Sunday 06 / September / 2026
India is stepping up efforts to build a domestic semiconductor industry and reduce its dependence on imports, but experts say the country’s biggest advantage may lie not only in manufacturing chips, but in its vast pool of engineering talent.
New Delhi has launched the second phase of its semiconductor mission with a budget of around US$13 billion, expanding support across the chip value chain, from design and manufacturing to assembly, testing and packaging.
The programme builds on the first phase, which focused on creating the infrastructure needed for a domestic semiconductor ecosystem. The new phase places greater emphasis on strengthening supply chains and developing specialised manpower.
India’s push comes as countries including Japan and Singapore accelerate their own semiconductor programmes after the Covid-19 pandemic exposed the risks of relying on a limited number of manufacturing hubs in East Asia.
India has approved 12 semiconductor projects across six states. Three companies — Micron, Kaynes Semicon and CG Semi — have begun commercial production this year, mainly in assembly, testing and packaging.
A major project by Tata Electronics and Taiwan’s Powerchip Semiconductor Manufacturing Corporation in Dholera, Gujarat, is targeting its first chip production in December. Tata has also signed an US$11 billion memorandum of understanding with Dutch semiconductor equipment maker ASML to support advanced chip manufacturing for industries ranging from automobiles to artificial intelligence.
Analysts caution that creating a competitive semiconductor industry will require long-term investment and coordination across the entire value chain.
“Establishing a complete semiconductor ecosystem is a marathon, not a sprint,” said Anndy Lian, a Singapore-based technology adviser.
He said India should develop downstream capabilities such as assembly, testing and packaging alongside fabrication plants. These activities are less capital-intensive and could help the country build a skilled workforce and supplier network while major fabs are being developed.
Infrastructure will also be critical. Semiconductor manufacturing requires ultra-pure water, uninterrupted electricity and specialised chemicals. Even a brief power disruption can damage a wafer production batch.
India’s biggest advantage, however, could be its talent pool.
The country has emerged as a global centre for semiconductor research and chip design and has the world’s largest pool of chip-design engineers. However, it lacks sufficient numbers of workers experienced in operating fabrication facilities and managing the complex processes required to turn silicon wafers into finished chips.
Lian said developing these skills could give India a significant competitive advantage. He called for stronger partnerships between industry and universities and more specialised semiconductor programmes.
“The goal should be to move from Make in India to Engineer in India,” he said.
India currently imports around 90-95 per cent of its semiconductor requirements, according to a May report by government think tank NITI Aayog.
The dependence is becoming increasingly important as domestic demand grows. India’s semiconductor market is expected to exceed US$200 billion by 2035, making reliance on overseas supplies an economic and strategic vulnerability.
The government is already expanding its talent pipeline. Information Technology Minister Ashwini Vaishnaw has set a target of developing 100,000 semiconductor engineers.
India has trained around 85,000 engineers in four years, ahead of the original 10-year target. Semiconductor design programmes are now offered at 355 universities, including institutions in smaller cities.
The global semiconductor industry is meanwhile expected to face a shortage of about one million workers by 2032.
The government is also offering financial support covering up to 50 per cent of semiconductor manufacturing project costs, with additional incentives from state governments.
Economist Sunil Sinha said domestic chip production was strategically important, but India must also consider the technology level of the chips it produces.
“The issue is not just production of chips but what generation chips you are producing,” he said, questioning whether India will be able to produce chips capable of supporting technologies such as AI.
India is not immediately seeking to compete with the world’s leading manufacturers in the most advanced processors. Instead, it appears to be targeting chip segments where demand is high and barriers to entry are lower.
That approach could allow India to establish manufacturing capacity, develop local suppliers and train workers before moving further up the technology ladder.
For India, the semiconductor mission is therefore about more than building factories. Its larger ambition is to create an ecosystem of technology, infrastructure, suppliers and skilled engineers — turning the country’s reputation as a chip-design hub into a broader semiconductor manufacturing and engineering powerhouse.
