Cabinet highlights: India clears Rs 2.19 lakh crore mega push across chips, corridors and mobile manufacturing

Semicon 2.0 gets biggest boost

The Union Cabinet on Wednesday approved Semicon 2.0, a Rs 1.27 lakh crore programme aimed at accelerating the development of India's semiconductor design and manufacturing ecosystem, as the government doubles down on its ambition to position the country as a global chipmaking hub.

Building on the momentum of the first phase, the new programme will provide long-term support across the semiconductor value chain, from chip design and fabrication to research, packaging and talent development.

The scheme is structured around six key pillars—strengthening chip design capabilities, incentivising the production of semiconductor manufacturing equipment and materials, attracting more fabrication units (fabs), expanding advanced semiconductor packaging (ATMP/OSAT) capacity, boosting research and development for next-generation chip technologies, and creating a skilled workforce.


Also Read: Cabinet approves India Semiconductor Mission 2.0; earmarks Rs 1.27 lakh crore for the project

Rs 62,500 crore push for mobile manufacturing

Cabinet further cleared the Mobile Phone Manufacturing Scheme (MPMS) with a budgetary outlay of Rs 62,500 crore, replacing the Production Linked Incentive (PLI) scheme for large-scale electronics manufacturing. The five-year scheme, which will run from FY27 to FY31, aims to scale up mobile phone production, deepen domestic value addition, strengthen supply chain resilience and enhance India's global competitiveness in electronics manufacturing.

Under the scheme, manufacturers will receive incentives ranging from 2.25% to 5% on eligible sales, with an additional incentive of up to 1.5% linked to domestic sourcing of key components and sub-assemblies. To encourage the creation of homegrown smartphone brands, the government has also provided an additional 3% incentive for product design and research and development.

The government expects the scheme to drive cumulative mobile phone production worth around Rs 39 lakh crore over its tenure and create nearly 60,000 direct jobs. India is currently the world's second-largest mobile phone manufacturer by volume, with 99.2% of handsets used domestically being made in the country, while smartphones emerged as India's largest export product in 2025, surpassing diesel fuel and cut diamonds.

Two mega elevated corridors for Varanasi

The Cabinet Committee on Economic Affairs on Wednesday approved two elevated corridor projects worth nearly Rs 25,446 crore to decongest Varanasi, clearing a 46-km six-lane corridor along the River Ganga and a 43-km 6/4-lane corridor along the River Varuna.

Together, the projects will create seamless links between NH-19, NH-31 and the Varanasi Ring Road, significantly easing traffic movement across the city while improving connectivity to key transport hubs and religious landmarks.

The Rs 14,447.64-crore Ganga corridor and the Rs 10,998.32-crore Varuna corridor will be built under the Hybrid Annuity Model (HAM). The government said the projects are designed to cut travel times by up to 67% on key stretches, including reducing the journey between NH-19 and Kashi Railway Station from around 50 minutes to 25 minutes, and between NH-31 and Kashi Railway Station from 40 minutes to 20 minutes.

The corridors will also provide faster access to Kashi Vishwanath Temple, Banaras Hindu University (BHU), Namo Ghat, Ramnagar Fort, major railway stations, Lal Bahadur Shastri Airport and the Ramnagar Inland Waterways port.

New national urea investment policy

Cabinet also approved the National Investment Policy for Urea-2026 (NIPU-2026), a new policy aimed at encouraging fresh investments in gas-based urea manufacturing plants and strengthening India's push towards self-reliance in fertiliser production. The policy seeks to attract private investment while improving transparency and efficiency in the sector.

Replacing the 2012 policy framework, NIPU-2026 introduces several key reforms, including the separation of fixed and variable costs for greater transparency, the introduction of a Return on Equity (RoE) band of 12%-16%, and a mechanism to mitigate foreign exchange risk by converting fixed costs into rupee terms after four years based on prevailing exchange rates.

The government said the revised framework is expected to improve project viability and lower costs, with each new urea plant established under NIPU-2026 estimated to save more than Rs 250 crore compared with projects developed under the 2012 policy, making future investments in domestic fertiliser manufacturing more attractive.

Railways gets capacity expansion

The Cabinet also cleared two key railway infrastructure projects:

• Doubling of the Paradeep-Haridaspur rail line – Rs 2,542 crore
• Fourth rail line between Dangoaposi and Rajkharsawan – Rs 1,365 crore

The projects are expected to improve freight movement, enhance port connectivity and increase network capacity for both passenger and cargo traffic.

At a glance

Decision	Outlay
Semicon 2.0	Rs 1,27,500 crore
Mobile Phone Manufacturing Scheme	Rs 62,500 crore
Elevated corridor along River Ganga	Rs 14,448 crore
Elevated corridor along River Varuna	Rs 10,998 crore
National Investment Policy for Urea-2026	Policy decision
Paradeep-Haridaspur rail doubling	Rs 2,542 crore
Fourth line: Dangoaposi-Rajkharsawan	Rs 1,365 crore