New Delhi, The Centre is developing a new funding framework for semiconductor startups under India Semiconductor Mission 2.0 that could combine milestone-linked financial support with minority government equity investments and participation from venture-capital firms.
India Semiconductor Mission Chief Executive Officer Amitesh Kumar Sinha said the proposed model is intended to address the capital requirements of semiconductor companies beyond the initial chip-design and proof-of-concept stages.
Unlike many software startups, semiconductor companies require significant investment for product qualification, fabrication, commercialisation and large-scale deployment before they can generate revenue.
Under the proposed structure, eligible startups could initially receive seed capital, followed by larger investments after achieving predefined technical and commercial milestones. The government is also considering investing alongside private venture-capital firms to improve access to long-term funding.
An internal committee is currently finalising the programme’s structure. The amount of support available to individual startups, eligibility conditions, investment terms and implementation timelines have not yet been officially announced.
Sinha said the government would generally maintain an equity holding of less than 50%, avoid seeking board representation and stay away from the daily management of supported companies. This would allow startup founders to retain operational control.
Founders may eventually be given an opportunity to repurchase the government’s stake. The Centre could also exit its investment at the company’s prevailing valuation and redeploy the recovered capital into other semiconductor startups.
The proposed framework follows the Union Cabinet’s approval of India Semiconductor Mission 2.0 on July 15, with a budgetary allocation of ₹1,27,500 crore. The programme seeks to strengthen capabilities across semiconductor design, fabrication, advanced packaging, equipment, materials, research and talent development.
Under the first phase of the semiconductor mission, 24 design projects involving startups and micro, small and medium enterprises were approved for financial assistance. A further 105 startups and smaller companies received access to industry-standard electronic design automation tools.
The India Semiconductor Mission serves as the government’s nodal agency for implementing semiconductor and display manufacturing schemes and supporting the development of the domestic chip-design and manufacturing ecosystem.
