India’s Semiconductor Strategy: Where It Stands & What Must Follow

The India Semiconductor Mission, initiated around 2022, has already made measurable progress. To date, the government has approved 10 semiconductor projects—two full fabs and eight assembly, test and packaging facilities—under its Semicon India programme. The total investment committed is about Rs 1.6 lakh crore (≈ USD 19–20 billion) under approved schemes, supported by state-level facilitation and federal subsidy programmes.

A major milestone is the expected launch of India’s first domestically fabricated semiconductor chip in the 28-90 nm node band by end of 2025. While this is not cutting edge, these nodes are sufficient for a broad base of electronics in automotive, telecommunications, and power applications. Six fabs are under construction, and pilot production has begun or is imminent in several plants e.g., Kaynes, CG Semi, Micron in Gujarat, and Tata in Assam. Full commercial production is projected in 2026.

To support these developments, India has layered several policy levers: up to 50% fiscal support for both semiconductor and display fabs; a separate scheme covering discrete and compound semiconductors / packaging / OSAT; focused incentives via Production-Linked Incentive (PLI) schemes; design-linked incentive schemes; and state subsidy for power, land, etc. The government has also articulated a longer-term ISM 2.0 phase, with emphasis on equipment, materials, substrates, and upstream inputs to make the ecosystem sustainable.

Strategically, India aims to join the top four semiconductor nations by 2032 and to be among the best by 2035. These goals hinge not just on approving projects but on execution: achieving commercial output, mastering advanced node technology, developing domestic IP/design, and ensuring robust ecosystem support. Key open questions include whether the fund corpus (~USD 10 billion) will be fully deployed; whether advanced fabs (e.g. 28-nm and below, compound semiconductors) will be competitive globally; how supply chain bottlenecks (e.g. exotic materials, substrates, equipment) will be addressed; and how rapidly skilled workforce and R&D capabilities can scale. Scaling state-level incentives across different regions while maintaining quality and coordination also poses governance and financial challenges.

In comparison with other nations—especially China—India has chosen an “anchor-firm” strategy to draw overseas firms and their supplier ecosystems (e.g. Micron, Intel, Powerchip), while simultaneously promoting homegrown design and small-scale fabs or OSAT units. This dual path may help mitigate risk of falling behind in technology nodes, but also increases complexity.