Govt to take equity stakes in semiconductor startups

The Indian government approved Semicon 2.0 with an outlay of Rs 1,27,500 crore, expanding the semiconductor strategy beyond fabrication and assembly.

Under Semicon 2.0, the government will move from one-time grants to a model of larger, milestone-linked funding coupled with equity investments alongside venture capital firms.

The India Semiconductor Mission chief Amitesh Kumar Sinha said startups will initially receive seed capital, followed by larger investments as they achieve predefined technical and commercial milestones.

The government intends to keep its equity stake below 50%, avoid board representation, and stay away from day-to-day management so that founders retain operational control.

Founders will have the option to buy back the government's stake at prevailing valuation, allowing the government to recover and reinvest capital into the next generation of startups.