Semiconductors serve as the fundamental control centres of the modern digital ecosystem, acting as both the “brain” and “beating heart” of electronic systems. Semiconductors or chips are electronic devices with millions or billions of transistors that process data and manage electric currents. In practice, manufacturers process semiconductor materials such as silicon and other materials into tiny, highly engineered chips that power and control most of the electrical devices today. As oil powered factories and transportation in the 20th century, semiconductors now power data, intelligence, and digital infrastructure, earning their place as the new oil of the 21st century.
Semiconductors are embedded in everything from satellites and smartphones to advanced medical equipment and electric vehicles, making them indispensable to both civilian life and national security. As global reliance on digital technologies deepens, access to a stable supply of chips has become a strategic priority rather than merely an industrial concern. The sector remains heavily concentrated in a few key regions, particularly Taiwan, South Korea, China, Japan, and the United States, creating significant global interdependence and vulnerability to disruptions.
India, too, has entered the race, by launching ambitious semiconductor incentive schemes and partnering with global firms to establish fabrication and assembly plants. India is currently highly dependent on semiconductor imports for almost all chips it uses. According to several sources, India imports around 95% of its semiconductors from countries like China, Taiwan, South Korea, and Singapore. This has highlighted the need for India to strengthen its domestic semiconductor industry.
For India, the pursuit of semiconductor capacity extends far beyond the objective of expanding manufacturing output. It represents a strategic imperative aimed at securing technological sovereignty, reinforcing the foundations of a rapidly expanding digital economy, and establishing the country as a credible and competitive participant in global value chains. In an era where semiconductors underpin critical sectors—from telecommunications and defence to automotive and artificial intelligence—the ability to design and produce chips domestically has become central to long-term economic and strategic resilience.
Recognising this reality, the Government of India has introduced a series of targeted schemes and incentive frameworks to catalyse investment in semiconductor design, fabrication, and packaging. Through fiscal support, ecosystem development measures, and industry-led research initiatives, these programmes seek to accelerate the creation of a robust, end-to-end semiconductor manufacturing base in the country.
Following is the list of schemes and missions set to drive the semiconductor sector in India:
1. India Semiconductor Mission
The Indian government launched India Semiconductor Mission in 2021 as part of the Atmanirbhar Bharat strategy (Self-Reliant India Mission). The mission was backed by a Rs.76,000 crore incentive package, one of the largest technology manufacturing incentives announced during the year. With this scheme, the government offered fiscal support of up to 50 per cent for silicon fabs, compound semiconductor facilities, assembly and testing units, and chip design. As of December 2025, 10 projects with a total investment of Rs.1.60 lakh crore have been approved across 6 states.
As of early 2026, the focus has shifted from initial policy setup (ISM 1.0) to large-scale production and advanced research (ISM 2.0).
In the Union Budget 2026-27, the government announced India Semiconductor Mission 2.0. ISM 2.0 prioritises the domestic production of semiconductor equipment and materials, the development of comprehensive, homegrown semiconductor intellectual property, and the reinforcement of both national and international supply chains. For FY 2026-27, a whopping Rs.1,000 crore has been allocated to support the mission.
2. Modified Semicon India Programme
The Modified Semicon India Programme, implemented through the India Semiconductor Mission, constitutes one of India’s principal policy frameworks for developing a domestic semiconductor ecosystem. This scheme is the “umbrella” incentive structure that provides a uniform 50% fiscal support (on a pari-passu basis/ at an equal rate) for the project cost across various segments like semiconductor fabs, display fabs, compound semiconductors and Assembly, Testing, Marking, and Packaging (ATMP) or Outsourced Semiconductor Assembly and Test (OSAT).
3. Design Linked Incentive (DLI)
The Design Linked Incentive (DLI) scheme targets the “brain” of the semiconductor industry – chip design. This scheme offers reimbursements of up to 50% of design costs (capped at Rs.15 crore) for fabless startups and design houses and access to shared design infrastructure, EDA tools, and IP prototyping support.
4. Electronics Components Manufacturing Scheme
The Electronics Components Manufacturing Scheme (ECMS), launched in April 2025, is designed to move India beyond just “assembling” devices to “deep manufacturing” of the parts inside them. ECMS outlay was substantially increased in the 2026-27 Budget to Rs.40,000 crore, up from around ₹22,900 crore previously. This scheme incentivises domestic manufacturing of electronic components, crucial inputs for semiconductor devices, modules and systems.
5. Skill Development & R&D Focus
The Union Budget 2026-27 emphasises industry-led research and training centres to develop a skilled workforce in semiconductor design, manufacturing and equipment. Given the complexity of semiconductor tech, skills, R&D and ecosystem collaboration are central pillars of the strategy.
Supported by these strategic schemes, India is now seeing tangible progress on the ground, with several semiconductor fabs, packaging units, and chip manufacturing facilities taking shape.
Currently, there are nine major semiconductor projects approved and under various stages of construction across six Indian states. With these projects, the total investment outlay has crossed Rs.1.6 lakh crore ($19 billion).
Here is the full list of these projects:
I. The Large-Scale Fabs (Chip Manufacturing)
- Tata Electronics & PSMC is building India’s largest semiconductor project in Dholera, Gujarat. The investment outlay for this project is estimated to be Rs.91,000 crore. The upcoming factory will produce chips for power management, display drivers and microcontrollers.
II. Advanced Packaging (ATMP/OSAT)
- Micron Technology has opened a large ATMP facility in Sanand, Gujarat with an investment of about Rs.22,516 crore. The plant will process advanced DRAM and NAND wafers and package them into finished products for data centres, consumer electronics and AI systems.
- Tata Electronics is setting up a major semiconductor manufacturing facility in Jagiroad, Assam, with an investment of approximately ₹27,000 crore. The unit is designed to manufacture up to 48 million chips per day, marking one of the largest semiconductor investments in the Northeast.
- A joint venture between CG Power, Japan’s Renesas Electronics and Thailand’s Stars Microelectronics is developing an ATMP/OSAT unit in Sanand. The facility is under construction and will focus on packaging chips for automotive, industrial and consumer electronics with a planned daily production capacity in the multi-million range once operational.
- HCL-Foxconn JV (Jewar, Uttar Pradesh joint venture has begun preparatory work after approval and a groundbreaking ceremony in February 2026 for a display-driver and semiconductor packaging facility near Jewar International Airport, in Uttar Pradesh. The unit is expected to start production around 2027, focusing on display driver and related chip products.
- The OSAT/packaging facility by Kaynes Semicon is approved and under construction in Sanand with a capacity of several million chips per day. Work is progressing toward phased production ramp-up over the next few years.
III. Specialized & Compound Semiconductors
- SiCSem (Bhubaneswar, Odisha): A new silicon carbide (SiC) semiconductor fabrication project — India’s first commercial SiC plant — has been approved under the India Semiconductor Mission. Construction began recently and the facility is expected to be operational by around 2027–28, focusing on SiC wafers and power devices for EVs, defence and renewable applications.
- 3D Glass Solutions is developing an advanced packaging and embedded glass substrate facility. The project is in the development stage. It will introduce high-end packaging technologies such as glass interposers and 3D heterogeneous integration modules, supporting high-performance electronics sectors once completed. unique project focusing on advanced glass-based substrates for 5G and high-frequency communication.
- Continental Device India (CDIL) (Mohali, Punjab): This facility received approval to expand its discrete semiconductor manufacturing lines to produce high-power devices such as MOSFETs, IGBTs and other power components in silicon and silicon carbide. The expansion is approved and in various preparatory stages, complementing India’s growing discrete chip production efforts.
While these projects are expected to position India as a leading semiconductor economy, the path is far from guaranteed.
The semiconductor industry is one of the most capital-intensive and technologically complex sectors in the world, governed by razor-thin margins and rapid innovation cycles. For India to successfully transition from a chip consumer to a chip creator, it must navigate a high-stakes environment where infrastructure reliability, a specialized workforce, and global geopolitical shifts play a decisive role. Consequently, there are certain challenges that can delay or hinder the country’s goal towards its ambitious chip targets.
Some of the key challenges the semiconductor industry is currently facing are:
i) High Capital Intensity and Long Gestation Periods – Semiconductor fabrication plants are among the most capital-intensive industrial projects in the world, often requiring investments running into billions of dollars. Building a “Fab” is not like building a standard factory. A single advanced facility can cost over $10 billion. Even with the government’s 50% subsidy, the private partner must still bring billions of dollars to the table. Beyond the initial outlay, continuous upgrades are necessary to keep pace with rapidly evolving technology nodes. If global market demand for chips dips, companies may delay their investment phases, leading to stalled projects. The long gestation period before commercial production also increases financial risk for investors.
ii) Supply Chain Vulnerabilities – A semiconductor ecosystem requires a deep network of suppliers for specialty chemicals, ultra-pure gases, silicon wafers, photoresists, precision machinery, and advanced packaging materials. Much of this ecosystem is still underdeveloped domestically, leading to reliance on imports and exposure to global disruptions.
iii) Global Competition and Subsidy Race – Major economies such as the United States, Japan, South Korea, Taiwan, and the European Union are aggressively subsidizing their semiconductor industries. Competing in this global subsidy race while maintaining fiscal prudence presents a policy balancing act for India.
iv) Skilled Workforce Gaps – Although India produces a large number of engineers annually, there are very few engineers with experience in chip fabrication (the actual chemistry and physics of “growing” chips). Further, building a workforce with hands-on manufacturing experience will take sustained investment in training and industry-academia collaboration.
The Challenge: India needs to train roughly 85,000 to 100,000 specialized technicians and engineers by 2030 to run Indian plants efficiently.
v) Environmental and Regulatory Considerations – Semiconductor manufacturing involves significant water and energy consumption, as well as chemical waste management. Ensuring environmental sustainability and obtaining timely regulatory approvals can add to project complexity.
If these challenges are effectively addressed or at least meaningfully mitigated over the next few years, India is well-positioned to emerge as one of the top semiconductor manufacturing nations globally—not only meeting domestic demand but also becoming an integral part of international supply chains.
The Vision: “Digital Diamonds” and Global Trust
The Indian leadership has consistently framed the semiconductor mission not just as an industrial project, but as a matter of national sovereignty and a gift to the global supply chain.
- Prime Minister Narendra Modi, during the inauguration of Semicon India 2025, famously declared that while the 20th century was shaped by oil, the 21st century will be defined by chips. He remarked: “Oil was black gold, but chips are digital diamonds. The day is not far when the world will say—Designed in India, Made in India, Trusted by the World.”
- Union Minister Ashwini Vaishnaw has emphasized that India is no longer “waiting for the bus” but is now driving the future. In early 2026, he noted that India’s unique advantage lies in its talent, stating that while the world faces a shortage of a million semiconductor professionals by 2030, India is already ahead of schedule, having trained over 65,000 engineers under the C2S program in record time.
- The Goal for 2030: The Ministry of Electronics and Information Technology has set a clear target to achieve $500 billion in semiconductor manufacturing by the end of this decade. With the launch of ISM 2.0, the government’s message to global investors is clear: India’s policies are not short-term signals, but a long-term commitment to becoming the world’s most reliable high-tech partner.
As the first “Made in India” chips begin to roll out from the Sanand and Dholera clusters in 2026, India’s dream of an Atmanirbhar semiconductor ecosystem is rapidly becoming a reality.