India chip push poised for big leap

Semiconductors may be invisible to most of us, but they are the beating heart of modern life. From smartphones and electric vehicles to defense systems, medical equipment, and space missions, chips power the world’s digital economy. When the COVID-19 pandemic and the Russia-Ukraine war disrupted global supply chains, the world was reminded of just how fragile and concentrated this lifeline is. More than 60% of foundry revenues—and nearly 90% of the most advanced chipmaking—come from Taiwan, a geopolitical flashpoint.

India, long a consumer of chips but never a producer, sensed both risk and opportunity. In December 2021, the government launched the India Semiconductor Mission (ISM) with a `76,000 crore ($9 billion) package of incentives. The aim: to turn India into a credible player in the global semiconductor value chain. Four years on, the results are beginning to show.

•Ten semiconductor and display projects have been approved across six states, attracting commitments worth `1.60 lakh crore.

•In August 2025, CG-Semi inaugurated one of India’s first outsourced semiconductor assembly and test (OSAT) pilot lines in Gujarat. The plant is expected to produce India’s first commercial-scale packaged chip.

•The domestic chip market, valued at $45–50 billion today, is projected to hit $100–110 billion by 2030.

•On the design side, companies like Vervesemi and dozens of startups supported under the Design Linked Incentive (DLI) scheme are creating chips for defense, aerospace, and EVs.

This week’s SEMICON India 2025, billed as the country’s largest semiconductor and electronics show, is meant to showcase these achievements. With 350 exhibitors, 33 participating countries, and global CEOs in attendance, the event underscores India’s growing confidence. But beneath the banners and roundtables lies the harder question: Is India genuinely on track to become a semiconductor powerhouse—or is it celebrating symbolic milestones while the real work remains undone?

India’s sheer demand for electronics gives it an edge few emerging players enjoy. By 2030, its domestic semiconductor market alone is expected to surpass $100 billion. That demand—driven by smartphone penetration, electric mobility, and digital infrastructure—provides the kind of scale that can anchor a local industry.

The Production Linked Incentive (PLI) and DLI schemes provide subsidies for manufacturing, design, and R&D. The ISM acts as a single-window agency to streamline approvals and build investor confidence. Unlike earlier failures such as the SemIndia project of 2007, today’s push is better funded, globally aligned, and strategically prioritized.

India’s real strength is not fabrication but design. Nearly every major global semiconductor company—Intel, AMD, Qualcomm, and more—already operates design centers here. With a young STEM workforce and new skilling initiatives like SEMI University and the Workforce Development Pavilion, India is cultivating the engineers who will drive the next generation of chips.

India also benefits from global anxieties. The United States, Japan, and Europe are eager to diversify supply chains away from Taiwan and China. “Friend-shoring” to trusted democracies is a theme of semiconductor policy worldwide. India’s strategic geography and political stability make it an attractive partner.

For all the announcements, India has yet to operationalize a high-volume fab. The much-publicized Tata-PSMC project in Dholera, with an investment of around `91,000 crore and a planned capacity of 50,000 wafers per month, is promising but still years from production. Taiwan and South Korea took decades to master fabrication. India is only at the pilot stage, with assembly and packaging leading the charge.

Fabs demand uninterrupted electricity, ultra-pure water, and specialized chemicals. India’s record on power reliability, logistics, and environmental clearances is uneven. Without addressing these fundamentals, no amount of incentives will bridge the gap.

Semiconductors are among the world’s most capital-intensive industries. A cutting-edge fab can cost $10–20 billion with payback periods measured in decades. India’s private sector has historically been cautious about such bets. Reliance on government subsidies alone raises concerns about sustainability if projects stall or global conditions shift. 

India is not alone in chasing chip self-reliance. The U.S. CHIPS Act ($52.7 billion), the EU Chips Act (€43 billion), Japan’s subsidies to attract TSMC, and China’s massive state-backed investments dwarf India’s funding. Competing head-on at that scale may not
be realistic.

SEMICON 2025: Hype and Hope

The sheer scale of SEMICON India 2025 shows how far India has come in just four years. From Bengaluru in 2022 to Greater Noida in 2024, each edition has grown larger, culminating now in Delhi with global pavilions, workforce sessions, and sustainability forums. The OSAT pilot line in Sanand is a milestone worth marking—it demonstrates that chips can finally roll out of an Indian facility, however modest the scale.

Yet the risk is clear: SEMICON could become more about optics than execution. India has seen this pattern before—grand summits, bold announcements, and limited follow-through. 

Where India Can Still Win

Rather than chase Taiwan’s dominance in fabrication, India could build global leadership in chip design, verification, and advanced packaging. These areas already leverage India’s existing ecosystem and talent base.

India is rich in chemicals, minerals, and rare earths needed for chipmaking. Developing a domestic supply chain for materials and equipment would reduce import dependence and strengthen India’s role in the global value chain.

Collaboration is key. The Tata-PSMC venture, Micron’s ATMP plant in Gujarat, and the HCL-Foxconn tie-up show the way forward. India should aggressively court partnerships with the U.S., Japan, and Taiwan, importing expertise while offering scale and talent. As AI, quantum computing, and 5G/6G drive chip demand, India has an opportunity to integrate its software services strength with semiconductor R&D. Offering “full-stack” solutions—hardware plus software—could set India apart. 

Betting on India— But Cautiously

“When the chips are down, you can bet on India,” Prime Minister Narendra Modi declared at SEMICON 2025. His words capture the optimism that now surrounds India’s chip ambitions. And indeed, in just four years, India has achieved more than in the previous four decades: design startups, packaging facilities, global partnerships, and a fast-growing domestic market. But the leap to global leadership is vast.  Becoming a semiconductor powerhouse will demand persistence.