India is pursuing a bold, long-term push to become a global hub for semiconductor design, fabrication, testing, and packaging. The government has launched an expansive program, approved a slate of ambitious projects totaling trillions of rupees, and rolled out incentives designed to stimulate a domestic electronics supply chain. At the same time, experts warn that turning aspiration into a durable, self-reliant industry will demand sustained policy alignment, the cultivation of high-end talent, and robust infrastructure. The journey unfolds amid shifting global dynamics in the chip industry, where the race for self-reliance has intensified since 2022, when export restrictions on advanced AI chips to China prompted a worldwide reorientation of semiconductor manufacturing strategies.
India’s bold bid to build a complete domestic semiconductor ecosystem
India has long been a major consumer of electronics, yet it has lagged behind in local chip production and has played only a minor role in the global supply chain. The nation’s new trajectory centers on the ambitious objective of establishing a full domestic semiconductor ecosystem—from chip design to fabrication, testing, and packaging—carved out and operated within Indian borders. This vision, often described as a comprehensive “Semiconductor Mission,” aims to catalyze not just a handful of factories but a robust, end-to-end value chain that can support strategic sectors, strengthen energy and defense security, and expand India’s share of the global electronics market as demand shifts away from China.
As of the latest assessments, New Delhi has approved ten semiconductor projects with a cumulative investment of about 1.6 trillion rupees, equivalent to roughly $18.2 billion. This portfolio includes two fabrication plants and multiple facilities dedicated to testing and packaging, signaling a deliberate move beyond mere concept to tangible manufacturing capability. A key aspect of this initiative is leveraging India’s pool of engineering talent, which already feeds major global chip design firms. In principle, these capabilities could underpin both domestic development and export-oriented activity, helping to create a self-reinforcing ecosystem that links design houses with fabrication facilities, testing labs, and packaging operations.
But the trajectory remains uneven. Industry observers caution that while the existing pipeline demonstrates momentum, it is not yet sufficient to translate India’s ambitions into a durable industry framework. The reality is that many components of a fully functional semiconductor ecosystem—ranging from specialized supply chains to consistent policy support and a stable IP environment—must mature in tandem. In this respect, India’s efforts mirror a larger, multifaceted national objective: to attract long-term, multi-billion-dollar investments that require a business environment capable of absorbing risk, providing stable incentives, and delivering predictable regulatory outcomes. The comparison between India’s current footprint and the scale of the global leaders underscores the challenge and the opportunity that lie ahead.
The broader strategic logic behind India’s approach rests on several intertwined assumptions. First is the imperative to reduce import dependence for chips that power critical sectors, including defense, energy, automotive, and digital infrastructure. Second is the aspiration to capture a larger slice of the evolving global electronics market, a market that is increasingly oriented toward regions with resilient, localized or regionalized manufacturing footprints. Third is the recognition that design talent alone—while essential—does not automatically yield a self-sustaining semiconductor industry; rather, it must be complemented by world-class fabrication, advanced testing, and high-precision packaging capabilities, each underpinned by a robust policy framework and reliable supply chains. Fourth, the government’s stance emphasizes domestic procurement and the creation of a local market for components, meaning that the ecosystem must be able to source and integrate active and passive electronic components locally, in order to enable chip manufacturers to scale efficiently.
This strategic narrative also reflects a broader global trend: as nations seek resilience in supply chains amid geopolitical tensions and technological rivalries, there is a growing recognition that chip manufacturing capability offers strategic leverage. India’s plan does not exist in isolation; rather, it is part of a regional and international chessboard in which collaboration, competition, and policy experimentation all shape outcomes. The government’s policy design seeks to address this dynamic by offering a framework that can accommodate both domestic production and selective foreign participation, while encouraging knowledge transfer, technology upgrading, and the creation of a self-sustaining ecosystem that can sustain long-run growth.
The architecture of the plan
The central architectural element of India’s semiconductor push is the aim to build a complete, vertically integrated supply chain on home soil. This encompasses not only device fabrication but also the development of essential downstream capabilities—testing, packaging, and platform-level services—that currently exist primarily in other parts of the world. The idea is to create a chain that can feed into the global market while also serving domestic needs. Achieving this requires a delicate balance of incentives, infra investments, and regulatory reforms that collectively improve the business environment for semiconductor players.
Industry observers note that a complete domestic ecosystem is a long-term proposition. It demands strategic alignment among multiple stakeholders, including private sector players, foreign partners, and various government agencies. The experience of other countries that have pursued similar goals shows that results accrue gradually and require ongoing iteration. The emphasis on a realistic, phased approach—prioritizing foundational capabilities, gradually expanding footprint, and ensuring skill-building and technology transfer—reflects a cautious but persistent methodology designed to reduce risks while maximizing the chance of enduring impact.
In this context, several milestones are worth noting. The identification and approval of ten semiconductor projects with substantial financial backing signal a credible appetite for scale. The incorporation of dedicated funding for not only fabs but also testing and packaging facilities suggests an awareness that the value created in chip infrastructure extends beyond wafer manufacturing. The inclusion of a local demand ecosystem—by supporting active and passive electronic components manufacturing—addresses a previously critical bottleneck by integrating potential buyers and suppliers into the ecosystem from the outset. Taken together, these moves indicate a holistic strategy that tries to align market signals with policy incentives to catalyze coordinated development.
The talent engine and global benchmarks
India’s talent advantage for design work is well recognized, with a sizable pool of engineers who can contribute to chipset design and related activities. This reality underpins the confidence that India can, over time, become a significant node in global chip design networks. Yet the talent story for fabrication, testing, and packaging presents a more nuanced picture. Experts emphasize that while India has demonstrated the capability to absorb and execute design tasks, the core challenges of hardware manufacturing—precision engineering, process control, materials science, and supply chain orchestration—require immersion in a scale and maturity that takes years to cultivate.
Analysts highlight that the decision-making calculus for leading semiconductor manufacturers is complex. They consider factors that span talent and workforce quality, tax regimes, trade policies, labor costs, regulatory environments, and customs procedures, among others. One prominent voice in the field notes that there can be as many as 500 discrete considerations before companies commit to multi-billion-dollar fab investments. These factors collectively shape the viability of a new manufacturing eco-system and determine how quickly it reaches the scale necessary to compete internationally. In this light, India’s policy framework must address not only the potential of its engineers but also the reliability and transparency of the business environment that surrounds large-scale, capital-intensive manufacturing.
The dialogue around India’s semiconductor ambitions therefore centers on a broad ecosystem-building exercise. It is not enough to attract investment; the country must cultivate an environment in which investors anticipate predictable policy signals, capable suppliers, accessible talent, and efficient logistics. The potential reward is significant: a diversified energy in means of export earnings, spurring job creation, and enabling strategic sectors to rely on a more domestically secure supply of essential components. However, achieving such a state will require continued political will, sustained funding commitments, and a steady stream of technology upgrades that keep pace with global advances in chipmaking.
Government policy and investment momentum
India’s policy push in May introduced a new dimension to its semiconductor strategy: a targeted scheme to support electronic component manufacturing. The policy response directly tackled a bottleneck that had hindered domestic chipmakers—namely, the scarcity of local demand for chip components. Historically, India’s electronics ecosystem lacked a robust base of component manufacturers, such as camera module suppliers and other critical electronic parts, which constrained chip fabrication ventures from achieving scale. The new policy is designed to rectify this by providing financial support to companies producing both active and passive electronic components, paving the way for a domestic supplier base that could be plugged into the chip manufacturing supply chain.
This policy shift is significant for several reasons. By expanding the scope of domestic demand to include electronic components, the government creates a more coherent, end-to-end platform that is capable of sustaining chip fabrication activities. In effect, it aims to reduce reliance on imported components and to encourage local suppliers to integrate with the semiconductor ecosystem. The result could be a more resilient local supply chain, improved lead times, and greater certainty for fab operators seeking to establish operations in India.
This evolution is part of a broader recalibration of the country’s approach to advanced semiconductor manufacturing. In 2022, India adjusted its incentives strategy in response to rapid global developments in chip technology, particularly the industry’s emphasis on smaller process nodes. That pivot away from providing incentives solely for fabrication units focused on 28-nanometer nodes or smaller, and toward a broader set of capabilities, reflected a recognition that successful semiconductor development requires more than a single type of facility. However, the initial policy emphasis on the most advanced process nodes did not deliver the desired momentum for a nascent Indian fab ecosystem. Consequently, New Delhi broadened support to cover 50% of the project costs for fabrication units and for chip testing and packaging units, regardless of the chip size. This change marks a strategic shift toward a more inclusive funding model designed to accelerate the development of a complete domestic semiconductor value chain.
The policy environment has also attracted international interest. Companies from Taiwan, the United Kingdom, the United States, and South Korea have shown willingness to engage with India on semiconductor manufacturing and related activities. Their interest includes collaboration on fab operations, component supply, and packaging, which could bring advanced know-how, vendor ecosystems, and investment to India’s nascent industry. While government officials have welcomed this interest, they also stress the need for sustainable growth. The reciprocal dynamic is clear: incentives can attract capital in the near term, but long-term success will depend on the durability of the program, the quality of policy execution, and the development of a robust market for semiconductor services within India.
The funding model and its implications
The financial framework underpinning India’s current push emphasizes government underwriting of part of the capital expenditure required to establish fabrication and testing/packaging facilities. By covering half of the project costs for fabrication units and for testing and packaging facilities, the government reduces the upfront risk for investors and helps to lower the barrier to entry for the most capital-intensive segments of the semiconductor value chain. This approach is designed to accelerate the scaling of domestic production capabilities and to signal a government commitment that aligns with the capital-intensive nature of chip manufacturing.
Still, industry observers caution that incentives alone do not guarantee sustainable outcomes. The sustainability of investments depends on a stable policy environment over multiple business cycles, predictable regulatory processes, the development of an integrated supplier base, and the ability to attract and retain talent across the design, manufacturing, and packaging spectrum. As such, while the current policy framework is a critical enabler, it is one element of a broader, long-term strategy to anchor semiconductor manufacturing capabilities in India.
Highlights of major projects and international interest
Among the marquee projects under India’s semiconductor agenda is the massive 910-billion-rupee facility in Gujarat, led by Tata Electronics and developed in partnership with Taiwan’s Powerchip Semiconductor Manufacturing Corp. This plant focuses on power management integrated circuits, display drivers, microcontrollers, and high-performance computing logic. The scope of these products encompasses sectors as diverse as artificial intelligence, automotive technology, computing, and data storage. The project’s scale and scope underscore India’s intent to secure a manufacturing base capable of producing a wide range of semiconductors with strategic relevance to multiple high-growth industries.
In another high-profile initiative, the United Kingdom’s Clas-SiC Wafer Fab has joined forces with India’s SiCSem to establish the country’s first commercial compound semiconductor fabrication facility in Odisha. Compound semiconductors—often crafted from materials beyond silicon, such as silicon carbide—have critical applications in defense, electric vehicles, solar power, consumer electronics, and other advanced domains. A government press release describes these materials as enabling capabilities in missiles, defense equipment, EVs, consumer appliances, and solar inverters, highlighting the strategic value of expanding India’s materials and process capabilities beyond conventional silicon-based devices.
Experts view the coming three to four years as pivotal for advancing India’s semiconductor objectives. Realizing a mature domestic ecosystem requires more than creating fabs; it requires operational silicon fabrication facilities and the resolution of technical and infrastructural hurdles that go beyond mere incentives. Beyond the physical plants, the industry will need reliable supply chains for ultra-high-purity chemicals, stable logistics, and the right regulatory infrastructure to protect intellectual property and foster innovation. Achieving these milestones will demand coordinated efforts across government, industry, and academia to ensure that capabilities are built in a way that supports long-term growth and global competitiveness. In this context, the involvement of global partners with proven track records can help unlock knowledge transfer and accelerate the maturation of India’s chip manufacturing capacity.
The human factor: skills, IP, and policy safeguards
In parallel with physical facilities, the human and regulatory dimensions of India’s plan demand careful attention. The design talent pool in India is robust, but the line between design and core manufacturing IP remains a critical distinction in the industry. Experts emphasize that while India has substantial design capabilities, and a history of design engagement dating back to the 1990s, the core intellectual property associated with chip designs is often located in regions with established IP regimes, such as the United States or Singapore. This raises questions about how India can maximize value from design activities while safeguarding IP rights as manufacturing capabilities expand domestically.
Jayanth BR, a recruiter with deep experience in the Indian semiconductor scene, notes that global companies frequently outsource “block-level” design validation work to Indian teams. This underscores India’s strength in certain design activities while also highlighting the limits of what local capabilities might contribute to core IP development. For India to fulfill its broader ambitions, the government and industry players will need to address the governance and enforcement of IP rights in ways that are commensurate with the demands of a high-end, globally integrated semiconductor ecosystem.
Experts also call for a thoughtful modernization of IP frameworks to address new forms of IP, including those emerging from digital content and software. Sajai Singh, a partner at a Mumbai-based law firm, emphasizes that a robust or enhanced IP environment can make India a more attractive base for design and development work, particularly when paired with strong enforcement mechanisms. The overarching message is that India’s competition is not just about incentives and physical assets; it is also about creating an IP-friendly legal and regulatory environment that can attract and retain high-value design work while enabling manufacturing and testing activities to thrive within a secure, predictable framework.
In this sense, India’s semiconductor policy is as much about establishing a credible, long-run IP and governance framework as it is about building fabs and packaging plants. The interplay between policy clarity, IP protection, and a skilled workforce will shape how quickly and how effectively the country can scale its semiconductor ambitions. The path forward will require continued attention to policy coherence, enforcement capacity, and international engagement to align with global standards and best practices.
The road ahead: opportunities and caveats
The journey toward a self-reliant Indian semiconductor industry is inherently long and complex. The opportunities are substantial: a domestically anchored supply chain can bolster national security, lower import dependence, generate high-skilled employment, and position India as a competitive hub for design, testing, and possibly some forms of manufacturing. The challenges are equally pronounced: sustaining investment over decades, ensuring consistent policy support across political cycles, building a deep network of suppliers for ultra-high-purity chemicals and materials, and navigating IP landscapes that balance openness with protection.
The success of OSAT—outsourced semiconductor assembly and testing—also looms large. As noted by industry observers, OSAT represents a significant growth opportunity for India because it offers higher margins and lower capital intensity compared to wafer fabrication. Realizing this potential will require clarifying market access, establishing clear demand channels, and creating a regulatory environment that supports the growth of OSAT services. If India can unlock these opportunities, it will not only diversify its electronics manufacturing capabilities but also add a critical layer to its broader national strategy for technology leadership.
Beyond fabrication: testing, packaging, and the broader ecosystem
While the headline ambition focuses on building chip fabs, India’s future in semiconductors hinges crucially on the viability of testing and packaging operations, and on establishing a reliable ecosystem that supports these activities. Fabrication facilities are the centerpiece of any semiconductor strategy, but the processes that occur after wafers are created—testing, validation, die separation, and packaging—are equally essential to delivering functionally complete and reliable chips to customers. In India’s case, the challenge is not merely to erect manufacturing capacity but to ensure that downstream capabilities keep pace, enabling chips to be validated and delivered to the market with the speed and quality demanded by AI, automotive, and data-intensive applications.
Logistical considerations are a recurring theme in discussions about site selection for fabrication and packaging facilities. Optimal sites are typically chosen for their proximity to critical supply chains, stable physical environments, and robust transportation networks. However, India’s diverse geography also presents unique challenges: certain regions may face risks from floods, while others can experience vibrations or supply chain disruptions. These factors must be accounted for in siting decisions and in the broader risk management and continuity planning for semiconductor plants. The government and industry players will need to assess and mitigate these risks through a combination of infrastructure investment, disaster risk reduction, and resilient design principles.
In addition to physical site considerations, there is a pressing need for specialist chemical suppliers that meet ultra-high-purity standards required for advanced semiconductor manufacturing. The availability of such materials is a cornerstone of manufacturing viability. Building a local supply chain for these indispensable inputs will require partnerships with global chemical producers, the development of regulatory frameworks for high-purity materials, and the establishment of rigorous quality control processes to ensure consistent, reliable standards. This dimension of the ecosystem—materials, processes, and standards—complements the hardware focus on fabs and packaging and is essential for achieving consistent device performance.
The expansion of testing and packaging capabilities is expected to attract more mid-sized companies into the Indian semiconductor sector. These firms may be drawn by the prospect of higher margins relative to pure manufacturing, as well as the potential to offer specialized services that support a broader ecosystem. As more firms participate, the market will begin to exhibit a more robust, integrated network that connects design, fabrication, and post-silicon services. The extent to which India can attract and retain such firms will influence the overall pace of ecosystem development and the degree to which the country can move from simply assembling and testing components to performing each stage of the process with increasing sophistication and efficiency.
The strategic significance of OSAT and packaging
Outsourced assembly and testing, and the packaging that surrounds final chips, are often overlooked in mainstream policy discussions, yet they are a linchpin of a viable semiconductor industry. OSAT operations offer a relatively more accessible pathway to scale than pure wafer fabrication because they require lower upfront capital expenditure and can deliver meaningful margins more quickly. For India, cultivating OSAT capability could provide a crucial bridge between design and manufacturing, enabling product validation, reliability testing, and packaging operations that bring value-added services to the market. Success in OSAT would also diversify India’s semiconductor revenue streams, reducing reliance on any single segment of the value chain and increasing resilience against market fluctuations.
Major projects and international partnerships shaping India’s path
India’s semiconductor journey is defined not only by its domestic policy and investment equations but also by the nature and scope of international partnerships that accompany it. Two prominent initiatives illustrate the scale and ambition of India’s strategy to attract foreign collaboration while building local capabilities.
The first is the Tata Electronics project in Gujarat, developed in collaboration with Taiwan’s Powerchip Semiconductor Manufacturing Corp. The plan envisions a major fabrication facility dedicated to a wide range of components—power management integrated circuits, display drivers, microcontrollers, and high-performance computing logic. These products have wide-reaching applications across sectors such as artificial intelligence, automotive technology, computing, and data storage. The scale of this project signals a strategic intent: to establish a flagship facility that demonstrates India’s readiness to host advanced semiconductor production and to catalyze related industries by providing a domestic base for a broad portfolio of chip types.
The second cornerstone partnership involves the United Kingdom’s Clas-SiC Wafer Fab and India’s SiCSem, which are working together to establish India’s first commercial facility for compound semiconductors in Odisha. Compound semiconductors—crafted from materials beyond pure silicon—hold particular promise for defense applications, electric vehicles, solar power systems, and specialized electronics. The collaboration emphasizes the government’s emphasis on expanding the material and device toolkit available in India, diversifying beyond traditional silicon-based semiconductors and enabling capabilities in high-growth, technologically advanced segments. By enabling compound semiconductor production, India positions itself to serve high-value, mission-critical applications that leverage the unique properties of these materials.
Another notable development in India’s semiconductor ecosystem relates to the branding and policy statements emerging from government circles. In Bengaluru, the inauguration of a new ARM office—an activity tied to design and IP aspects of semiconductor work—was highlighted by a senior minister during a press briefing. The minister asserted that ARM would design some of the most advanced chips used in AI servers, drones, and mobile devices at 2-nanometer scales from India’s tech hub. While these statements illustrate the strategic priority placed on design capabilities and IP-enabled services, experts caution that the role of local talent is likely to remain more connected to non-core design testing and validation in the near term. The core IP of chip designs is typically held in regions with well-established IP regimes and robust enforcement infrastructure, such as the United States or Singapore. The implication is that India’s competitive edge will likely emerge through a combination of strong design services, scalable manufacturing support, and a policy-driven environment that facilitates collaboration with global IP holders under appropriate legal frameworks.
What these partnerships mean in practice
The collaboration with international players brings a mix of strategic advantages and practical challenges. On one hand, partnerships can accelerate technology transfer, provide access to world-class manufacturing know-how, and help establish credible, long-term supply networks. They can also help India calibrate its own regulatory and IP frameworks by aligning with global best practices. On the other hand, the presence of foreign partners requires careful governance to ensure that domestic priorities remain at the core of the ecosystem and that benefits—such as employment opportunities and local supplier development—are shared widely. Building trust among stakeholders, ensuring transparent governance, and creating mechanisms for knowledge transfer while protecting national interests are imperative for sustaining momentum.
The broader implication of these partnerships is their potential to establish India as a credible destination for high-end semiconductor activity. If the combination of large-scale investments, robust policy support, and international collaboration can align over the coming years, India could become an important node in the global semiconductor value chain. The process will require careful management of expectations, a measured pace of investment, and a strong focus on building indigenous capabilities that can withstand geopolitical and market fluctuations. The goal is not merely to attract capital but to embed a durable manufacturing and innovation ecosystem that supports high-performance chips and advanced electronics across multiple industries.
The IP, talent, and regulatory backbone
A central debate in India’s semiconductor strategy concerns the balance between local capability development and safeguarding intellectual property. While India has demonstrated strength in certain design tasks, the core IP that underpins most advanced chip architectures remains largely concentrated in jurisdictions with mature IP protection regimes. This reality has implications for how India can position itself as a center for integrated semiconductor activity, where both design and manufacturing work in concert.
Industry voices emphasize that India is well-stocked with design talent, having had a presence in chip design activities for decades. This depth in the design space provides a strong foundation for developing local engineering ecosystems and for participating in international design services. However, to translate design prowess into a thriving domestic manufacturing and IP ecosystem, India will need to upgrade its IP framework and enforcement mechanisms. Strengthening IP laws to cover emerging forms of IP—such as digital content and software-based innovations—will be essential in ensuring that Indian entities can collaborate with global players without exposing themselves to undue risk.
Sajai Singh, a partner at a Mumbai-based law firm, highlights that improving enforcement and sharpening IP protections will benefit not only Indian firms but also attract more foreign investment in the high-value segments of the semiconductor value chain. He argues that competition from the United States, Europe, and Taiwan is not only about incentives but also about the legal and regulatory ecosystems that support robust IP protection and predictable dispute resolution. The implication for India is that policy design must consider not only the financial and infrastructural dimensions of its semiconductor program but also the legal architecture that underpins innovation and collaboration at a global scale.
The broader takeaway is that India’s success will hinge on a robust, coherent strategy that integrates talent development, IP protection, and regulatory clarity with aggressive investment and infrastructure improvements. The ambition to build a domestic supply chain, attract global players, and develop high-end capabilities depends on maintaining a stable policy environment that reduces risk for investors while protecting national interests. Achieving this balance will require ongoing dialogue among policymakers, industry participants, and the research community to ensure that India’s semiconductor roadmap remains aligned with global market dynamics and technological progress.
Conclusion
India’s march toward becoming a global semiconductor major is underway, marked by a bold policy push, substantial investment, and strategic collaborations with international partners. The country has set out a clear, long-term objective: to create a complete domestic supply chain—from design to fabrication, testing, and packaging—on Indian soil, supported by targeted incentives and the development of a local buyer base for electronic components. While the groundwork is being laid with major projects, ambitious timelines, and high-level endorsements, the path forward is complex and multi-faceted. The challenges span manufacturing scale, infrastructure, supply chains for specialized inputs, and, crucially, intellectual property and regulatory frameworks that can attract and sustain high-value investment.
Success will likely depend on several intertwined elements. First is the sustained political will and predictable policy environment that encourages multi-decade investment cycles and reduces market risk. Second is the establishment of a robust ecosystem for OSAT, packaging, and testing, which will diversify the revenue base beyond wafer fabrication and help India achieve higher-value, margin-rich activities. Third is the continued development of local, world-class talent across design, manufacturing, and IP governance, supported by a modernized IP regime and robust enforcement mechanisms. Fourth is the ability to translate international partnerships into meaningful knowledge transfer that accelerates skill-building, accelerates process improvement, and broadens the local supplier network for ultra-high-purity chemicals and advanced materials.
If India can harmonize these dimensions—policy clarity, capital investment, ecosystem maturation, and IP governance—the country stands to become a meaningful participant in the global semiconductor landscape. The coming years will test the speed and quality with which these plans are executed, but the ambition is clear: to reduce import dependence, secure strategic chips for critical sectors, and position India as a durable pillar of global electronics manufacturing and innovation. The road may be long, but the foundational steps are being taken, and the international interest already reflected in high-profile collaborations suggests that India is poised to play a more consequential role in the world’s semiconductor future.