Union Cabinet clears Rs 1.9 lakh crore push for chips, mobile phones
UPSC / SSC current affairs note · Economy
Why in news
The Union Cabinet approved two major schemes—Semicon 2.0 and the Mobile Phone Manufacturing Scheme (MPMS)—with a combined outlay of Rs 1.9 lakh crore to boost electronics manufacturing. This marks a significant policy push to move beyond assembly into semiconductor fabrication, advanced packaging, and domestic mobile phone brands, aligning with India's target of a $500 billion electronics industry by 2030-31.
Background
India has been trying to reduce import dependence in electronics and semiconductors. Earlier, the government launched a production-linked incentive (PLI) scheme for mobile phones. The new schemes succeed and expand upon previous efforts, focusing on deeper localisation and indigenous IP.
Key facts
Union Cabinet approved Semicon 2.0 with outlay of Rs 1,27,500 crore and MPMS with Rs 62,500 crore.
Both schemes run for five years from 2026-27 to 2029-31.
Semicon 2.0 extends incentives beyond fabs to materials, specialty chemicals, equipment, R&D, chip design, and talent development.
Semicon 2.0 expected to attract investments of ~Rs 4 lakh crore, generate semiconductor production worth Rs 2 lakh crore, and exports of ~Rs 1 lakh crore.
MPMS provides sales-linked incentives of 2.25% to 5%, plus additional 1.5% for domestic sourcing of key components.
Indian brands undertaking design and R&D get an additional 3% incentive under MPMS.
Long-term target: $500 billion electronics manufacturing industry by 2030-31.
Government aims to create indigenous ecosystem for semiconductor manufacturing equipment and materials.
Prelims pointers
- Semicon 2.0
- Mobile Phone Manufacturing Scheme (MPMS)
- Rs 1.9 lakh crore total outlay
- Ministry of Electronics and Information Technology
- 2026-27 to 2029-31 scheme period
- $500 billion target by 2030-31
Mains angles
- Discuss the significance of Semicon 2.0 and MPMS in achieving self-reliance in electronics manufacturing.
- Critically examine the potential of these schemes to reduce import dependence and boost exports.
- Analyze the role of government incentives in fostering indigenous R&D and IP creation in semiconductors.