Cabinet Approves Semicon 2.0, Mobile Manufacturing, Urea Plants,…

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

July 16, 2026

Why in the News?

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

What’s in Today’s Article?

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 The Cabinet approvals cover four major areas:

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&D.

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

See All