Parth Nadpara
NEW DELHI: India’s semiconductor journey has entered a decisive phase. For decades, the country had a strong presence in chip design, software engineering and electronics talent, but remained heavily dependent on imports for semiconductor manufacturing.
That imbalance is now beginning to change. Backed by the India Semiconductor Mission, large public incentives, private-sector investment and global technology partnerships, India is attempting to build a complete semiconductor ecosystem — from design and research to fabrication, packaging, testing and eventual export capability.
The importance of this transition cannot be overstated. Semiconductors are the foundation of the modern digital economy. They power mobile phones, computers, electric vehicles, defence systems, telecom networks, artificial intelligence, data centres, satellites, consumer appliances and industrial automation.
In a world where technology supply chains have become deeply strategic, chips are no longer just commercial components; they are instruments of economic security and national power.
Semiconductor Mission
India’s push is anchored by the Semicon India Programme, approved with an outlay of ₹76,000 crore to support the development of semiconductor and display manufacturing. The programme offers fiscal support for silicon fabs, display fabs, compound semiconductor units, assembly, testing, marking and packaging facilities, and semiconductor design.
The Government has said that the India Semiconductor Mission is designed to build a sustainable semiconductor and display ecosystem in the country.
The latest momentum came last month, when the Union Cabinet approved two more semiconductor manufacturing units in Gujarat with cumulative investment of more than ₹3,900 crore. These include India’s first commercial mini / micro-LED display facility using Gallium Nitride technology and a semiconductor packaging unit. The projects are expected to generate more than 2,200 skilled jobs, adding further depth to Gujarat’s emerging semiconductor cluster.
From approvals to execution
This is part of a wider national build-up. Earlier, the Cabinet had approved three major semiconductor units in February 2024, including Tata Electronics’ semiconductor fab in Dholera, Gujarat; Tata’s semiconductor assembly and test facility in Morigaon, Assam; and CG Power’s unit in Sanand, Gujarat. These approvals marked one of the most important manufacturing steps in India’s semiconductor history, as they moved the country beyond policy intent into project execution.
India’s semiconductor ecosystem is developing in layers. The first layer is design, where India already has natural strength. A significant share of the world’s semiconductor design work has long involved Indian engineers, either in global capability centres of multinational firms or in domestic technology companies. The Design Linked Incentive scheme aims to convert this talent pool into a stronger base of Indian-owned intellectual property, fabless companies and chip-design startups. This is crucial because design is one of the highest-value parts of the semiconductor chain.
Fabrication: The hardest frontier
The second layer is fabrication, the most capital-intensive and technologically demanding part of the industry. Building a fabrication unit requires massive investment, clean-room infrastructure, uninterrupted power, ultra-pure water, specialised gases, chemicals, wafers, equipment maintenance and highly trained process engineers.
India’s first major commercial fab efforts are therefore focused on practical, high-demand segments such as mature-node chips, power electronics, automotive electronics, industrial applications and telecom-related components.
This is a realistic strategy. Mature-node chips may not be the most advanced chips used in high-end artificial intelligence processors, but they are essential for cars, appliances, defence equipment, energy systems and a large part of the electronics economy.
Packaging and testing
The third and fastest-moving layer is packaging and testing. Assembly, testing, marking and packaging, commonly known as ATMP, and outsourced semiconductor assembly and test, or OSAT, give India an immediate opportunity to enter the global supply chain.
Packaging has become increasingly important as the world moves towards advanced chip architectures, chiplets and heterogeneous integration. India’s approved packaging projects in Gujarat, Assam, Uttar Pradesh and other states can therefore become an early bridge between design capability and full-scale fabrication.
Moving up the value chain
NITI Aayog’s work on electronics and global value chains has underlined the need for India to move from assembly-led electronics manufacturing to deeper participation in components and high-value supply chains. Its report on electronics manufacturing sets out a pathway for India to become a much larger player in global electronics, with a target of $500 billion in electronics manufacturing and six million jobs by FY30.
Semiconductors are central to that larger ambition because no electronics powerhouse can remain dependent on imported chips indefinitely.
Industry bodies have also recognised the scale of the opportunity. Ficci and the India Electronics and Semiconductor Association signed an agreement to strengthen India’s semiconductor and electronics ecosystem, promote supply-chain development and support industry collaboration.
CII has also highlighted that India’s semiconductor opportunity will depend not only on fabs but also on the wider ecosystem of materials, chemicals, gases, equipment, MSMEs and skilled manpower.
Demand is another major advantage. India is one of the world’s fastest-growing markets for electronics, smartphones, digital payments, automobiles, electric vehicles, telecom infrastructure, renewable energy systems and data centres. This gives the country a powerful domestic base for chip consumption.
The challenge is to convert this demand into domestic value addition. If India remains only a consumer and assembler of electronics, the strategic gains will be limited. But if it builds local capability in design, packaging, components, materials and fabrication, the semiconductor mission can transform the country’s manufacturing profile.
The ecosystem is still young and faces serious challenges. India does not yet have a proven track record in commercial-scale semiconductor fabrication. It remains dependent on imported semiconductor equipment, specialty chemicals, gases, wafers and advanced manufacturing technology.
Talent is another issue: India has abundant software and design engineers, but fabs require process specialists, materials scientists, equipment engineers, technicians and manufacturing managers. Building this workforce will take sustained investment in education, training and industry-academia partnerships.
Execution speed will also be critical. Semiconductor projects require long gestation periods and high precision. Approvals and incentives are only the first step. The real test will be whether projects are completed on time, achieve reliable production yields, attract global customers and create supplier ecosystems around them. States will have to compete not only on incentives but also on infrastructure, water availability, logistics, power reliability and ease of doing business.
Even so, India’s direction is clear. The country is not trying to replace Taiwan, South Korea or the United States overnight. Instead, it is seeking to become a trusted and scalable alternative in selected parts of the semiconductor chain. Its strongest initial position lies in design, mature-node fabrication, compound semiconductors, display technologies, packaging, testing and electronics-linked demand.
The semiconductor mission therefore represents more than an industrial policy. It is a strategic national project. If executed well, it can reduce import dependence, support defence and digital sovereignty, create high-skilled jobs, strengthen electronics manufacturing and position India as an important player in the global technology order.
With policy support, global partnerships and rising domestic demand, India is moving from being a chip-consuming economy to an emerging node in the global semiconductor value chain
From design desks in Bengaluru and Noida to fabs and packaging units in Gujarat, Assam, Uttar Pradesh and beyond, India’s semiconductor ecosystem is slowly but steadily taking shape.
Wafer thin entry
The global chip war has changed the way countries view semiconductors. Chips are now central to economic security, artificial intelligence, defence systems, electric vehicles, telecom networks and digital infrastructure.
The global supply chain remains highly concentrated, with advanced fabrication dominated by Taiwan and South Korea, while the United States leads in chip design tools, intellectual property and high-end technology. China, meanwhile, is investing aggressively to reduce its dependence on Western technology. India has a very thin space for entry in this segment at the global level.
Opening for India
The country enters this contest not as an immediate rival to the most advanced chip-making nations, but as an emerging and trusted partner in supply-chain diversification.
Its strength lies in design talent, a large domestic electronics market, democratic strategic alignment, improving manufacturing capacity and growing policy support.
India’s best near-term opportunities are in chip design, fabless start-ups, ATMP and OSAT packaging, mature-node fabrication, compound semiconductors and electronics components. These are areas where global companies are actively looking for alternative locations to reduce supply-chain risk.
Semiconductor node
For India, the goal should not be to chase every part of the semiconductor chain at once. It must build depth where it has advantage: talent, market scale, strategic trust and manufacturing momentum. In the global chip war, India’s role is that of a credible new node — not yet dominant, but increasingly necessary.
