India Bets on Chip Design Startups With $15 Billion Program
India's government has approved a $15 billion budget for the India Semiconductor Mission (ISM) 2.0, shifting focus to electronics system design and introducing a new equity-based investment model.
The Indian government has allocated a budget of ₹1.25 Lakh Crore (approximately $15 billion) for the India Semiconductor Mission (ISM) 2.0, signaling a significant push into semiconductor design startups.
The ISM 2.0 represents a strategic shift from the broader focus of its predecessor, Semicon India Programme. While the first phase supported semiconductor manufacturing broadly, the new initiative prioritizes electronics systems design, leveraging India's existing strength as a global hub for chip design engineers.
A key innovation in ISM 2.0 is its financing mechanism. Moving beyond a grant-based system, the government will now invest directly in startups through an equity model, aiming to co-invest alongside private capital. This approach seeks to de-risk investments for venture capitalists and encourage greater private participation.
While specific operational guidelines are still pending, the program's design aims to address the capital constraints that have historically hindered Indian fabless semiconductor companies. The previous Design Linked Incentive (DLI) scheme supported 22 companies with ₹234 crore, but ISM 2.0 is expected to facilitate substantially larger investments in chip design projects.