TLDRs:
- India commits $18.2B to build domestic semiconductor industry and reduce import dependence.
- Tata Electronics and Taiwan’s Powerchip to lead $11B fabrication plant in Gujarat.
- Government incentives now cover 50% of all chip projects, regardless of size.
- India’s chip ambitions face hurdles in talent, IP, and supply chain readiness.
India has taken a major step toward establishing itself as a global semiconductor player, approving 10 new chip projects with a combined investment of $18.2 billion.
The initiative aims to reduce India’s reliance on imported chips while positioning the country to capture a growing share of the global electronics market shifting away from China.
The government’s “Semiconductor Mission” envisions a complete domestic chip ecosystem, from design and fabrication to testing and packaging on Indian soil.
While India is already a top consumer of electronics, it has historically played a minimal role in global semiconductor manufacturing.
Major Projects and Partnerships
The largest of the approved projects is an $11 billion semiconductor fabrication plant in Gujarat, spearheaded by Tata Electronics in partnership with Taiwan’s Powerchip Semiconductor Manufacturing Corp (TSMC). This facility will produce chips used in AI, automotive systems, computing, and data storage applications.
Additionally, the UK-based Clas-SiC Wafer Fab is joining forces with India’s SiCSem to develop the nation’s first commercial compound semiconductor facility in Odisha.
These semiconductors have applications across electric vehicles, solar power inverters, defense equipment, and consumer electronics, signaling India’s intent to serve both strategic and commercial markets.
Government Incentives Drive Growth
To make the semiconductor push viable, New Delhi has implemented a range of incentives for domestic and international chip manufacturers.
Previously focused on advanced 28nm chips, the policy now provides financial support covering 50% of project costs for all fabrication, testing, and packaging units, regardless of chip size.
The government has also introduced schemes to support electronic component manufacturing, creating a local ecosystem that can supply critical parts for domestic fabs. Without this, many chipmakers would struggle to find domestic buyers for their products.
Challenges and the Road Ahead
Despite the ambitious investments, experts caution that India faces significant hurdles in realizing its chip ambitions.
“India needs more than a few fabs or ATP facilities,” said Stephen Ezell, vice president for global innovation policy at the Information Technology and Innovation Foundation. “A deep, dynamic ecosystem is critical, and India still has work to do on talent, trade policies, labor laws, and IP protection.”
Specialized infrastructure is also essential. Fabrication plants require areas free of floods and vibrations, reliable logistics, and suppliers for ultra-high-purity chemicals. India’s current talent pool is strong in chip design but less experienced in core fabrication and high-end testing.
Medium-sized companies are increasingly entering chip testing and packaging, attracted by higher margins and lower capital requirements compared to fabs. Success in these areas could allow India to gradually integrate into the global semiconductor supply chain, even as the production of cutting-edge 2nm chips remains dominated by Taiwan and other established players.
Strategic Implications
The coming years are critical for India’s semiconductor mission. With major international partners expressing interest and strong government incentives in place, the country is poised to establish a foothold in the global chip industry. However, achieving full self-reliance and competing with the U.S., Europe, and Taiwan will require long-term ecosystem development, infrastructure expansion, and enhanced intellectual property protection.
India’s $18 billion gamble reflects both the challenges and opportunities of entering the high-stakes semiconductor race. While the road is steep, success could transform the nation into a formidable player in one of the world’s most strategic and technologically advanced sectors.
