Telangana has made a direct bid to become a priority destination under India Semiconductor Mission 2.0 (ISM 2.0), with IT, Industries and Legislative Affairs Minister D. Sridhar Babu arguing that Hyderabad’s established strengths in chip design, engineering talent and Global Capability Centres (GCCs) make it a logical candidate for the next wave of India’s semiconductor investment. Speaking at the Rising Bharat Summit – South Edition in Bengaluru, the minister said the state’s existing technology base should translate into stronger support for advanced manufacturing and semiconductor ecosystem projects. Metro India News
The appeal arrives at a consequential moment for India’s electronics ambitions. ISM 2.0 is no longer merely an extension of the original incentive programme: it is intended to broaden the national semiconductor strategy beyond fabs and packaging into equipment, materials, domestic intellectual property, R&D, talent development and resilient supply chains. That broader remit gives Telangana a more credible opening than a conventional race for a large wafer fabrication plant alone.
For Windows users, PC builders, enterprise IT teams and the broader hardware industry, the policy stakes are tangible. Semiconductors sit beneath every modern computing category: Windows laptops, desktops, AI PCs, servers, networking devices, storage controllers, GPUs, automotive systems and industrial equipment. India’s ability to participate more deeply in design, packaging, testing and eventually manufacturing could influence how resilient and locally capable the country’s technology supply chain becomes.
Sridhar Babu’s core argument is straightforward: Hyderabad already possesses an important part of the semiconductor value chain—design and engineering—and should use that position to win a larger share of physical manufacturing and associated investment. Metro India News
That distinction matters. Semiconductor manufacturing is often discussed as though it begins and ends with a multibillion-dollar fabrication plant. In reality, the industry relies on a much wider ecosystem:
The Union government has itself stressed India’s existing design capability. A March 2026 statement from the Ministry of Electronics and Information Technology said India hosts about 7% of the world’s semiconductor-domain GCCs and employs nearly 20% of the global semiconductor chip-design workforce. It also said Indian engineers are contributing to design, verification and the development of advanced semiconductor technologies. Press Information Bureau
That national context reinforces Telangana’s pitch. The state is not asking to leap from a standing start into a capital-intensive sector. It is arguing that its software, R&D and GCC base should be treated as industrial infrastructure in its own right.
The policy conversation accelerated further in July when the Union Cabinet approved a much larger ISM 2.0 outlay, reported at ₹1.27 lakh crore. The programme is expected to span chip design, equipment and materials, fabrication, assembly and packaging, R&D, and talent development. The Indian Express
The two figures should not be confused. The ₹1,000 crore number reflected the provision announced for the 2026–27 financial year, while the subsequent Cabinet-scale outlay represents the wider programme framework reported for the new mission. This distinction matters because states will be positioning themselves not just for an annual allocation, but for projects that could take years to plan, approve, build and qualify.
ISM 2.0 appears designed to push further upstream and downstream. Instead of viewing a fab as a standalone trophy project, the new phase is intended to encourage the supply chain around it: tools, materials, IP, R&D partnerships, specialised talent and packaging expertise.
That is potentially favourable for Telangana. A state with powerful engineering clusters may be better placed to build a durable ecosystem around design-intensive and research-heavy semiconductor activities than to compete solely on land, subsidies or headline investment size.
Those figures are important, but they should be read carefully until detailed implementation guidelines and project-specific terms are fully established. The key policy signal is less ambiguous: India is seeking projects that create lasting capability, not simply announcements that consume incentives.
For Telangana, that raises the bar. A persuasive case will need to demonstrate that the state can help companies reduce execution risk, hire specialised workers, access reliable utilities, protect schedules and establish a supply chain—not merely offer an attractive policy brochure.
There is supporting evidence that Hyderabad’s GCC momentum is real, even if broad claims about being the “foremost” destination should be treated as competitive positioning rather than a universally standardised ranking. Telangana’s investment agency currently promotes the state as home to more than 500 GCCs, alongside a single-window approval framework and a large talent base. Invest Telangana
An industry assessment published by ANSR said Hyderabad attracted 70 new enterprise capability centres in the 2025 financial year, identifying infrastructure, technical talent and a business-friendly policy environment as major drivers. ANSR via GlobeNewswire
GCCs are increasingly relevant to semiconductor strategy because they are no longer limited to back-office IT functions. Many now handle work such as:
That could include fabless chip companies designing products in Hyderabad and manufacturing elsewhere initially; OSAT and ATMP facilities that package and test chips designed by local engineering teams; and R&D centres working with universities and global firms on specialised applications such as power electronics, sensors, automotive chips, edge AI and industrial systems.
This approach has practical appeal because it creates multiple stepping stones. A large logic fab requires immense capital, process expertise, supply-chain coordination and years of customer qualification. Advanced packaging, specialised semiconductor products, design services and equipment-related engineering are also difficult—but they can be more achievable entry points with lower capital intensity and stronger links to existing IT talent.
The Telangana State Industrial Project Approval and Self-Certification System, or TS-iPASS, was designed to provide time-bound clearances and self-certification mechanisms for industrial projects. The state says mega projects can receive clearance within 15 days and other projects within a month, subject to the framework’s conditions. Telangana State Portal
For semiconductor investors, speed matters, but predictability matters more. A chip facility can involve complex approvals covering land, water, electricity, environmental requirements, hazardous chemicals, logistics, construction, customs, security and workforce development. A formal time-bound clearance structure is valuable only if it functions consistently across those linked layers.
Telangana’s electronics policy also advertises financial support for electronic components, semiconductor and display fabrication units, ATMP facilities, specialised sub-assemblies and capital goods. Invest Telangana
The state has already sought Centre-backed approvals for semiconductor-related projects. In July 2025, Chief Minister A. Revanth Reddy asked Union IT and Electronics Minister Ashwini Vaishnaw to expedite approvals for the Advanced System in Package Technologies (ASIP) project and the Crystal Matrix Micro LED Display Fab Project. Telangana also raised an EMC 2.0 proposal for a high-tech electronics park at Muchcherla in Rangareddy district. Telangana State Portal
That history makes Sridhar Babu’s latest intervention more than a generic request for investment. Telangana has identifiable projects and industrial infrastructure aspirations that could be linked to the broader objectives of ISM 2.0.
This is a natural fit for Hyderabad because advanced packaging depends on engineering, testing, software, materials knowledge and close collaboration between design and production teams. It is also more compatible with India’s current stage of semiconductor industrial development than an immediate race to leading-edge fabrication nodes.
For Windows laptop users, the benefits may seem indirect, but power-efficiency improvements show up everywhere: smaller chargers, cooler devices, stronger battery life and more efficient enterprise infrastructure. A Telangana ecosystem centred on power electronics, specialised sensors and related packaging would connect directly to expanding global demand.
Hyderabad’s GCC and startup base could help create that transition. The state should aim to attract and support teams that build reusable IP blocks, specialised processors, connectivity silicon, edge-AI chips, security controllers and domain-specific hardware for sectors such as automotive, healthcare, industrial automation and smart infrastructure.
This is an area where Telangana’s existing IT strengths could become a competitive differentiator rather than a parallel industry.
India’s design talent is an advantage, and the government’s own figures underline its scale. But manufacturing success requires a distinct workforce pipeline. ISM 2.0’s focus on industry-led research and training centres is therefore significant: states that link universities, polytechnics, global firms and hands-on training facilities will be better positioned than those relying on generic IT-skilling programmes. Press Information Bureau
Telangana will need to show precisely how its proposed sites can deliver clean water, redundant power, wastewater treatment, chemical handling, transportation access and long-term land availability. The more ambitious the manufacturing category, the more important these fundamentals become.
That means Telangana is competing against regions with established approvals, industrial land strategies, manufacturing ecosystems and political momentum. Priority cannot simply be a reward for being a major technology city. It must be won through project readiness, credible private-sector partners and a compelling contribution to national supply-chain resilience.
The shift in ISM 2.0 toward materials, equipment, design IP, research and talent is encouraging because it acknowledges this reality. A state that builds a connected ecosystem can retain value long after a specific incentive cycle ends. A state that focuses only on a large announcement may find that employment, supplier development and intellectual property remain shallow.
Still, the direction of travel matters. India’s PC market is moving toward more complex devices: AI PCs with neural processing units, secure enterprise laptops, 5G and Wi-Fi 7 connectivity, advanced power-management hardware, faster storage and more capable integrated graphics. These systems depend on a web of semiconductor technologies rather than one headline processor.
A stronger domestic ecosystem can benefit the Windows hardware market in several ways:
For Telangana, that could mean prioritising proposals that meet several conditions:
The real test will be whether Telangana can convert that advantage into a practical pipeline of projects with the technical depth to survive beyond policy announcements. The state has a credible opportunity to become a major centre for advanced packaging, fabless development, semiconductor R&D, equipment software and specialised electronics manufacturing.
Priority under ISM 2.0 would help, but it cannot substitute for execution. If Hyderabad can connect its established software and GCC strengths to clean-room infrastructure, specialised training, reliable utilities, research partnerships and globally competitive industrial projects, Telangana could become more than a chip-design hub. It could emerge as one of the places where India’s semiconductor strategy begins to turn engineering expertise into enduring hardware capability.
The appeal arrives at a consequential moment for India’s electronics ambitions. ISM 2.0 is no longer merely an extension of the original incentive programme: it is intended to broaden the national semiconductor strategy beyond fabs and packaging into equipment, materials, domestic intellectual property, R&D, talent development and resilient supply chains. That broader remit gives Telangana a more credible opening than a conventional race for a large wafer fabrication plant alone.
For Windows users, PC builders, enterprise IT teams and the broader hardware industry, the policy stakes are tangible. Semiconductors sit beneath every modern computing category: Windows laptops, desktops, AI PCs, servers, networking devices, storage controllers, GPUs, automotive systems and industrial equipment. India’s ability to participate more deeply in design, packaging, testing and eventually manufacturing could influence how resilient and locally capable the country’s technology supply chain becomes.
Telangana’s Case: Start With the Design Ecosystem
Sridhar Babu’s core argument is straightforward: Hyderabad already possesses an important part of the semiconductor value chain—design and engineering—and should use that position to win a larger share of physical manufacturing and associated investment. Metro India NewsThat distinction matters. Semiconductor manufacturing is often discussed as though it begins and ends with a multibillion-dollar fabrication plant. In reality, the industry relies on a much wider ecosystem:
- Chip architecture and specification
- Electronic design automation workflows
- RTL design and functional verification
- Physical design, validation and testing
- Intellectual-property core development
- Firmware, drivers and board design
- Assembly, testing, marking and packaging
- Materials, chemicals, equipment and specialised services
- Research laboratories, universities and skilled technicians
The Union government has itself stressed India’s existing design capability. A March 2026 statement from the Ministry of Electronics and Information Technology said India hosts about 7% of the world’s semiconductor-domain GCCs and employs nearly 20% of the global semiconductor chip-design workforce. It also said Indian engineers are contributing to design, verification and the development of advanced semiconductor technologies. Press Information Bureau
That national context reinforces Telangana’s pitch. The state is not asking to leap from a standing start into a capital-intensive sector. It is arguing that its software, R&D and GCC base should be treated as industrial infrastructure in its own right.
What ISM 2.0 Changes
India Semiconductor Mission 2.0 was announced in the Union Budget for 2026–27 as a second-phase programme focused on producing semiconductor equipment and materials in India, building full-stack Indian semiconductor IP, and strengthening domestic and international supply chains. The initial budget provision for the programme in 2026–27 was ₹1,000 crore, with an emphasis on industry-led research and training centres. Press Information BureauThe policy conversation accelerated further in July when the Union Cabinet approved a much larger ISM 2.0 outlay, reported at ₹1.27 lakh crore. The programme is expected to span chip design, equipment and materials, fabrication, assembly and packaging, R&D, and talent development. The Indian Express
The two figures should not be confused. The ₹1,000 crore number reflected the provision announced for the 2026–27 financial year, while the subsequent Cabinet-scale outlay represents the wider programme framework reported for the new mission. This distinction matters because states will be positioning themselves not just for an annual allocation, but for projects that could take years to plan, approve, build and qualify.
From incentives for plants to incentives for ecosystems
The first phase of India’s semiconductor push was strongly oriented around creating foundational manufacturing capacity. The original programme, launched in 2021, used an incentive framework of ₹76,000 crore and offered fiscal support of up to 50% for facilities including silicon fabs, compound semiconductor projects, assembly and testing operations, and chip design initiatives. By December 2025, the government said 10 projects worth a combined ₹1.60 lakh crore had been approved across six states. Press Information BureauISM 2.0 appears designed to push further upstream and downstream. Instead of viewing a fab as a standalone trophy project, the new phase is intended to encourage the supply chain around it: tools, materials, IP, R&D partnerships, specialised talent and packaging expertise.
That is potentially favourable for Telangana. A state with powerful engineering clusters may be better placed to build a durable ecosystem around design-intensive and research-heavy semiconductor activities than to compete solely on land, subsidies or headline investment size.
A more selective incentive model
The new phase also appears to bring a harder commercial edge. Reporting on the Cabinet approval indicates that ISM 2.0 may offer lower capital subsidies than the uniform 50% support associated with the prior programme—reportedly 40% for silicon fabs, 35% for other fabs and advanced packaging, and 25% for conventional packaging—while adding support for R&D and talent development. The Indian ExpressThose figures are important, but they should be read carefully until detailed implementation guidelines and project-specific terms are fully established. The key policy signal is less ambiguous: India is seeking projects that create lasting capability, not simply announcements that consume incentives.
For Telangana, that raises the bar. A persuasive case will need to demonstrate that the state can help companies reduce execution risk, hire specialised workers, access reliable utilities, protect schedules and establish a supply chain—not merely offer an attractive policy brochure.
Why Hyderabad’s GCC Strength Matters
Sridhar Babu described Hyderabad as a leading GCC destination, citing world-class infrastructure, skilled talent, investor-friendly policies and a supportive ease-of-doing-business environment. Metro India NewsThere is supporting evidence that Hyderabad’s GCC momentum is real, even if broad claims about being the “foremost” destination should be treated as competitive positioning rather than a universally standardised ranking. Telangana’s investment agency currently promotes the state as home to more than 500 GCCs, alongside a single-window approval framework and a large talent base. Invest Telangana
An industry assessment published by ANSR said Hyderabad attracted 70 new enterprise capability centres in the 2025 financial year, identifying infrastructure, technical talent and a business-friendly policy environment as major drivers. ANSR via GlobeNewswire
GCCs are increasingly relevant to semiconductor strategy because they are no longer limited to back-office IT functions. Many now handle work such as:
- Silicon design and verification
- Embedded software and firmware
- Cloud platform engineering
- Automotive electronics
- AI model optimisation
- Cybersecurity and systems validation
- Enterprise hardware support
- Product lifecycle engineering
- Data-centre and edge-computing architecture
The design-to-manufacturing bridge
Hyderabad’s strongest semiconductor opportunity may not be to replicate an established global fab cluster overnight. Its more realistic advantage lies in creating a design-to-manufacturing bridge.That could include fabless chip companies designing products in Hyderabad and manufacturing elsewhere initially; OSAT and ATMP facilities that package and test chips designed by local engineering teams; and R&D centres working with universities and global firms on specialised applications such as power electronics, sensors, automotive chips, edge AI and industrial systems.
This approach has practical appeal because it creates multiple stepping stones. A large logic fab requires immense capital, process expertise, supply-chain coordination and years of customer qualification. Advanced packaging, specialised semiconductor products, design services and equipment-related engineering are also difficult—but they can be more achievable entry points with lower capital intensity and stronger links to existing IT talent.
Telangana’s Existing Policy Assets
Telangana is not presenting its semiconductor case in isolation. The state has long used its industrial policy and clearance mechanisms as a central part of its investment proposition.The Telangana State Industrial Project Approval and Self-Certification System, or TS-iPASS, was designed to provide time-bound clearances and self-certification mechanisms for industrial projects. The state says mega projects can receive clearance within 15 days and other projects within a month, subject to the framework’s conditions. Telangana State Portal
For semiconductor investors, speed matters, but predictability matters more. A chip facility can involve complex approvals covering land, water, electricity, environmental requirements, hazardous chemicals, logistics, construction, customs, security and workforce development. A formal time-bound clearance structure is valuable only if it functions consistently across those linked layers.
Telangana’s electronics policy also advertises financial support for electronic components, semiconductor and display fabrication units, ATMP facilities, specialised sub-assemblies and capital goods. Invest Telangana
The state has already sought Centre-backed approvals for semiconductor-related projects. In July 2025, Chief Minister A. Revanth Reddy asked Union IT and Electronics Minister Ashwini Vaishnaw to expedite approvals for the Advanced System in Package Technologies (ASIP) project and the Crystal Matrix Micro LED Display Fab Project. Telangana also raised an EMC 2.0 proposal for a high-tech electronics park at Muchcherla in Rangareddy district. Telangana State Portal
That history makes Sridhar Babu’s latest intervention more than a generic request for investment. Telangana has identifiable projects and industrial infrastructure aspirations that could be linked to the broader objectives of ISM 2.0.
The Strongest Opportunities for Telangana
Priority under ISM 2.0 should not be understood as a single binary outcome. Telangana could benefit from several different kinds of central support, each with a different risk profile and industrial payoff.Advanced packaging and chiplet integration
Advanced packaging is one of the most compelling opportunities. It involves assembling multiple chips and components in sophisticated configurations that improve performance, power efficiency and form factor. Chiplets and heterogeneous integration are increasingly important for AI accelerators, data-centre hardware, automotive computing and high-performance PCs.This is a natural fit for Hyderabad because advanced packaging depends on engineering, testing, software, materials knowledge and close collaboration between design and production teams. It is also more compatible with India’s current stage of semiconductor industrial development than an immediate race to leading-edge fabrication nodes.
Compound semiconductors and power electronics
Compound semiconductors, including materials such as silicon carbide and gallium nitride, have major uses in power management, electric vehicles, telecommunications, industrial systems and data centres. These categories could become increasingly important as AI workloads drive up power demand and as device makers seek more efficient chargers, power supplies and battery systems.For Windows laptop users, the benefits may seem indirect, but power-efficiency improvements show up everywhere: smaller chargers, cooler devices, stronger battery life and more efficient enterprise infrastructure. A Telangana ecosystem centred on power electronics, specialised sensors and related packaging would connect directly to expanding global demand.
Fabless design and Indian IP
The phrase full-stack Indian IP in ISM 2.0 carries significant weight. India’s most durable semiconductor gains may come when domestic companies can own designs, patents, software stacks and products rather than providing only outsourced engineering labour.Hyderabad’s GCC and startup base could help create that transition. The state should aim to attract and support teams that build reusable IP blocks, specialised processors, connectivity silicon, edge-AI chips, security controllers and domain-specific hardware for sectors such as automotive, healthcare, industrial automation and smart infrastructure.
Semiconductor equipment software and engineering
The equipment and materials portion of ISM 2.0 may be especially relevant to a technology centre such as Hyderabad. Semiconductor tools rely on highly specialised software, automation, imaging, control systems, simulation and data analytics. India may not quickly displace established global equipment suppliers, but it can develop valuable niches in software, subsystems, engineering services, metrology support and maintenance capabilities.This is an area where Telangana’s existing IT strengths could become a competitive differentiator rather than a parallel industry.
The Risks Behind the “Priority” Argument
Telangana’s case is credible, but the semiconductor industry has a way of punishing overconfidence. The state must distinguish between announcing semiconductor ambitions and building the operational capacity that global customers trust with critical production.Talent is not interchangeable
A deep pool of software engineers does not automatically equal a deep pool of semiconductor manufacturing specialists. Fabs and advanced packaging facilities require process engineers, equipment technicians, yield experts, materials scientists, clean-room operators, reliability engineers and quality professionals.India’s design talent is an advantage, and the government’s own figures underline its scale. But manufacturing success requires a distinct workforce pipeline. ISM 2.0’s focus on industry-led research and training centres is therefore significant: states that link universities, polytechnics, global firms and hands-on training facilities will be better positioned than those relying on generic IT-skilling programmes. Press Information Bureau
Reliable infrastructure is non-negotiable
Semiconductor manufacturing is unusually sensitive to the quality of electricity, water, environmental controls, logistics and utility continuity. A chip plant cannot treat these as ordinary industrial services. The cost of disruption can be enormous, particularly once a facility is operating at a scale where yield and qualification are crucial.Telangana will need to show precisely how its proposed sites can deliver clean water, redundant power, wastewater treatment, chemical handling, transportation access and long-term land availability. The more ambitious the manufacturing category, the more important these fundamentals become.
Competition will be intense
The first phase of India’s semiconductor programme spread approved projects across multiple states. India’s existing pipeline includes a Tata semiconductor fab, assembly and testing projects, and facilities that have begun commercial production. The Indian ExpressThat means Telangana is competing against regions with established approvals, industrial land strategies, manufacturing ecosystems and political momentum. Priority cannot simply be a reward for being a major technology city. It must be won through project readiness, credible private-sector partners and a compelling contribution to national supply-chain resilience.
Incentives alone are not a strategy
Subsidies can attract attention, but they cannot guarantee technological depth or market demand. Projects ultimately need customers, qualification pathways, dependable suppliers and commercial discipline.The shift in ISM 2.0 toward materials, equipment, design IP, research and talent is encouraging because it acknowledges this reality. A state that builds a connected ecosystem can retain value long after a specific incentive cycle ends. A state that focuses only on a large announcement may find that employment, supplier development and intellectual property remain shallow.
Why This Matters to the Windows and PC Hardware Market
India’s semiconductor policy will not suddenly make Windows laptops or gaming PCs cheaper. Pricing remains shaped by global chip supply, memory cycles, exchange rates, OEM strategy, panel costs, taxes, distribution and the product mix selected by brands.Still, the direction of travel matters. India’s PC market is moving toward more complex devices: AI PCs with neural processing units, secure enterprise laptops, 5G and Wi-Fi 7 connectivity, advanced power-management hardware, faster storage and more capable integrated graphics. These systems depend on a web of semiconductor technologies rather than one headline processor.
A stronger domestic ecosystem can benefit the Windows hardware market in several ways:
- More local engineering: Indian teams can contribute to firmware, drivers, validation, board design and system integration.
- Improved supply-chain resilience: Packaging, testing and component support within India can reduce exposure to specific chokepoints over time.
- Growth in specialised hardware: Edge AI, industrial PCs, connected devices and automotive systems may create demand for locally designed silicon and modules.
- Deeper enterprise capability: GCC-led R&D can connect Indian engineering centres more closely to global product roadmaps.
- A better startup environment: Access to design infrastructure and support can help Indian firms develop niche hardware rather than remain limited to software services.
A Practical Definition of “Priority” for Telangana
The most productive response to Sridhar Babu’s appeal would not necessarily be a blanket preference for Telangana over other states. It would be a project-based priority framework that rewards demonstrable readiness and ecosystem value.For Telangana, that could mean prioritising proposals that meet several conditions:
- A credible industrial partner with proven semiconductor, packaging, equipment or design experience.
- A defined product focus, such as advanced packaging, compound semiconductors, power electronics, display technology or chip-design IP.
- Guaranteed utility plans for power, water, treatment and logistics.
- A skills partnership involving universities, technical institutes and industry.
- A local supplier-development programme that creates opportunities beyond the anchor investor.
- A clear export and customer strategy rather than dependence on incentives alone.
- Links to Hyderabad’s design ecosystem, ensuring R&D and product development remain part of the local value chain.
The Bigger Strategic Test
Sridhar Babu is right to identify Hyderabad’s design base and GCC ecosystem as assets in the semiconductor race. India’s own semiconductor strategy increasingly recognises that design, IP, materials, equipment, talent and packaging matter alongside fabrication. Press Information BureauThe real test will be whether Telangana can convert that advantage into a practical pipeline of projects with the technical depth to survive beyond policy announcements. The state has a credible opportunity to become a major centre for advanced packaging, fabless development, semiconductor R&D, equipment software and specialised electronics manufacturing.
Priority under ISM 2.0 would help, but it cannot substitute for execution. If Hyderabad can connect its established software and GCC strengths to clean-room infrastructure, specialised training, reliable utilities, research partnerships and globally competitive industrial projects, Telangana could become more than a chip-design hub. It could emerge as one of the places where India’s semiconductor strategy begins to turn engineering expertise into enduring hardware capability.
References
- Primary source: metroindia.net
Published: 2026-07-26T16:50:10.534066
Sridhar Babu urges for priority to TG under ISM 2.0
Sridhar Babu urges for priority to TG under ISMwww.metroindia.net - Related coverage: telangana.gov.in