India is one of the fastest-growing economies in the world, yet it continues to rely heavily on imports in the semiconductor sector. While semiconductors form the backbone of modern technology — powering everything from mobile phones and electric vehicles to defence systems and AI — India’s domestic manufacturing capacity remains in its infancy.
Although the government has launched ambitious initiatives under the ‘Semicon India’ mission, several roadblocks are still holding this dream back.
Let’s understand what’s preventing India from becoming a semiconductor superpower — and what future opportunities lie ahead.
What’s Happening?
In 2021, the Government of India launched the Rs 76,000 crore ‘Semicon India’ programme to promote semiconductor and display manufacturing in the country. Under this scheme, the government is offering financial support of up to 70% to companies setting up semiconductor and display fabrication facilities (fabs).
Currently, India imports 65–70% of the components used in its electronic devices, the majority of which come from China. This dependency is a concern for the country’s technological security and economic sovereignty. As a result, the government’s vision is to position India as a competitive and attractive manufacturing hub for global semiconductor players. However, this ambitious vision faces several practical and strategic challenges.
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Challenges India Is Facing
India faces multiple hurdles on its journey to becoming a global semiconductor hub:
Partnership Failures: Several high-profile collaborations have collapsed. The Kaynes Semicon and Taiwan-based Aptos Technology deal fell through in 2024. Similarly, the Foxconn-Vedanta joint venture in 2022 was scrapped due to subsidy delays and strategic disagreements.
Reluctance of Global Players: Major international players such as Taiwan Semiconductor Manufacturing Company (TSMC), United Microelectronics Corporation (UMC), and World Advanced have declined to enter the Indian market. Powerchip, while involved, is only offering technology support without long-term commitments.
Financial and Operational Risks: The semiconductor industry is capital-intensive. A single fabrication plant can cost upwards of $10 billion and take several years to become profitable.
In addition, India is projected to face a shortage of 2,50,000 to 3,00,000 skilled workers in this sector by 2027. The global semiconductor supply chain is tightly controlled, with Taiwan and South Korea accounting for nearly 80% of the market. Additionally, ASML’s monopoly over EUV lithography technology poses a significant hurdle for India.
India’s New Semiconductor Units
Gujarat, Maharashtra, and Assam are emerging as hubs for semiconductor plants, boosting India’s digital infrastructure.
Despite the challenges, India is making significant investments in semiconductor production. In Dholera, Gujarat, the Tata Group and Taiwan’s Powerchip are setting up a Rs 91,526 crore semiconductor fabrication unit, expected to begin production by the end of 2026.
Micron’s Sanand unit is focused on the testing and packaging of memory chips. Foxconn-HCL is establishing a Rs 3,700 crore display driver chip facility in Jewar, Uttar Pradesh. An OSAT (Outsourced Semiconductor Assembly and Test) unit is also coming up in Sanand, through a partnership between CG Power, Renesas, and STARS Microelectronics.
Additionally, Kaynes Technology has received approval for its OSAT unit in Sanand, expected to become operational by September 2024.
What’s in it for Investors?
Amid these challenges, there are significant opportunities for investors. First, the domestic market is growing rapidly. In 2023, India’s semiconductor market was valued at $45 billion and is projected to surpass $100 billion by 2030. With rising demand for smartphones and electronics, this growth is expected to continue. India ranks second in the global 5G smartphone market, which will drive sustained domestic chip demand.
To attract investment, the government has offered major incentives. For example, under the Semicon India programme, subsidies of up to 70% are available, and the PLI scheme has facilitated production worth Rs 5 lakh crore. These factors make the semiconductor sector even more attractive for investment.
What’s Next?
The global semiconductor market is expected to reach $1 trillion by 2030. India is targeting a 10% share of this market. To support this goal, the government has earmarked a substantial budget of Rs 76,000 crore and continues to host global conferences under the Semicon India banner.
The next edition of Semicon India is scheduled for September 2025 in Delhi, hosted by the India Semiconductor Mission and SEMI. Over 300 companies from 18 countries are expected to participate — signalling India’s growing commitment to building a globally competitive semiconductor ecosystem under the ‘Aatmanirbhar Bharat’ initiative.
From a technology perspective, India aims to start fabrication on 14nm+ nodes by 2030. More advanced nodes below 10nm will take additional time and infrastructure. Simultaneously, the country is targeting 50% domestic electronics production by 2047 — a move that could unlock a $1.5 trillion economic opportunity.
*The companies mentioned in the article are for information purposes only. This is not investment advice.
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