Cabinet Approves Semicon 2.0, Mobile Manufacturing, Urea Plants, and Highway Projects

Semicon Latest News

• The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, has cleared several major projects, including Semicon Mission 2.0 worth Rs. 1.27 lakh crore.

Background

• India has been pursuing an aggressive strategy to strengthen domestic manufacturing and reduce dependence on imports across critical sectors. 
• This aligns with the broader Atmanirbhar Bharat and Make in India initiatives. The Cabinet approvals cover four major areas:
  • Semiconductor manufacturing: critical for electronics, AI, and defence
  • Mobile phone manufacturing: a key export sector
  • Urea production: essential for agricultural self-sufficiency
  • Highway infrastructure: for improved connectivity
• These decisions come at a time when global supply chain disruptions, memory chip shortages, and geopolitical tensions have highlighted the need for domestic capabilities.

‹ ›

India Semiconductor Mission 2.0

• About the Programme
  • The Cabinet has approved Rs. 1.27 lakh crore for the second edition of the India Semiconductor Mission (ISM 2.0), aimed at developing India’s semiconductor design and manufacturing ecosystem.
• Expected Outcomes
  • Investments of around Rs. 4 lakh crore are expected to be attracted.
  • Semiconductor production worth Rs. 2 lakh crore during the scheme period.
  • Self-reliance in indigenous chip production by the end of the programme.
• Six Pillars of Semicon 2.0
  • Design of chips
  • Development of chips
  • Production of indigenous chips
  • Support for raw material suppliers including minerals and gases
  • Meeting chip requirements for AI devices
  • Building end-to-end semiconductor value chain
• Comparison with ISM 1.0
  • ISM 1.0 was allocated Rs. 76,000 crore
  • Under ISM 1.0, the government approved 12 projects with cumulative investments of around Rs. 1.64 lakh crore
  • Majority of investment came from Tata Electronics and its semiconductor arm
• Strategic Timing
  • The programme comes at a critical time when:
  • The world is facing a memory chip shortage
  • Companies are working on enhancing production capacity
  • Demand for AI-related chips is rising
  • Geopolitical tensions are affecting global supply chains

Mobile Phone Manufacturing Scheme (MPMS)

• About the Scheme
  • The Cabinet approved an outlay of Rs. 62,500 crore for the Mobile Phone Manufacturing Scheme to build Indian brands, achieve technological sovereignty, and scale up local mobile production.
• Key Features
  • Incentive support on eligible sales at rates ranging from 2.25% to 5%
  • Additional incentive of up to 1.5% linked to domestic sourcing of key components and sub-assemblies
  • Additional incentive of 3% on eligible sales for design and R&D of the product
  • Focus on building Indian brands in the mobile phone sector
• Expected Outcomes
  • Cumulative mobile phone production expected to reach around Rs. 39 lakh crore during the scheme tenure
  • Significant increase in exports of mobile phones
  • Generation of around 60,000 direct jobs
  • Creation of Indian patents in design and R&B

National Investment Policy for Urea (NIPU 2026)

• About the Policy
  • The Cabinet approved the National Investment Policy for Urea (NIPU 2026) to set up nine new gas-based urea plants with a production capacity of 10 million tonnes, aiming to make India self-reliant in the most widely consumed fertiliser.
• Current Situation
  • Annual urea demand: Rising at 5% annually
  • Domestic production: Around 30 million tonnes
  • Total requirement: 40 million tonnes
  • Imports: 10 million tonnes to meet the shortage
• Key Changes from NIP 2012
  • Separation of fixed and variable costs for greater transparency
  • Viable Return on Equity (RoE) band with a floor at 12% and ceiling at 16%
  • Foreign exchange risk mitigation through conversion of fixed costs into rupees after four years based on prevailing exchange rates
• Expected Savings
  • These measures are estimated to result in savings of over Rs. 250 crore for each plant established under NIPU-2026 compared with NIP-2012
• Equal Treatment
  • Incentives under the policy will be the same for private, government, and cooperative projects
• Historical Context
  • Under the 2012 NIP (expired in October 2019), six new urea units were set up: 
  • Four through joint ventures of nominated public sector undertakings
  • Two units by private companies

Significance of Cabinet Decisions

• For Manufacturing Sector
  • Boost to indigenous manufacturing across critical sectors
  • Reduced import dependence for semiconductors, mobile phones, and urea
  • Job creation across multiple industries
  • Technology transfer and skill development opportunities
• For Economic Growth
  • Massive investment inflows expected from these schemes
  • Export growth particularly in mobile phones and semiconductors
  • Multiplier effects on ancillary industries
  • Foreign exchange savings through import substitution
• For Strategic Autonomy
  • Semiconductor self-reliance reducing geopolitical vulnerability
  • Fertiliser security critical for agricultural sector
  • Technology sovereignty in strategic sectors
  • Enhanced supply chain resilience
• For Infrastructure
  • Improved connectivity in Varanasi with modern highway infrastructure
  • Reduced congestion and travel times
  • Alignment with PM Gati Shakti for integrated infrastructure development

Way Forward

• For Semicon 2.0
  • Timely implementation of approved projects
  • Attracting global players and technology partners
  • Building a talent pool through education and training
  • Developing a supporting ecosystem for materials and equipment
• For Mobile Manufacturing
  • Strengthening the domestic component ecosystem
  • Encouraging Indian brands to scale globally
  • R&D investments for innovation
  • Export market development
• For Urea Production
  • Ensuring the timely commissioning of new plants
  • Gas supply security for the plants
  • Efficiency improvements in existing units
  • Promoting balanced fertiliser use
• For Highway Projects
  • Adherence to timelines and quality standards
  • Environmental safeguards during construction
  • Integration with other transport modes
  • Sustainable maintenance frameworks

Source: TH | Print