Cabinet Approves Semicon 2.0, Mobile Manufacturing Scheme, Urea Policy & Highway Projects
SUBJECT: Economy | Industrial Policy | Infrastructure | Agriculture
Context
The Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister, approved a series of major initiatives to strengthen manufacturing, infrastructure, technology, and agricultural self-reliance.
Major Approvals
- ₹1.27 lakh crore for India Semiconductor Mission (ISM) 2.0
- ₹62,500 crore for the Mobile Phone Manufacturing Scheme (MPMS)
- ₹25,400 crore for two highway corridors in Varanasi
- Approval of the National Investment Policy for Urea (NIPU) 2026 for setting up new gas-based urea plants
1. India Semiconductor Mission (ISM) 2.0
About
The India Semiconductor Mission (ISM) 2.0 is India’s flagship programme to build a complete semiconductor ecosystem and reduce dependence on imported chips.
Financial Outlay
- Scheme Allocation: ₹1.27 lakh crore
- Expected Investment: Nearly ₹4 lakh crore
- Expected Semiconductor Production: ₹2 lakh crore
Objectives
- Develop an end-to-end semiconductor ecosystem.
- Achieve technological self-reliance in chip manufacturing.
- Reduce dependence on imports.
- Support India’s growing AI, electronics and digital economy.
Key Features
Unlike ISM 1.0, the new scheme extends incentives beyond semiconductor fabrication units to include:
- Raw materials
- Critical minerals
- Specialty gases
- Chemicals
- Semiconductor equipment
- Packaging and testing ecosystem
Six Pillars of ISM 2.0
- Chip Design
- Fabrication (Fab)
- Assembly, Testing, Marking & Packaging (ATMP)
- Semiconductor Supply Chain
- Research & Innovation
- Skilled Workforce Development
Progress under ISM 1.0
- Allocation: ₹76,000 crore
- 12 semiconductor projects approved
- Investment worth ₹1.64 lakh crore
- Tata Electronics emerged as the largest private investor.
2. Mobile Phone Manufacturing Scheme (MPMS)
Objective
To transform India into a global mobile manufacturing hub by promoting:
- Domestic brands
- Indigenous technology
- Export competitiveness
- Research & Development (R&D)
Financial Outlay
- ₹62,500 crore
Incentives
- 2.25%–5% incentive on eligible mobile phone sales.
- Additional up to 1.5% for domestic sourcing of components and sub-assemblies.
- Additional 3% incentive for companies undertaking indigenous design and R&D.
Expected Outcomes
- Mobile phone production worth ₹39 lakh crore
- Higher exports
- Around 60,000 direct jobs
- Greater technological sovereignty
- Promotion of indigenous Intellectual Property (IP)
3. Highway Infrastructure Projects
Financial Outlay
- ₹25,400 crore
Implementing Agency
- National Highways Authority of India (NHAI)
Model Used
Hybrid Annuity Model (HAM)
Under HAM:
- Government finances 40% of project cost during construction.
- Private developer invests 60%.
- Government repays the private developer through fixed annuity payments over the concession period.
- The private developer is responsible for construction and maintenance.
Highway Projects
Corridor 1
- 43.218 km
- Connects NH-31 with Varanasi Ring Road
- Runs along the Varuna River
Corridor 2
- 46.039 km
- Connects NH-19 with the Ring Road
- Runs along the Ganga River
Infrastructure Features
- Elevated carriageways
- Flyovers
- Cable-stayed bridges
- Service roads
- Interchanges
- Entry/Exit ramps
Speed
Designed for 80–100 km/h.
Expected Benefits
- NH-19 to Kashi Railway Station:
- Travel time reduced from 50 minutes to 25 minutes
- NH-31 to Kashi Railway Station:
- Travel time reduced from 40 minutes to 20 minutes
- Reduced traffic congestion in Varanasi
- Improved logistics and freight movement
These projects form part of the Varanasi Decongestion Plan and align with the PM Gati Shakti National Master Plan.
What is the Hybrid Annuity Model (HAM)?
The Hybrid Annuity Model (HAM) is a Public-Private Partnership (PPP) model introduced in 2016 for highway development.
Key Features
- Government bears 40% of project cost during construction.
- Private developer invests the remaining 60%.
- Government repays the investment through fixed annuity payments.
- Reduces financial risk for private players.
- Ensures timely completion and long-term maintenance of highways.
4. National Investment Policy for Urea (NIPU) 2026
About
The National Investment Policy for Urea (NIPU) 2026 replaces the New Investment Policy (NIP) 2012.
Objective
- Establish 9 new gas-based urea plants.
- Increase domestic fertiliser production.
- Reduce dependence on imported urea.
- Achieve fertiliser self-reliance.
Production Target
- Combined capacity: 10 million tonnes
India’s Urea Scenario
- Annual Demand: ~40 million tonnes
- Domestic Production: ~30 million tonnes
- Imports: ~10 million tonnes annually
- Demand growth: Around 5% per year
Key Reforms under NIPU 2026
- Separation of fixed and variable costs.
- Return on Equity (RoE) band of 12%–16%.
- Foreign exchange risk mitigation by converting fixed costs into rupees after four years.
- Uniform incentives for:
- Public Sector
- Private Sector
- Cooperative Sector
Expected Benefits
- Savings of over ₹250 crore per plant compared to NIP 2012.
- Greater investment certainty.
- Reduced fertiliser imports.
- Enhanced food and fertiliser security.
Performance of NIP 2012
Under the earlier policy:
- 6 gas-based urea plants were established.
- Four through Public Sector Joint Ventures.
- Two through Private Sector companies.
