According to reports, the government is considering extending the fiscal support period under the second phase of the India Semiconductor Mission (ISM) to eight years from the current five years.

Projects approved under ISM Phase II are also eligible for additional financing, including skills training for employees, interest-free loans from the government, and a priority supply of domestically produced chips by the Ministry of Electronics and Information Technology.

With the successful implementation of Phase I of the ISM, we have some learnings to share. It is receiving constant feedback from the industry and many global experts and is trying to incorporate as much as possible.
However, the second phase of the mission may withdraw the financial support for technology transfer costs, and instead raise the outlay for administrative expenses, according to reports.

In the second phase of ISM, the IT ministry will reduce financial incentives for chip packaging units and instead redirect those funds to attract more chip manufacturing companies to India.

Instead of the current 50 percent incentive, the next phase of ISM may reduce the incentive for outsourced assembly and inspection and assembly, inspection, marking, and packaging units to 30 percent or less on an equal basis.

An incentive of 30-35 percent of the total capital expenditures used to establish the gas, chemicals, raw materials, metals, and other metallurgical sectors may also be available to successful applicants.

The ISM may receive a second budget allocation of up to $10 billion. The government must seek new funding under ISM because it has nearly exhausted the $11 billion approved for the first phase.

In the first phase, the government has approved five semiconductor projects so far. These are the chip manufacturing units of Tata Group Powerchip Semiconductor Manufacturing in Dhola, Gujarat, and four chip packaging units, three of which are in Sanand, Gujarat, and the other in Morigaon, Assam.