In-Depth PIB Analysis2 Items

Core TopicImportantConcise

Science & TechnologyGS Paper III

01Semicon 2.0 & SEMICON India 2026

Environment, Ecology & AgricultureGS Paper III

02India’s First Soil Carbon Payments

Science & TechnologyGeneral Studies Paper III

01

Semicon 2.0: India moves from chip assembly towards a full-stack semiconductor ecosystem

GS-III · S&T, Industrial Policy, Supply-Chain SecurityPrelims + MainsPIB · Ministry of Electronics & IT · PMO · 17 Sep 2026

The Prime Minister inaugurated the fifth SEMICON India at Yashobhoomi, New Delhi (17–19 September 2026) and formally opened the second phase of the India Semiconductor Mission — Semicon 2.0 — which extends state support from fabs and packaging to equipment, materials, design, research and talent.

◈ Start from the basics: what is a semiconductor?

A semiconductor is a material whose electrical conductivity can be controlled — unlike copper, which conducts freely, or glass, which resists. That controllability is what allows a transistor to work as a microscopic switch.

• Transistor: an electronic switch. A modern integrated circuit (IC) places millions to billions of them on one chip; their coordinated switching yields computing, memory, sensing, communication and power management.
• Silicon: the dominant substrate, refined from silica (sand). Compound semiconductors — gallium nitride (GaN), silicon carbide (SiC), gallium arsenide — are used where high power, high frequency or high temperature matters (EVs, radar, RF, defence).
• Wafer: a thin polished disc sliced from a cylindrical silicon ingot, on which circuits are printed layer by layer.
• ATMP / OSAT: Assembly, Testing, Marking and Packaging — the back end that protects the die and connects it to the outside world. An OSAT is an outsourced provider of these services.
• Node: shorthand for a process generation (90 nm, 28 nm, 3 nm). It once tracked a physical dimension; today it is largely a marketing label for a technology generation.

Figure 1 — From sand to a packaged chip: the six stages

India’s operating capacity today sits at stage 6 — assembly, testing and packaging. Semicon 2.0 is an attempt to move upstream into stages 2–5 and into the machines, chemicals and gases each stage consumes. Infographic courtesy Press Information Bureau, Government of India, 17 September 2026; reproduced with credit for educational use.

Why chips became a strategic, not merely industrial, question

• Extreme geographic concentration. Taiwan alone accounts for over 60% of global chip production and close to 90% of advanced-node output; the United States, South Korea, Japan and China hold the remaining leadership positions across design, memory, equipment and materials.
• No country holds the whole chain. Specialisation raised efficiency but created chokepoints — EUV lithography (ASML, Netherlands), photoresists and specialty chemicals (Japan), EDA software (US), advanced foundry (Taiwan, South Korea).
• Demand shock. AI, data centres, 5G/6G, EVs, IoT and autonomous systems have lifted chip demand structurally; the pandemic-era shortage exposed how a single back-end or wafer bottleneck can idle automobile plants continents away.
• India’s exposure. Per NITI Aayog, 90–95% of India’s chip consumption is imported. India spent close to USD 150 billion on semiconductor product imports between FY17 and FY25, growing at about 23% a year.
• Defence and security. UAVs, naval and airborne systems, communications and strategic electronics all rest on chips whose provenance a state may not control — hence the language of “trusted” supply.

Figure 2 — Why a domestic semiconductor ecosystem is treated as urgent

Import dependence, security exposure, the foreign-exchange drain and downstream affordability are the four grounds on which the mission is justified. Infographic courtesy Press Information Bureau (source: NITI Aayog), 17 September 2026; reproduced with credit for educational use.

▤ Scheme at a Glance — Semicon 2.0 (India Semiconductor Mission, Phase II)

• Outlay: ₹1,27,500 crore (about USD 13.5 billion), against ₹76,000 crore (about USD 8 billion) for Semicon 1.0.
• Approved: July 2026 by the Union Cabinet; Semicon 1.0 was approved in December 2021.
• Nodal ministry: Ministry of Electronics and Information Technology (MeitY); implemented through the India Semiconductor Mission (ISM), an independent business division under Digital India Corporation.
• Coverage — six pillars: Design · Machines & Materials (equipment, chemicals, gases) · Fabs (silicon, compound, memory, display, logic) · Advanced Packaging · Applied R&D · Talent.
• Stated investment response: commitments of around ₹1 lakh crore (about USD 11–12 billion) reported as received, expected to materialise over two to three years (government statement; project-level approvals awaited).
• Stated targets: 200 semiconductor design start-ups; training of 1 lakh technicians over five years, including through partnership with ITRI, Taiwan; about 1 lakh new jobs across the ecosystem (all government projections).
• Position today: 12 units approved under Semicon 1.0; five in commercial production — Micron (Sanand), Kaynes, CG Semi, CDIL (Mohali) and Suchi Semicon (Surat).

Figure 3 — Semicon 1.0 → Semicon 2.0: what the second phase adds

Semicon 1.0 — December 2021₹76,000 croreSemiconductor fabs · Display fabs · Compound semiconductors,silicon photonics, sensors · ATMP/OSAT · Design Linked IncentiveSemicon 2.0 — July 2026₹1,27,500 croreRetains fabs and packaging, and adds the upstream ecosystem:equipment, materials, design scale-up, applied R&D and talent

The policy shift is from attracting plants to building the supplier base a plant needs — the part of the chain that decides whether a fab is viable.

Figure 4 — The six pillars of Semicon 2.0

Phase I built the closing stages of the chain; phase II attempts the stages before and around them. Infographic courtesy Press Information Bureau (source: Ministry of Electronics & IT), 17 September 2026; reproduced with credit for educational use.

Static background: how India arrived here

• Semiconductor Laboratory (SCL), Mohali — set up in 1976 and commissioned in 1984, India’s first fab. A fire in 1989 destroyed the facility; it was rebuilt but has remained a strategic-use unit (space, defence) at mature nodes rather than a commercial foundry. It now operates under MeitY.
• Repeated false starts. The Special Incentive Package Scheme (2007) and the 2013–14 fab proposals lapsed for want of financial closure, anchor technology partners and utility-grade infrastructure.
• Strength in design, not manufacture. India has long hosted a large chip-design workforce in the captive centres of global firms — roughly a fifth of the world’s chip design engineers by common industry estimates — while holding almost no fabrication capacity.
• Semicon 1.0 (Dec 2021) created four schemes: semiconductor fabs, display fabs, compound semiconductors/silicon photonics/sensors/ATMP-OSAT, and the Design Linked Incentive (DLI), which supports Indian fabless start-ups across design, deployment and product phases.
• Supporting policy stack: National Policy on Electronics 2019 · SPECS (2020) · Modified Electronics Manufacturing Clusters, EMC 2.0 (2020) · PLI for Large Scale Electronics Manufacturing (2020) · PLI 2.0 for IT Hardware (2023) · Electronics Components Manufacturing Scheme (2025), outlay raised to ₹40,000 crore in Budget 2026–27 · Mobile Phone Manufacturing Scheme (2026) · 100% FDI in electronics manufacturing.

What was announced at SEMICON India 2026

• Two new commercial lines opened virtually — CDIL Semiconductor, Mohali (discrete devices) and Suchi Semicon, Surat (packaging) — taking commercial ATMP units to five out of twelve approved.
• First commercial QFN chip in India, by Suchi Semicon with eInfochips; and the India-designed SenseSoC-200 integrated into smart meters.
• Six ChipIN regional centres announced to widen access to EDA tools and design infrastructure beyond a few metros.
• Eleven MoUs, most involving Tata Electronics — with Nexperia (wafer manufacturing, assembly and test), Ascendas First Space (a 363-acre vendor park at Dholera, Gujarat), Fujifilm (materials localisation), JSR (photoresists), BESI (advanced packaging), SCL, and Gati Shakti Vishwavidyalaya with L&T EduTech and Jacobs for facility-engineering talent.
• Announced investments: Applied Materials’ ‘India Vision 2035’ of USD 5 billion over a decade; Lam Research’s roughly ₹10,000 crore silicon-component and ingot-processing plant; Tokyo Electron’s training centre in Gujarat with the Government of Japan.
• Scale of the event: 600-plus exhibitors including about 300 international participants; six country pavilions (Japan, South Korea, Malaysia, the Netherlands, Singapore, Sweden) and twelve state pavilions; India–USA and India–Japan country roundtables.

▤ The numbers worth memorising

• Global market: CAGR of 6.5% between 2014 and 2024; projected 8.5% over the next 5–10 years. SEMI’s leadership placed the market at USD 3 trillion by 2035.
• India’s demand: projected at USD 110 billion by FY2030 and above USD 200 billion by FY2035.
• Import bill: about USD 150 billion, FY17–FY25; if the 23% growth trend holds, annual imports could approach USD 240 billion by 2035 (projection).
• Design talent: 70,000 design engineers trained under phase I against a target of 1 lakh; EDA tools deployed in 500-plus organisations; about 400 universities engaged in chip-design education; 105 design start-ups supported, of which 20 have raised venture capital.

The critical view

• The base is back-end, not front-end. All five units in commercial production are ATMP/OSAT or discrete-device lines — the lowest value-added segment. India’s first large wafer fab (Tata–PSMC, Dholera, 300mm) is still under construction and is targeted at mature nodes, not leading-edge logic.
• Ecosystem dependence remains total at the top. Lithography (ASML), deposition and etch tools (Applied Materials, Lam, Tokyo Electron), photoresists and ultra-pure chemicals (JSR, Fujifilm, Merck) are all imported. Merck’s own caution at the event — that fab viability requires local ultra-pure chemicals, gases and certified suppliers — is the honest measure of the gap.
• Fiscal cost and the global subsidy race. India’s USD 13.5 billion sits against the US CHIPS and Science Act (about USD 52 billion), the EU Chips Act (about €43 billion), and far larger Chinese, Korean and Japanese commitments. Competing on subsidy alone is not a winning strategy for a capital-scarce state.
• Utilities and water. A 300mm fab needs uninterrupted power measured in hundreds of megawatts and very large volumes of ultra-pure water — a demanding requirement in Gujarat and a live question for siting decisions elsewhere.
• Talent mix. India’s strength is design engineering; fabs need process engineers, equipment technicians and cleanroom operators — hence the technician-training target and the ITRI partnership. That capability cannot be created inside a single five-year window.
• Projection versus performance. Investment commitments, job numbers and design start-up targets are announcements, not outcomes. The relevant test is commissioned capacity, yield and repeat customer orders — and against that test Semicon 1.0 has delivered packaging, with fabrication still pending.

◈ Institutions & terms for Prelims

• India Semiconductor Mission (ISM) — nodal agency under MeitY; SEMI — the global industry association that hosts SEMICON events.
• Fabless (designs, does not manufacture) · Foundry (manufactures for others) · IDM (does both) · OSAT · EDA (electronic design automation software) · tape-out (the point at which a finished design is sent for fabrication).
• QFN — Quad Flat No-lead, a common surface-mount chip package. Silicon photonics — optical data transmission on a silicon chip, central to AI data-centre interconnects.
• ITRI, Taiwan — the Industrial Technology Research Institute, the state research body credited with seeding TSMC and UMC; India’s technician-training partner.
• Yashobhoomi — the India International Convention and Expo Centre, Dwarka, New Delhi.

✎ Mains Practice Question

“India has acquired a semiconductor packaging industry, not yet a semiconductor manufacturing industry.” In the light of the Semicon 2.0 framework, examine whether extending state support to equipment, materials and talent can convert assembly capacity into genuine technological autonomy. 15 marks · 250 words

Environment, Ecology & AgricultureGeneral Studies Paper III

02

India’s first soil carbon payments: farmers paid for carbon stored in their fields

GS-III · Agriculture, Environment, Carbon MarketsPrelims + MainsPIB · Ministry of Agriculture & Farmers’ Welfare · ICAR · 17 Sep 2026

At Punjab Agricultural University, Ludhiana, over ₹2.9 crore was transferred by DBT to 2,550 smallholder farmers in Punjab and Haryana for greenhouse-gas reductions and soil-carbon gains on their own fields — described as the first instance in India of farmers being paid for carbon stored in their soil.

◈ Start from the basics: what is being sold here?

A carbon credit is a tradable instrument representing one tonne of carbon dioxide equivalent (1 tCO₂e) either not emitted or removed from the atmosphere. A buyer with emissions purchases it to offset them.

• Soil organic carbon (SOC) is the carbon held in soil organic matter. Ploughing, residue burning and continuous intensive cropping release it; reduced tillage, residue retention and diversified rotations rebuild it. Higher SOC also improves water retention, soil biology and yields.
• Compliance markets impose a legal cap on emitters (the EU ETS; India’s emerging Carbon Credit Trading Scheme). Voluntary markets serve buyers with no legal obligation, and are governed by private standards such as Verra’s Verified Carbon Standard and Gold Standard.
• The three tests every credit must pass: additionality (would the reduction have happened anyway?), permanence (will the carbon stay stored?) and avoidance of leakage (was the emission simply pushed elsewhere?).
• MRV — Measurement, Reporting and Verification — is the machinery that makes a credit credible: soil sampling, GHG accounting models, remote sensing, and audit by an accredited third party.
• Regenerative agriculture is the umbrella term for practices aimed at rebuilding soil health: minimum disturbance, permanent cover, residue retention, crop diversity and integration of livestock.

▤ Scheme at a Glance — the ‘Aadi’ farmer carbon programme

• Programme: ‘Aadi’, run by Grow Indigo (a private agri-venture) with technical guidance from ICAR; launched in 2019.
• Practices credited: Direct Seeded Rice (DSR), reduced tillage and crop-residue management, adopted between 2019 and 2022.
• Methodology: Verra VM0042 — the improved agricultural land management methodology under the Verified Carbon Standard; credits issued only after independent verification.
• Programme footprint: more than 2 million acres and over 100,000 farmers across seven states.
• First issuance: about 30,000 acres and more than 50,000 carbon credits; payments to 2,550 farmers in Punjab and Haryana.
• Payment structure: farmers chose between an assured upfront payment and 75% of net carbon revenue after the credits were sold. Grow Indigo released payments from its own funds before sale, so farmers did not wait on the market.
• Scientific support: ICAR–IARI, New Delhi (GHG accounting, crop-simulation modelling, soil-sampling protocols, device validation, remote sensing) and ICAR–ATARI Zone 1; delivery through State agricultural universities and KVKs.

What the farmers actually received

Figure 5 — The first soil carbon credit payments at a glance

₹2.9 crore across 2,550 farmers — an average of ₹11,478, with most payments in the ₹4,000–₹15,000 band. Infographic courtesy Press Information Bureau, Ministry of Agriculture & Farmers’ Welfare, 17 September 2026; reproduced with credit for educational use.

Read against the accrual period — three years of practice, verified and paid in the fourth — these sums are a supplement to farm income rather than a substitute for crop revenue. That is the single most important qualification to place on the announcement.

Figure 6 — From a farming practice to a payment: the soil-carbon credit chain

1 · PracticeDirect Seeded Rice,reduced tillage,residue retention2019 – 20222 · MeasurementSoil sampling, GHGaccounting, crop-simulationmodels, remote sensingICAR–IARI protocols3 · VerificationIndependent third-partyaudit of additionality,permanence, leakageVerra VM00424 · IssuanceCredits issued on theregistry; 1 credit =1 tonne CO₂ equivalentvoluntary market5 · PaymentDBT to the farmer:assured upfront sumor 75% of net revenue₹2.9 crore, Sept 2026A MULTI-YEAR CHAIN: THE 2019 PRACTICE IS PAID FOR IN 2026The lag between stage 1 and stage 5 — here about four years — is the structural obstacle to smallholder participation, and the reason theaggregator advanced the money from its own funds rather than waiting for credits to sell.

Farmers who joined after 2022 fall in the next monitoring cycle and will be paid as their credits are issued.

The co-benefits, and why Punjab in particular

• Water. DSR dispenses with puddling and transplanting, cutting irrigation demand. For the fields enrolled during 2019–2022, the programme estimates savings of about 45 billion litres of water.
• Air. More than two lakh tonnes of crop residue were kept out of field fires, avoiding an estimated 1,000 tonnes of PM2.5 — directly relevant to the north Indian winter smog episode.
• Methane. Continuously flooded paddy fields are anaerobic and a major source of methane; DSR and alternate wetting-and-drying reduce that flux, which is where much of the credited reduction originates.
• Farm fires are already falling. Punjab recorded 5,114 farm-fire incidents in the 2025 paddy season — the lowest under the present monitoring framework, a 93% fall from 2021 and 90% from 2022.
• A village model: Ransinh Kalan in Moga district has held 100% residue-burning-free status across 1,310 acres for six consecutive years.

The international layer

• The 16th BRICS Agriculture Ministers’ Meeting at Indore in June 2026, under India’s chairship, agreed to establish a BRICS Network of Centres of Excellence on Agroecology and Regenerative Agriculture for Climate Resilience and Productivity.
• Initial coordination rests with ICAR–Indian Institute of Farming System Research (IIFSR), Modipuram.
• The BRICS New Delhi Declaration adopted in September 2026 welcomed the strengthening of cooperation through this network.

The critical view

• Permanence is the weak joint. Soil carbon is reversible: one season of deep ploughing can release what several years of reduced tillage accumulated. Unlike a decommissioned coal plant, the reduction must be continuously maintained, and no contract can bind a farmer for twenty years.
• Additionality is contested in Punjab. DSR and residue management are already promoted by State subsidy, NGT orders, Supreme Court directions and the Commission for Air Quality Management. Paying for behaviour that public policy is separately mandating raises a genuine methodological question.
• Transaction costs against small payouts. Sampling, modelling, verification and registry fees are largely fixed. On a two-hectare holding yielding a five-figure payment over four years, aggregation is the only viable route — which makes the farmer dependent on an intermediary whose margin is not publicly disclosed.
• Price and integrity risk in the voluntary market. Voluntary credits have faced sustained criticism over inflated baselines, and prices have been volatile. The ‘75% of net revenue’ option transfers that market risk to the farmer.
• Who owns soil carbon? India has no settled legal position on carbon rights in agricultural land — a live issue where the tiller is a tenant or a sharecropper, and where records of rights are contested.
• Regulatory gap. Agriculture sits outside the obligated sectors of India’s Carbon Credit Trading Scheme, so such credits currently have no domestic compliance buyer and must be sold abroad — with the attendant question, under Article 6 of the Paris Agreement, of whose Nationally Determined Contribution the reduction ultimately counts towards.
• Agronomic caveats. DSR carries known risks — heavier weed pressure, iron deficiency in light soils, and yield variability in poor monsoon years — which is why adoption has fluctuated season to season despite incentives.

◈ Institutions & terms for Prelims

• DARE — Department of Agricultural Research and Education, the department of the Agriculture Ministry through which ICAR functions; the DG, ICAR is ex-officio Secretary, DARE.
• ATARI — Agricultural Technology Application Research Institute, the ICAR body that coordinates Krishi Vigyan Kendras within a zone.
• Carbon Credit Trading Scheme (CCTS), 2023 — notified under the Energy Conservation (Amendment) Act, 2022; administered with the Bureau of Energy Efficiency, with compliance and offset mechanisms. It succeeds the PAT and REC schemes.
• Green Credit Programme (2023), Ministry of Environment — distinct from carbon credits; rewards environmental actions such as plantation and water conservation.
• Related missions: National Mission on Sustainable Agriculture, National Mission on Natural Farming, Soil Health Card Scheme, PM-PRANAM, and the Viksit Krishi Sankalp Abhiyan outreach campaign.

✎ Mains Practice Question

India’s first soil-carbon payments have linked farm practice to the global voluntary carbon market. Critically examine whether carbon finance can become a dependable income stream for smallholders, and what institutional and regulatory preconditions India must put in place before it can. 15 marks · 250 words