BT Explainer: All you need to know about India’s Semicon and mobile manufacturing push

India is taking significant strides in its manufacturing sector with the recent approval of the Semicon India Programme 2.0, featuring an investment of ₹1,27,500 crore alongside the ₹62,500 crore Mobile Phone Manufacturing Scheme (MPMS). These initiatives mark a pivotal evolution in India's industrial policy, aiming to establish a comprehensive manufacturing ecosystem that encompasses chip design, research and development (R&D), component production, and advanced manufacturing processes. Building on the success of Semicon India 1.0, which successfully positioned India on the global semiconductor landscape, the new programme aims to further develop the country’s semiconductor capabilities. The first phase of the initiative attracted over $20 billion in investments and established 12 semiconductor facilities, including silicon fabrication plants and assembly units. The second phase is expected to unlock even greater opportunities for startups, especially in sectors adjacent to semiconductor fabrication that require less capital and offer significant potential for innovation. Amit Chand, founder of BYT Capital, emphasizes that the most substantial business opportunities now lie in upstream activities. These include indigenous chip design, semiconductor manufacturing equipment, and advanced materials. Such sectors are ripe for deep-tech startups, which can establish competitive and sustainable businesses. This shift signals a move towards fostering a self-reliant innovation ecosystem that prioritizes long-term value creation for investors. According to the Indian Electronics and Semiconductor Association (IESA), the new programme not only enhances India’s capabilities in semiconductor design but also bolsters its manufacturing sector. The IESA projects that Semicon India 2.0 could attract an additional $40-50 billion in investments and generate 2-3 lakh high-skilled jobs. This transformation is poised to increase domestic value addition and position India as a key player in the global semiconductor market. Simultaneously, the Cabinet approved the Mobile Phone Manufacturing Scheme, which aims to nearly double mobile phone production to approximately ₹39 lakh crore, while boosting exports to ₹15 lakh crore and creating an additional 60,000 jobs. This initiative builds on India’s recent success in mobile manufacturing, which has seen the country emerge as the second-largest mobile manufacturing hub in the world. Unlike previous programs that primarily focused on assembly, the new scheme emphasizes domestic sourcing and manufacturing of components, thus opening doors for startups involved in electronics, precision manufacturing, and R&D. Together, the Semicon India 2.0 and MPMS represent a strategic shift in India's manufacturing approach, focusing on the development of technologies, components, and intellectual property that are essential to the industry’s future.