India is seeking to establish itself as a major global hub for semiconductor manufacturing and chip design, building on the rapid expansion of its electronics manufacturing industry over the past decade.
In an article outlining the government’s semiconductor strategy, Union Minister for Railways, Information & Broadcasting, and Electronics & Information Technology Ashwini Vaishnaw said India’s approach is focused not merely on setting up individual semiconductor plants, but on creating a comprehensive ecosystem covering chip design, manufacturing, packaging, equipment, materials, research and skilled talent.
Why semiconductors matter
Semiconductors are a foundational industry because chips produced by semiconductor companies power a wide range of other industries. They are now integral to devices and systems ranging from cars, mobile phones and drones to aircraft and MRI machines.
The global electronics industry is estimated at $4.3 trillion and continues to expand rapidly. Semiconductor chips are among the most complex products manufactured by humans. As an example of the technological advances in the sector, Vaishnaw cited Apple’s A19 Bionic chip, which uses a 3-nanometre process and contains roughly 30 billion transistors.
The COVID-19 pandemic highlighted the strategic importance of semiconductors and exposed vulnerabilities in global chip supply chains. Countries around the world subsequently accelerated efforts to build domestic semiconductor capabilities, although many of them had already been developing their industries for decades.
India’s long semiconductor journey
India’s efforts to establish a semiconductor ecosystem date back to 1960. Vaishnaw said Fairchild Semiconductor, one of the earliest semiconductor companies in the world, had explored establishing operations in India. However, he said the country’s socialist economic planning and production quotas at the time discouraged the company from proceeding.
Similar efforts continued over subsequent decades but did not produce the desired results.
There was another push to develop the semiconductor industry in the early 2010s, but Vaishnaw said the strategy and execution did not match the intent. He cited instances in which semiconductor companies shipped manufacturing equipment to India, only for the equipment to be sent back by customs.
He said that the situation began to change after Prime Minister Narendra Modi assumed office.
Electronics manufacturing provided the foundation
The government’s semiconductor strategy has been built on the growth of India’s broader electronics manufacturing industry.
The launch of Make in India, along with reforms relating to foreign direct investment, taxation and customs duties, was accompanied by several manufacturing support schemes. These measures encouraged companies to manufacture mobile phones and other electronic products in India.
Over time, global electronics and mobile phone companies expanded their operations in the country.
Vaishnaw said India now has more than 300 electronics manufacturing units, while electronics manufacturing has crossed $130 billion and electronics exports have exceeded $48 billion.
Mobile phones have emerged as India’s largest exported item, surpassing petroleum products as well as gems and jewellery, according to the minister.
The growth of the sector has also created employment, with electronics manufacturing now supporting 2.5 million jobs.
This expanding manufacturing base provided the foundation on which the government sought to build a domestic semiconductor ecosystem.
Semicon India: The 2021 push
Building on the electronics manufacturing success, the government introduced the Semicon India programme in 2021.
Vaishnaw said the objective from the beginning was to create a robust semiconductor ecosystem rather than pursue individual “vanity projects”.
The government studied the development of semiconductor industries in different countries and consulted extensively with companies operating across the sector.
The initiative initially encountered considerable scepticism. Vaishnaw said questions raised included whether India genuinely wanted to develop the industry and whether the country understood the complexities involved in building semiconductor clean rooms, producing ultrapure water and operating sophisticated lithography machines.
The government, he said, took these concerns into account while formulating its strategy.
Rather than attempting to immediately match the hundreds of billions of dollars being spent by developed countries on semiconductors, India began with a $10-billion programme to support the establishment of fabrication facilities, or fabs, and semiconductor packaging units.
12 semiconductor units approved with $20 billion investment
The initial scepticism was followed by increasing industry interest.
Over a period of five years, the government approved 12 semiconductor units, involving cumulative investment of $20 billion, according to Vaishnaw.
Three of these units have already started commercial production:
* Micron – commercial production began on February 28, 2026.
* Kaynes – commercial production began on March 31, 2026.
* CG Power – commercial production began on July 4, 2026.
Construction work on the remaining approved units is progressing rapidly.
Vaishnaw said that the progress should not be measured only by the number of plants approved or the amount of investment attracted. In his assessment, a key achievement has been the creation of the foundations of a semiconductor industry in India.
Building India’s chip-design capabilities
Manufacturing is only one part of the semiconductor ecosystem. The sector requires specialised skills at virtually every level, with chip design itself involving some of the industry’s most complex work.
India initially set a target of developing a pool of 85,000 skilled engineers over 10 years.
To support this goal, semiconductor-related courses have been introduced and curricula have been modified.
The government also launched the Chips to Startup programme, through which electronic design automation (EDA) tools have been made available to young engineers.
These tools have so far been provided to more than 320 universities and startups.
At the most recent Semicon India event, 40 chips designed by Indian students using these tools were presented to Prime Minister Narendra Modi.
India emerges as a major chip-design base
Vaishnaw said almost all major semiconductor design companies now have large bases in India.
Indian chip designers are working on some of the most advanced chips, including designs based on 2-nanometre and 3-nanometre process nodes.
The government has also supported startups through the Design Link Incentive scheme.
Under the scheme:
* 105 startups have been supported.
* 24 startups have received financial assistance totalling $83 million.
* 15 of these startups have subsequently attracted venture capital funding totalling $118.5 million.
These efforts are intended to strengthen the domestic chip-design ecosystem alongside manufacturing capabilities.
Global industry interest is increasing
The development of India’s semiconductor ecosystem has also begun to influence how international companies view the country as an investment destination.
Vaishnaw said global companies are investing more than $3 billion beyond the Semicon programme.
He described the change in industry sentiment as significant. According to him, discussions in corporate boardrooms and economic forums have moved away from scepticism about India’s ability to develop a semiconductor industry towards a state of “curious optimism”.
What is Semicon 2.0?
With the initial semiconductor ecosystem taking shape, the government has announced Semicon 2.0, which seeks to expand and deepen India’s capabilities.
The next phase focuses on seven key pillars.
1. Chip design
India plans to expand its chip-design ecosystem, with particular attention to six building blocks – Compute, Memory, Radio frequency (RF), Power, Networking, and Sensors.
The objective is to build capabilities across a wider range of chip-design applications.
2. Semiconductor manufacturing machines
Semiconductor manufacturing requires highly sophisticated equipment.
Under Semicon 2.0, the government plans to incentivise the domestic manufacture of semiconductor manufacturing equipment.
The aim is to reduce dependence on external sources for the machinery required to produce chips and build capabilities deeper into the semiconductor supply chain.
3. Semiconductor materials
Chip manufacturing depends on a large number of specialised inputs.
Vaishnaw said semiconductor production requires between 150 and 500 specialty chemicals, gases and materials.
Semicon 2.0 will therefore support domestic manufacturing of these materials, helping India develop a more complete semiconductor supply chain.
4. More fabrication facilities
India is currently developing two semiconductor fabs.
The government plans to support the establishment of additional fabs as the ecosystem expands.
Fabrication facilities are central to semiconductor manufacturing because they manufacture chips on silicon wafers using highly sophisticated processes.
5. Advanced packaging
Packaging is another critical component of the semiconductor ecosystem.
The government intends to continue supporting semiconductor packaging while placing greater emphasis on advanced packaging technologies.
The objective is therefore to develop capabilities beyond chip fabrication and establish a broader semiconductor manufacturing chain within India.
6. Research and advanced nodes
India currently has 40-nanometre technology in the domestic ecosystem.
The next objective is to develop a clear strategy for reaching significantly more advanced process nodes.
The government aims to bring 7-nanometre to 3-nanometre technologies to India within the next eight years.
This represents a major technological ambition, given the complexity and long development cycles associated with advanced semiconductor manufacturing.
7. Talent development
The next phase will also significantly increase India’s semiconductor talent-development target.
The government plans to train 1 lakh chip-design engineers in the coming years.
The broader ambition is to replicate India’s success in IT services by establishing the country as a global centre for semiconductor design.
Why India is starting with mature technologies
India’s semiconductor programme has faced criticism from different directions. Some critics have argued that the government is doing too little, while others have questioned whether it is spending too much.
Another criticism concerns India’s position in advanced semiconductor manufacturing. While leading semiconductor countries are already working on 5-nm, 3-nm and 2-nm technologies, India is only beginning to establish domestic manufacturing capabilities at more mature nodes.
Vaishnaw acknowledged that the criticism is understandable but described it as overly simplistic.
He compared building a semiconductor industry to nurturing a mango tree. A mature mango tree can thrive independently and produce fruit, but a young sapling requires water, fertiliser and protection while it develops.
In the same way, he said, India’s nascent semiconductor industry requires government support during its early stages, even though established semiconductor industries in other countries have had decades to mature.
The minister also stressed that countries currently developing 2-nm technologies have followed many decades-long journeys, whereas India’s current semiconductor programme is only five years old.
From electronics manufacturing to a complete semiconductor ecosystem
India’s semiconductor strategy is therefore being built in stages.
The first stage involved creating a strong electronics manufacturing base through reforms and manufacturing incentives. The second involved establishing semiconductor fabs and packaging facilities through the Semicon India programme. At the same time, efforts were made to develop chip-design capabilities, support startups and create a skilled workforce.
The next stage, through Semicon 2.0, aims to make the ecosystem deeper and more self-sufficient by expanding chip design, domestic equipment and materials manufacturing, fabs, advanced packaging, research and talent development.
The government’s stated objective is not simply to manufacture chips in India, but to establish capabilities across the entire semiconductor value chain.
Vaishnaw said that the industry has moved from initial scepticism to growing confidence, with 12 approved units, $20 billion in cumulative investment, three units already in commercial production, more than 300 electronics manufacturing units, a rapidly expanding chip-design ecosystem and additional global investment of more than $3 billion outside the Semicon programme.
The longer-term goal is to build on these foundations and position India not only as an electronics manufacturing centre but also as a significant global hub for semiconductor design, manufacturing and related technologies.
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