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Indias Cabinet Approves Major Funding for Semiconductors, Mobile Manufacturing, Urea Production and Varanasi Highway Projects
India’s Cabinet has just green‑lit a multi‑sector investment spree, with the Cabinet Committee on Economic Affairs—chaired by Prime Minister Narendra Modi—clearing a slate of projects that will boost domestic manufacturing and infrastructure. On 15 July 2026, the committee announced funding for the second edition of the India Semiconductor Mission (Semicon 2.0), a new Mobile Phone Manufacturing Scheme (MPMS), two elevated highway corridors in Varanasi, and a fresh investment policy that paves the way for nine gas‑based urea plants.
Semicon 2.0 The cabinet’s decision to allocate ₹1.27 lakh crore to Semicon 2.0 follows the 2026–27 Union Budget’s push to deepen India’s semiconductor ecosystem. The new phase is projected to attract about ₹4 lakh crore in investment and generate semiconductor production worth ₹2 lakh crore over the programme period. The mission’s six pillars cover design, development, and production of indigenous chips, with the first pillar focused on chip design. Incentives now extend to suppliers of raw materials, minerals, and gases that support chip manufacturing. In the first edition, the government had allocated ₹76 000 crore and approved 12 projects that together attracted a cumulative investment of roughly ₹1.64 lakh crore. Tata Electronics and its semiconductor arm remain the largest domestic investor.
Mobile Phone Manufacturing Scheme MPMS receives an outlay of ₹62,500 crore to support the growth of Indian mobile‑phone brands. The scheme offers incentive support on eligible sales ranging from 2.25 % to 5 %, with an additional 1.5 % linked to domestic sourcing of key components or sub‑assemblies. An extra 3 % incentive is available for design and research and development of the product. According to the cabinet, the programme is expected to raise cumulative mobile‑phone production to about ₹39 lakh crore and create roughly 60,000 direct jobs. The scheme is positioned as a continuation of the Production Linked Incentive Scheme for Large‑Scale Electronics Manufacturing (PLI‑LSEM), which concluded on 31 March 2026.
Varanasi Highway Projects Two elevated highway corridors totaling 89.257 km will be built under the Hybrid Annuity Model (HAM). The first corridor, 43.218 km long, connects NH‑31 with the Varanasi Ring Road along the Varuna River and is estimated to cost ₹10,998.32 crore. The second corridor, 46.039 km long, links NH‑19 with the ring road along the Ganga River and is estimated at ₹14,447.64 crore. Both projects feature elevated carriageways, cable‑stayed bridges, loops, ramps, and service roads, and are designed for operating speeds of 80–100 km/h. The corridors are part of the Varanasi Decongestion Plan and align with the PM Gati Shakti National Master Plan. They are expected to cut travel time between key points in the city by up to 50 % and improve connectivity to the airport, port, temple, university, and other destinations.
Urea Production Policy The cabinet has also approved the National Investment Policy for Urea (NIPU‑2026), which will facilitate the establishment of eight to nine new gas‑based urea plants with a total capacity of 10 million tonnes. The policy introduces a separation of fixed and variable costs, a return‑on‑equity band of 12 % to 16 %, and a mechanism to mitigate foreign‑exchange risk by converting fixed costs into rupees after four years. The Fertilizers Ministry estimates that these measures will save more than ₹250 crore per plant compared with the 2012 policy. India currently imports about 10 million tonnes of urea, while domestic production stands at 30 million tonnes against a requirement of 40 million tonnes. The new policy aims to make the country self‑reliant in urea amid rising demand driven by changes in cropping patterns and increased sowing area.
Current Situation With these approvals, India is advancing several key sectors simultaneously: semiconductor manufacturing, mobile‑phone production, urban infrastructure, and agricultural input supply. The semiconductor and mobile‑phone schemes are expected to attract significant private investment and generate employment, while the highway projects aim to reduce congestion and improve logistics in Varanasi. The urea policy seeks to address a critical input gap for the agricultural sector. The cabinet has not yet announced specific timelines for the start of construction or the first production milestones, but the approvals provide a clear policy framework and financial backing for the projects.
Semicon 2.0 The cabinet’s decision to allocate ₹1.27 lakh crore to Semicon 2.0 follows the 2026–27 Union Budget’s push to deepen India’s semiconductor ecosystem. The new phase is projected to attract about ₹4 lakh crore in investment and generate semiconductor production worth ₹2 lakh crore over the programme period. The mission’s six pillars cover design, development, and production of indigenous chips, with the first pillar focused on chip design. Incentives now extend to suppliers of raw materials, minerals, and gases that support chip manufacturing. In the first edition, the government had allocated ₹76 000 crore and approved 12 projects that together attracted a cumulative investment of roughly ₹1.64 lakh crore. Tata Electronics and its semiconductor arm remain the largest domestic investor.
Mobile Phone Manufacturing Scheme MPMS receives an outlay of ₹62,500 crore to support the growth of Indian mobile‑phone brands. The scheme offers incentive support on eligible sales ranging from 2.25 % to 5 %, with an additional 1.5 % linked to domestic sourcing of key components or sub‑assemblies. An extra 3 % incentive is available for design and research and development of the product. According to the cabinet, the programme is expected to raise cumulative mobile‑phone production to about ₹39 lakh crore and create roughly 60,000 direct jobs. The scheme is positioned as a continuation of the Production Linked Incentive Scheme for Large‑Scale Electronics Manufacturing (PLI‑LSEM), which concluded on 31 March 2026.
Varanasi Highway Projects Two elevated highway corridors totaling 89.257 km will be built under the Hybrid Annuity Model (HAM). The first corridor, 43.218 km long, connects NH‑31 with the Varanasi Ring Road along the Varuna River and is estimated to cost ₹10,998.32 crore. The second corridor, 46.039 km long, links NH‑19 with the ring road along the Ganga River and is estimated at ₹14,447.64 crore. Both projects feature elevated carriageways, cable‑stayed bridges, loops, ramps, and service roads, and are designed for operating speeds of 80–100 km/h. The corridors are part of the Varanasi Decongestion Plan and align with the PM Gati Shakti National Master Plan. They are expected to cut travel time between key points in the city by up to 50 % and improve connectivity to the airport, port, temple, university, and other destinations.
Urea Production Policy The cabinet has also approved the National Investment Policy for Urea (NIPU‑2026), which will facilitate the establishment of eight to nine new gas‑based urea plants with a total capacity of 10 million tonnes. The policy introduces a separation of fixed and variable costs, a return‑on‑equity band of 12 % to 16 %, and a mechanism to mitigate foreign‑exchange risk by converting fixed costs into rupees after four years. The Fertilizers Ministry estimates that these measures will save more than ₹250 crore per plant compared with the 2012 policy. India currently imports about 10 million tonnes of urea, while domestic production stands at 30 million tonnes against a requirement of 40 million tonnes. The new policy aims to make the country self‑reliant in urea amid rising demand driven by changes in cropping patterns and increased sowing area.
Current Situation With these approvals, India is advancing several key sectors simultaneously: semiconductor manufacturing, mobile‑phone production, urban infrastructure, and agricultural input supply. The semiconductor and mobile‑phone schemes are expected to attract significant private investment and generate employment, while the highway projects aim to reduce congestion and improve logistics in Varanasi. The urea policy seeks to address a critical input gap for the agricultural sector. The cabinet has not yet announced specific timelines for the start of construction or the first production milestones, but the approvals provide a clear policy framework and financial backing for the projects.
