The Union Cabinet has approved four new semiconductor projects in Odisha, Punjab, and Andhra Pradesh under the India Semiconductor Mission (ISM). With these, the total number of projects has increased to ten across six states.
India’s semiconductor industry grows with ISM, PLI, new fab projects, global tie-ups and rising market demand.
The Union Cabinet has approved four new semiconductor projects in Odisha, Punjab, and Andhra Pradesh under the India Semiconductor Mission (ISM). With these, the total number of projects has increased to ten across six states.
India’s semiconductor consumption market is valued at USD 52 billion in 2024–25 and is expected to grow to USD 103.4 billion by 2030, with a CAGR of 13%.
Mobile phones, IT products, and industrial applications make up around 70% of the revenue, while automotive and industrial electronics are emerging as major growth areas.
The semiconductor industry is currently dominated by Taiwan, South Korea, Japan, China, and the US.
India’s imports of integrated circuits (ICs), memory chips, and amplifiers increased sharply between FY16 and FY24—by 2,000%, 4,500%, and 4,800% respectively. China supplies almost one-third of these imports.
The India Semiconductor Mission (ISM), approved in 2021, aims to strengthen India’s position in the global electronics value chain and develop the country as a major manufacturing hub. It functions under the Ministry of Electronics and Information Technology (MeitY).
The mission focuses on supporting chip design startups, promoting home-grown intellectual property, encouraging technology transfer, and boosting research, innovation, and industry–academia collaboration. It also aims to reduce dependence on imports and build a strong semiconductor ecosystem in India.
Mission Focus:
Key Schemes under ISM:
Production Linked Incentive (PLI) Scheme: PLI for large-scale electronics and IT hardware aims to boost domestic manufacturing and increase exports.
Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS): Helps strengthen India’s ecosystem for electronic components and semiconductor manufacturing.
Electronics Manufacturing Clusters (EMC & EMC 2.0): Provides infrastructure and support systems needed for electronics manufacturing.
Public Procurement (Preference to Make in India) Order, 2017: Gives priority to products manufactured in India when the government makes purchases.
Tax Reforms: Includes tariff rationalisation, removal of basic customs duty on capital goods, and other incentives to promote manufacturing.
FDI Policy: Allows 100% foreign direct investment in electronics manufacturing, subject to applicable rules and regulations.
Infrastructure and Innovation Challenges:
Semiconductor manufacturing requires 500–1,500 highly complex steps carried out in cleanrooms, demanding advanced infrastructure, specialised technology, and skilled workers.
The high cost of building fabs, purchasing equipment, and funding R&D—along with India’s limited semiconductor research and heavy reliance on imported components and intellectual property—slows innovation and reduces technological independence.
Skilled Workforce Gap:
India has around 2.2 lakh semiconductor professionals today, but the industry may face a shortage of 2.5 to 3.5 lakh skilled workers by 2027 across the entire semiconductor value chain.
Technology & Global Competition:
Countries like Taiwan and South Korea control nearly 80% of global chip foundry capacity. ASML in the Netherlands leads EUV lithography technology, and companies like Nvidia and ARM dominate chip design. This restricts India’s access to high-end technology and increases competition.
Environmental and Regulatory Challenges:
Semiconductor production uses hazardous chemicals, toxic metals, and large amounts of energy, creating environmental risks and higher compliance costs.
Complicated regulations, IP-related issues, export controls, and policy uncertainties make operations more challenging for manufacturers.
Skill Development: Set up specialised training programmes in chip design, fabrication, and testing to create a skilled workforce.
Boost R&D and Indigenous IP: Increase investment in research and development, support home-grown product design, and develop intellectual property to help startups and smaller companies compete internationally.
Incentives and Policy Support: Strengthen government initiatives like the India Semiconductor Mission (ISM) and state policies (e.g., UP Semiconductor Policy 2024) to attract investment and promote semiconductor manufacturing.
Chip Diplomacy and Niche Focus: Encourage international collaboration (“chip diplomacy”) and focus on niche technologies such as MEMS and sensors to give India a strong presence in specialised global markets.
Private Sector Participation and Strategic Opportunities: Promote private investment and partnerships, and leverage geopolitical shifts, like US-China tensions, to expand India’s semiconductor industry.
India’s semiconductor industry is expanding quickly, supported by initiatives like the ISM, PLI, and SEMICON India, along with growing domestic demand and international partnerships. Improving infrastructure, technology, and skilled workforce will be essential for establishing India as a global centre for semiconductor manufacturing and design.
India is home to 20% of the global workforce involved in semiconductor design, with a rapidly growing technology sector and a robust domestic market. These factors create a favourable environment for developing a self-reliant semiconductor ecosystem in the country.
India faces challenges due to the absence of a well-established and integrated supply chain for the semiconductor industry. This includes limited access to essential raw materials, equipment, components, testing infrastructure, and a shortage of skilled professionals.
A recent research report highlighted that India’s semiconductor industry reached a value of USD 34.3 billion in 2023 and is projected to grow significantly, reaching USD 100.2 billion by 2032. This represents a strong compound annual growth rate (CAGR) of 20.1% over the 2023-2032 period.
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