India expands support for advanced semiconductor packaging

India has notified the detailed framework for its Semicon 2.0 programme, placing advanced semiconductor packaging among the strategic areas eligible for significant government support. The initiative is designed to strengthen the country’s position across the full semiconductor value chain, from chip design and fabrication to packaging, equipment, materials, research and talent development.

Under the new guidelines, advanced packaging projects will be eligible for fiscal support covering 35% of eligible capital expenditure. The scheme specifically includes technologies such as 2.5D and 3D packaging, wafer-level chip-scale packaging and heterogeneous integration.

Legacy packaging receives separate support

Projects focused on more conventional semiconductor packaging technologies will also receive assistance, although at a lower level. Legacy packaging projects are eligible for support of 25% of qualifying expenditure.

The distinction reflects the government’s intention to encourage investment not only in assembly and testing capacity but also in higher-value packaging technologies that are becoming increasingly important for AI, high-performance computing and advanced electronics.

Semicon 2.0 covers six strategic pillars

The programme is structured around six areas spanning semiconductor design, wafer fabrication, ATMP and OSAT operations, equipment and materials, research and development, and workforce development.

Silicon semiconductor wafer fabs will receive fiscal support equivalent to 40% of eligible project costs, while advanced packaging receives 35%. The framework also includes support for research in CMOS process technologies, silicon photonics, display fabrication and chiplet-based packaging.

Advanced packaging becomes a national priority

The emphasis on packaging reflects its changing role within semiconductor manufacturing. Technologies such as 2.5D and 3D integration allow multiple dies, memory components and specialised processors to be combined in a single package, providing an alternative route to performance gains as conventional transistor scaling becomes more difficult.

Heterogeneous integration and chiplet architectures are also becoming central to AI accelerators and high-performance computing platforms, increasing the strategic importance of domestic packaging capacity.

Government targets major investment

Semicon 2.0 has been approved with an overall outlay of Rs 1.275 trillion. Government projections indicate that the programme could attract approximately Rs 4 trillion in investment while generating around Rs 2 trillion in production and Rs 1 trillion in exports.

Most projects supported under the programme will be implemented over periods of up to six years, while the initial application window will remain open for three years. The India Semiconductor Mission will act as the nodal agency responsible for implementation.

India seeks a broader semiconductor ecosystem

The new framework signals a shift from focusing primarily on semiconductor manufacturing capacity towards building a more complete domestic ecosystem. Advanced packaging, equipment, materials and research are increasingly being treated as strategic capabilities rather than secondary activities.

For packaging technology providers, OSAT companies and semiconductor suppliers, the incentives could create new opportunities to establish production and R&D operations in India as the country seeks to reduce reliance on imported semiconductor services and strengthen its position in the global electronics supply chain.