India is rapidly moving towards establishing itself as a global hub for semiconductor manufacturing and chip design. According to Ashwini Vaishnaw, the Union Minister for Railways, Communications, and Electronics & Information Technology, the government’s strategy is not limited to merely setting up a few semiconductor plants; rather, the aim is to create a comprehensive semiconductor ecosystem by integrating chip design, manufacturing, packaging, equipment, materials, research and development, and skilled talent.
The Semiconductor Industry: Backbone of the Modern Economy
Semiconductors have become a fundamental necessity of the modern economy. A vast array of electronic devices and systems—ranging from cars, mobile phones, drones, and aircraft to MRI machines—rely on chips. The global electronics industry is valued at approximately $4.3 trillion and continues to expand. Semiconductor chips rank among the most complex products manufactured globally. Citing an example of technological advancement, Vaishnaw referred to Apple’s A19 Bionic chip, which is based on a 3-nanometer process and contains nearly 30 billion transistors.
COVID-19 Pandemic Heightened Strategic Importance
The COVID-19 pandemic exposed vulnerabilities in the global semiconductor supply chain. Chip shortages impacted numerous industries worldwide, prompting various nations to accelerate efforts to develop domestic semiconductor capabilities. While many developed countries had initiated work in this direction decades ago, India is now striving to make rapid strides in this sector by leveraging its existing electronics manufacturing capabilities.
India’s Semiconductor Journey Spans Six Decades
Efforts to develop a semiconductor ecosystem in India are not new. According to Vaishnaw, Fairchild Semiconductor—one of the world’s early semiconductor companies—had explored the possibility of establishing operations in India as far back as 1960. However, the company could not proceed due to the economic policies and production quota systems in place at the time. Efforts continued over the subsequent decades, yet the expected success remained elusive. Attempts to boost the semiconductor industry were also made in the early 2010s. According to Vaishnaw, there was a lack of adequate alignment between strategy and execution at that time. He cited instances where semiconductor companies shipped manufacturing equipment to India, only to have it sent back by customs authorities.
Electronics Manufacturing Laid a Strong Foundation
Under the leadership of Prime Minister Narendra Modi, the government initially prioritized establishing a robust electronics manufacturing base in India. Initiatives such as ‘Make in India’ and Foreign Direct Investment (FDI), along with reforms in taxation and customs duties, were accompanied by the launch of various manufacturing support schemes. These efforts boosted the domestic production of mobile phones and other electronic products. Gradually, global electronics and mobile phone companies expanded their manufacturing operations in the country. According to Vaishnaw, India is now home to over 300 electronics manufacturing units. The value of electronics manufacturing has surpassed $130 billion, while electronics exports have exceeded $48 billion. Mobile phones have emerged as India’s largest export product, overtaking petroleum products as well as gems and jewellery. The sector also supports approximately 2.5 million jobs. This expanding manufacturing base served as the initial foundation for India’s semiconductor ecosystem.
Launch of the Semicon India Programme in 2021
Building on the success achieved in electronics manufacturing, the government launched the Semicon India programme in 2021. The objective was not merely to set up isolated plants but to create a robust and comprehensive semiconductor ecosystem. The government studied the development of the semiconductor industry in various countries and held extensive consultations with companies operating in the sector. Initially, however, there was considerable skepticism regarding the programme. Questions arose regarding whether India genuinely intends to develop a semiconductor industry and whether the country is prepared to meet complex requirements such as semiconductor cleanrooms, ultrapure water, and state-of-the-art lithography machines.
Kick-off with a $10 billion program
Instead of initially spending hundreds of billions of dollars—as developed nations have done—India decided to proceed with a $10 billion program. These funds were utilized to support the establishment of fabrication plants (fabs) and semiconductor packaging units. According to Ashwini Vaishnaw, the government has approved 12 semiconductor units over a five-year period. A total investment of $20 billion is proposed for these projects.
Commercial production underway at three units
Out of the 12 approved units, three have commenced commercial production.
Micron: Commercial production to begin on February 28, 2026.
Kaynes: Commercial production to begin on March 31, 2026.
CG Power: Commercial production to begin on July 4, 2026.
Construction work is progressing rapidly at the other approved units. According to Vaishnaw, India’s achievement should not be measured solely by the number of approved plants or the investment amount; the most significant achievement is the laying of the foundation for a semiconductor industry within the country.
India’s growing capability in chip design
A target was set to create a pool of 85,000 skilled engineers over a decade. To achieve this, semiconductor-related courses were introduced, and existing curricula were modified. Under the ‘Chips to Startup’ program, Electronic Design Automation (EDA) tools have been made available to young engineers. So far, these tools have been provided to over 320 universities and startups. At the recent Semicon India event, 40 chips designed by Indian students using these tools were showcased to Prime Minister Narendra Modi.
India Emerges as a Major Chip Design Hub
According to Vaishnaw, almost all major semiconductor design companies have large design centers in India. Indian engineers are working on chip designs based on cutting-edge process nodes, such as 2-nanometer and 3-nanometer technologies. The government has also supported startups through the ‘Design Linked Incentive’ scheme. Under this initiative, 105 startups have received support; 24 of them secured a total of $83 million in financial assistance, while 15 went on to raise a combined $118.5 million in venture capital funding.
Growing Confidence Among Global Companies
The development of the semiconductor ecosystem in India is beginning to influence the investment trends of global companies. According to Vaishnaw, beyond the Semicon program, global companies are investing over $3 billion in India. He noted that until a few years ago, there was skepticism in corporate boardrooms and economic forums regarding India’s semiconductor capabilities. Now, that conversation is gradually shifting towards ‘curious optimism.’
Semicon 2.0 to Further Strengthen the Ecosystem
India has now announced ‘Semicon 2.0.’ The goal is to make the existing semiconductor ecosystem more comprehensive and self-reliant. This initiative will focus on seven key areas.
Expansion of Chip Design
The primary focus will be on chip design. Special emphasis will be placed on six key building blocks: compute, memory, radio frequency (RF), power, networking, and sensors. The objective is to expand India’s capabilities in designing chips for various sectors.
Focus on Semiconductor Manufacturing Machinery
Chip manufacturing requires state-of-the-art and highly complex machinery. Under Semicon 2.0, the government will encourage the domestic production of semiconductor manufacturing equipment. The aim is to reduce reliance on external sources for chip-making machinery and to build India’s capacity in this critical segment of the supply chain.
Domestic Production of Semiconductor Materials
Chip manufacturing requires a wide range of specialized materials, gases, and chemicals. According to Vaishnaw, semiconductor production can involve the use of anywhere from 150 to 500 specialized chemicals, gases, and materials. Semicon 2.0 will also support the domestic production of these materials to make India’s semiconductor supply chain more comprehensive and robust.
Plans to Establish More Fabs
Currently, two semiconductor fabs are being developed in India. Alongside expanding the ecosystem, the government plans to facilitate the establishment of additional fabs. Fabs are central to the semiconductor industry; this is where chips are fabricated on silicon wafers through highly complex processes.
Increased Focus on Advanced Packaging
Semiconductor packaging is a crucial component of the chip supply chain. While continuing to build packaging capacity, the government will place greater emphasis on advanced packaging technologies. The goal is to develop a comprehensive semiconductor manufacturing chain in India—encompassing packaging, not just chip fabrication.
Steps Towards Research and Advanced Nodes
India’s domestic ecosystem currently supports 40-nanometer technology. The government is now working on a strategy to develop process nodes that are significantly more advanced than this. The goal is to bring technology ranging from 7-nanometer to 3-nanometer nodes to India over the next eight years. This is a significant technological challenge, as advanced semiconductor manufacturing requires long research and development cycles and highly complex technical capabilities.
Goal to Train 100,000 Chip Design Engineers
Talent development will also be scaled up significantly under the ‘Semicon 2.0’ initiative. The government plans to train 100,000 chip design engineers in the coming years. The overarching objective is to establish India as a global hub for semiconductor design, mirroring the success the country has achieved in IT services.
