Explainer: How India's Ambitious Semiconductor Journey Is Taking Shape

As India begins its semiconductor electronics manufacturing journey amid Prime Minister Narendra Modi's "it is right time to be in India" call, the reformist government, a growing manufacturing base in Bharat, and a huge aspirational market can help realise the mega chip dream.

To begin with, about Rs 1.52 lakh crore (nearly $18 billion) worth of investments have come in India's semiconductor manufacturing space in a short span of time and several projects are already in the pipeline.

The construction of two semiconductor units is in full swing (Micron's plant in Gujarat and Tata Electronics' unit in Assam) and the work will soon commence on the three more units in the country.

According to industry experts, the country could receive up to $30 billion investment in the sector in the next three-four years which would further bolster its position in the global supply chain.

In March this year, PM Modi laid the foundation stone of three semiconductor projects worth Rs 1.25 lakh crore.

As per reports, India's semiconductor-related market will reach $64 billion in 2026, nearly triple the size in 2019. Towards achieving this goal, the 'Semicon India' initiative allows financial support for front-end fabrication units, display fabs, semiconductor packaging, compound semiconductors, sensors, and display manufacturing.

Semiconductors is a foundational industry. With the advent of artificial intelligence (AI), chips are being used in medical instruments, mobile phones, laptops, cars, trucks, trains, televisions and practically every device on earth India is a major consumer of chips and has built the world's best digital public infrastructure (DPI) on this chip.

This small chip is playing a significant role in ensuring last-mile delivery in Bharat. Whether it is the unified payments interface (UPI), RuPay card, Digi Locker, or Digi Yatra, various digital platforms have become part of everyday life. The demand for data centres in the country is continuously rising and these run on chips.

Experts say that by expanding production capacity, the country is poised to become a major player in the sector. National initiatives, such as the Semicon India Programme and the India Semiconductor Mission (ISM), are focused on capturing a significant share of the global market, driving innovation, and stimulating economic growth through job creation and technological advancement. The government is working on setting up a semiconductor research centre at the Indian Institute of Space Sciences, along with partnering with IITs so that engineers not only develop high-tech chips for today but also research next-gen chips.

In his speech, PM Modi said India has been elected Vice Chair of the Indo-Pacific Economic Framework's Supply Chain Council. The country is also a significant partner in the QUAD Semiconductor Supply Chain Initiative and has recently signed agreements with several countries including Japan and Singapore.

India is also continuously increasing its cooperation with the US in this sector. The first indigenously-developed chip is set to arrive in the country soon.

According to PM Modi, the country has the potential to fulfil the dream of developing a 'Made in India' chip for every piece of equipment. At the moment, the chip fabrication facility in Dholera, Gujarat, is being set up by Tata Electronics with an investment of over Rs 91,000 crore. The Semiconductor Assembly, Testing, Marking and Packaging (ATMP) facility in Morigaon, Assam is being set up by Tata Electronics for about Rs 27,000 crore. The Maharashtra government has approved a chip manufacturing project, to be jointly set up by Israel's Tower Semiconductor and the Adani Group. The project will be set up in Panvel in Raigad district with a proposed investment of Rs 58,763 crore in the first phase and another Rs 25,184 crore in the second phase, creating at least 15,000 jobs.

The Outsourced Semiconductor Assembly and Test (OSAT) facility in Sanand, Gujarat is being set up by CG Power and Industrial Solutions Ltd for about Rs 7,500 crore. The Cabinet has also approved the proposal of Kaynes Semicon to set up a semiconductor unit in Sanand, Gujarat, with an investment of Rs 3,300 crore that will produce nearly 60 lakh chips per day. The first chip plant in the country was the Rs 22,500 crore US-based Micron's semiconductor plant in Gujarat announced last year.
 

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