2.0 Projects? Approval authority depends on the project category and, for certain categories, project cost. Project Cost Approval Authority Semiconductor design categories and talent development Below 100 crore rupees Secretary, MeitY Same categories Above 100 crore rupees and up to 500 crore rupees Minister for Electronics and Information Technology Same categories Above 500 crore rupees Union Cabinet Other Semicon 2.0 categories Relevant project cost Union Cabinet route after recommendation The nodal agency first evaluates and recommends proposals. For other categories, recommended proposals are to be placed before the Union Cabinet through MeitY.  This is one reason businesses should distinguish eligibility from approval. Meeting minimum conditions gets a project into consideration, it does not guarantee selection. How Will the Incentive Money Be Released? MeitY will make budgetary provision for support given to approved applicants. Disbursement will then be made by the nodal agency based on the conditions of approval.  The notification does not prescribe a universal payment schedule. That matters when preparing project finance. A company should not structure its entire funding plan around receiving the maximum incentive at the beginning of the project. Cash-flow planning should instead account for promoter contribution, debt or equity requirements, and the actual disbursement terms eventually attached to approval. What is Still Awaited under the Detailed Guidelines? MeitY has expressly stated that separate scheme guidelines will be issued. The scheme and its guidelines may also be reviewed and amended.  Area Current Position 6 pillars and 10 categories Confirmed Main fiscal-support structure Confirmed Major manufacturing thresholds Confirmed Nodal agency Confirmed Approval route Confirmed Three-year application period Confirmed Exact application windows To be announced Complete forms Not expressly specified Final document checklist Not expressly specified Detailed scoring methodology Not expressly specified Detailed milestone verification Further guidance may be required Detailed Category 9 eligibility Separate guidelines to come Category 10 support details Separate guidelines to come Uniform disbursement schedule Not expressly specified For applicants, this means early project preparation is useful, but filing assumptions should remain flexible enough to accommodate the detailed guidelines. What Does Semicon 2.0 Mean for Startups and MSMEs? For semiconductor startups, the biggest attraction may not be the large fab subsidies. The more relevant support may come through: EDA tool access,  MPW services,  IP cores,  Validation infrastructure,  Seed funding,  Equity co-investment,  And later-stage DLI support.  This can help with some of the costs that appear before a semiconductor product starts generating revenue. Even so, the scheme does not make product development risk-free. Seed funding is milestone-linked. Equity changes the company's ownership structure. Royalty financing creates revenue-linked repayment. DLI becomes relevant only when an eligible product is commercially deployed. Startups should therefore evaluate the scheme as part of their funding strategy, not as a replacement for one. What Does Semicon 2.0 Mean for Semiconductor Manufacturers? Manufacturers face a different set of questions. For them, the issue is less about access to EDA tools and more about: Plant scale,  Technology rights,  Revenue capacity,  Production capability,  Project finance,  Suppliers,  Customers,  And implementation.  A silicon fab needs at least 20,000 crore rupees of capital investment under the notified threshold. OLED and LCD fabs require at least 10,000 crore rupees. Even specialised Category 6 fabs start at 500 crore rupees. Government support can materially change project economics, but it cannot replace a viable plant design or sound financing plan. This is where professional semiconductor project consultancy becomes relevant: businesses need to understand the scheme alongside the underlying industrial project, rather than treating incentive filing as a separate paperwork exercise. What Does the Scheme Mean for Equipment and Material Suppliers? This may be one of the areas with the widest business opportunity. Not every company entering the semiconductor sector needs to manufacture chips. Category 4 expressly covers: Wafers,  Photomasks,  Photoresist,  Substrates,  Chemicals,  Gases,  Equipment,  Refurbished equipment,  Sub-assemblies,  Components,  And testing infrastructure.  For established engineering, chemical, materials, or precision-manufacturing businesses, Semicon 2.0 may therefore create a route into the semiconductor supply chain without the need to build a full fabrication facility. The eligibility requirements still need to be checked carefully, especially the investment, revenue, and technology conditions. Is Semicon 2.0 a Good Decision or an Additional Burden? The scheme has clear advantages, but the commercial burden should not be ignored. Positive Side Practical Challenge Support across the semiconductor value chain Several categories need very high investment Dedicated support for startups Milestone and funding conditions apply EDA and MPW infrastructure Technical teams are still necessary 35–40% eligible CAPEX support for major categories Promoters still need large-scale financing Support for materials and equipment Technology and revenue thresholds apply Advanced packaging gets stronger support Licensed process technology is needed R&D support up to 75% Maximum support is not guaranteed Talent development gets a dedicated pillar Separate guidelines are still awaited Where the Scheme Helps Semicon 2.0 addresses a real structural problem: semiconductor manufacturing depends on an ecosystem. If India supports only one or two fabs but continues importing most equipment, specialised materials, packaging, design technology and trained manpower, the local value chain remains shallow. The scheme gives policy support to more of those missing links. For startups, design, infrastructure, and funding can reduce early-stage cost pressure. For manufacturing companies, CAPEX support can improve project economics. For equipment and materials manufacturers, the scheme opens a route into a growing industrial supply chain. Where the Burden Remains A high incentive percentage does not make a weak project viable. Semiconductor manufacturing remains expensive and technically demanding. Technology licensing can be difficult. Skilled people are limited. Large manufacturing projects need long-term financing and credible customer demand. The Government also evaluates implementation capacity, operations, and offtake, which makes commercial preparation as important as eligibility. The Practical View Semicon 2.0 is more useful as an industrial-development framework than as a simple subsidy scheme. Companies that already have a credible product, technology, promoter structure, or manufacturing plan may find meaningful financial support under it. Businesses that begin with only the question “What subsidy can I claim?” may struggle because the scheme asks for much more than investment alone. Business Opportunities under Semicon 2.0 The scheme can create opportunities in several parts of the semiconductor industry. Opportunity Relevant Category Chip and SoC design 1–3 Semiconductor IP 1–3 EDA and design infrastructure 2 Semiconductor equipment 4 Equipment refurbishment 4 Wafers and substrates 4 Semiconductor chemicals and gases 4 Testing and characterisation 4 Silicon fabs 5 Compound semiconductors 6 MEMS and sensors 6 Photonics 6 OLED/Micro LED/LCD 7 Advanced packaging 8 Legacy packaging 8 Legacy packaging 9 Technical training 10 The commercial potential should still be evaluated project by project. The notification does not provide market size or revenue guarantees for these sectors. Key Risks Businesses Should Avoid The biggest mistake would be treating Semicon 2.0 as one uniform incentive programme. Businesses should be careful about: Selecting the wrong category,  Assuming sector presence means eligibility,  Overlooking ownership conditions,  Treating technology access as the same as a valid production licence,  Confusing investment thresholds with incentive amounts,  Treating “up to” funding as guaranteed,  Confusing P-DLI and DLI,  Overlooking equity or royalty consequences,  Ignoring group-company and JV treatment in revenue calculations,  Building cash flows around full upfront incentive payment,  Or relying on unofficial application checklists before MeitY/ISM issues the relevant guidance.  Careful eligibility screening at the beginning can save a great deal of restructuring later. What Should Businesses Do Next? Businesses considering the scheme should begin with a project-level assessment rather than a generic subsidy search. A sensible internal review would cover the proposed activity, relevant category, ownership structure, technology rights, and capital investment, past revenue, production capacity, expected funding mechanism and approval route. For manufacturing projects, technology agreements should be reviewed alongside project finance. For design startups, the impact of seed funding, Government equity, or royalty financing should be modelled before selecting a support route. Businesses should also monitor future MeitY and India Semiconductor Mission announcements because the detailed scheme guidelines will fill in several operational areas. How Corpseed Can Help with Semicon 2.0 Applying for Semicon 2.0 involves more than submitting an application. A business first needs to understand which category fits its project, whether it meets the required conditions, and what financial or technical requirements may apply. As a Semicon 2.0 consultant, Corpseed can help businesses understand the scheme and prepare their project in a more organised way. 1. Choosing the Right Semicon 2.0 Category Corpseed can help businesses identify the category that best matches their proposed semiconductor project. Review the nature of the proposed business or project.  Identify the relevant Semicon 2.0 category.  Check whether the project falls under design, manufacturing, materials, equipment, ATMP/OSAT, R&D, or talent development.  Avoid applying under a category that does not match the project.  Explain the support available under the relevant category.  2. Checking Project and Applicant Eligibility Each Semicon 2.0 category has its own conditions. Corpseed can help businesses carry out an initial eligibility check before they move ahead with the application. Review applicant eligibility. Evaluate category-specific requirements.  Analyze investment requirements, if any.  Evaluate minimum income requirements, if any.  Analyze production/capacity requirements.  Pinpoint eligibility gaps that may need to be addressed before application.  3. Reviewing Investment and Financial Requirements Large semiconductor projects can involve substantial investment. Corpseed can help businesses understand the financial conditions linked to the selected category. Check minimum capital investment requirements.  Review applicable revenue thresholds.  Explain the available fiscal-support structure.  Help distinguish CAPEX support, DLI, P-DLI, PLI, seed funding, and other forms of assistance.  Review financial information required for project preparation.  Help businesses understand that the maximum incentive is not automatically guaranteed.  4. Ownership, Technology and Licensing Review Some Semicon 2.0 categories contain specific conditions relating to ownership, control and access to technology. Corpseed can assist with: Reviewing ownership and control requirements  Checking Indian incorporation or headquarters conditions where applicable  Reviewing technology-related eligibility  Examining available technology or licensing documents  Identifying whether production-grade licensed technology may be required  Checking whether the proposed structure broadly matches the selected scheme category  This step is particularly important for semiconductor fabs, display fabs, ATMP/OSAT facilities, and other technology-heavy manufacturing projects. 5. Project Report and Documentation Support A strong semiconductor project application needs clear technical and financial information. Through semiconductor incentive consultancy, Corpseed can help organise the project information required for application preparation. Support may include: Project report preparation support  Technical information coordination  Financial information coordination  Application-document organisation  Project structure review  Supporting information preparation  Examining the application to ensure no information is left out  It will be essential to compare the document checklist with the MeitY and India Semiconductor Mission guidelines after issuance. 6. Application Preparation and Query Support Once the prescribed application process and relevant window are available, Corpseed can assist businesses in preparing for submission. Application preparation support  Filing assistance using the procedure that has been notified  Information scrutiny before filing the application  Application monitoring assistance  Support for answering questions or clarifications sought  Co-ordination of supporting documentation  Approval readiness review  Approval or incentive sanction by Corpseed is not guaranteed, as the ultimate decision rests on the assessment by the Government. 7. Semiconductor Project and Post-Approval Support A semiconductor project may require other registrations and approvals in addition to Semicon 2.0 support. Through semiconductor project consultancy, Corpseed can help businesses understand the wider project requirements that may apply separately. This may include: Identifying other project-related approvals  Supporting semiconductor manufacturing setup planning  Coordinating applicable registrations and licences  Assisting with post-approval requirements  Helping businesses track scheme-related conditions  Supporting ongoing documentation and compliance requirements where applicable  For a silicon fab, ATMP/OSAT facility, semiconductor-material unit, equipment manufacturing project, or testing facility, looking at these requirements early can help avoid unnecessary changes later. Corpseed's role is to help businesses understand the correct Semicon 2.0 route, assess their readiness, and prepare their project in line with the applicable scheme conditions, rather than approaching the application only as a subsidy form. Key Takeaways MeitY notified Semicon 2.0 on 31 August 2026.  The scheme has 6 pillars and 10 categories covering design, equipment, materials, fabs, packaging, R&D and talent.  Eligible startups and MSMEs may receive milestone-linked seed funding of 50% of the project cost or 15 crore rupees, whichever is lower.  Category 3 grants a 9% DLI on net sales for 5 years but is subject to certain caps of 30 crore rupees per application and 120 crore rupees per company.  The silicon wafer fabs need at least an investment of 20,000 crore rupees and have 40% CAPEX eligibility according to the notification conditions.  Advanced packaging receives 35% eligible CAPEX support, compared with 25% for legacy packaging.  ISM is the nodal agency.  Applications are initially open for three years, while the project duration is determined project by project and is preferably up to six years.  Separate MeitY guidelines remain important because several detailed operational requirements are yet to be prescribed.  Semicon 2.0 gives semiconductor businesses more than one route into India's incentive framework. A startup designing chips, a company supplying semiconductor gases, a MEMS manufacturer, an ATMP operator, and a large silicon fab developer can all potentially fall within the scheme, but not under the same conditions. That is why the headline incentive percentage should never be the only basis for a decision. Ownership, technology, investment, revenue, capacity, financing terms, and approval requirements need to be checked together. For businesses planning a serious semiconductor project, the next useful step is to map the project against the correct Semicon 2.0 category and then review the detailed MeitY and ISM guidelines as they are issued.