Semiconductor microchips are foundational components for consumer electronics, automobiles, defense systems, and telecommunications. India aims to develop domestic semiconductor manufacturing to reduce import dependence, enhance national technological sovereignty, and support an electronics market projected to reach $100 billion by 2030.

Challenges Faced by the Semiconductor Industry in India

• High Capital Expenditure and Gestation Periods: Establishing an advanced commercial semiconductor fabrication plant requires $10–$20 billion in upfront capital investment, alongside high ongoing maintenance costs, as illustrated by the Tata Electronics-Powerchip fab at Dholera.
• Resource Requirements (Ultra-Pure Water and Uninterrupted Power): A commercial fab consumes millions of liters of ultra-pure water daily and requires continuous, surge-free electric power, which requires specialized local utility infrastructure.
• Specialized Engineering Talent Deficits: While India accounts for roughly 20% of global chip design engineers, it lacks sufficient engineers trained in cleanroom operations, chemical vapor deposition, and yield optimization.
• Supply Chain and Chemical Dependencies: Relies on an imported supply chain of photoresists, specialty gases, silicon ingots, and lithography tools (e.g., ASML machines), leaving domestic fabs vulnerable to international export controls.
• Global Subsidy Competition: Competing against established chipmaking hubs (Taiwan, South Korea, the US with its $52B CHIPS Act, and Japan) that offer established component ecosystems and large incentive packages.

Salient Features of the India Semiconductor Mission (ISM)

• Comprehensive Policy and Financial Outlay: Launched in 2021 with a dedicated budgetary allocation of ₹76,000 crore to support the development of a domestic semiconductor and display ecosystem.
• Fiscal Support Across Core Segments: Offers financial assistance covering up to 50% of the project cost on an equal-share basis for establishing Silicon Fab units, Display Fabs, Compound Semiconductor units, and Out-sourced Semiconductor Assembly and Test (OSAT) / ATMP facilities.
• Design-Linked Incentive (DLI) Scheme: Provides financial incentives and access to Electronic Design Automation (EDA) software tools to support homegrown fabless startups working on semiconductor design.
• Specialized Institutional Governance: Managed as an independent business division within Digital India Corporation, led by industry specialists to conduct technical reviews and streamline approvals.
• Approved Project Pipeline: Advanced major manufacturing approvals across states, including the Tata Electronics-PSMC commercial fab in Dholera (Gujarat) and advanced packaging facilities by Micron and CG Power.
• Workforce and R&D Integration: Upgrading curriculum in over 300 engineering universities and partnering with institutions like IISc and IITs to train semiconductor technicians.
• Modernizing the Semi-Conductor Laboratory (SCL): Modernizing the SCL facility at Mohali to support domestic R&D and defense semiconductor fabrication requirements.

Developing semiconductor manufacturing requires sustained policy support, high-quality infrastructure, and deep industry-academia partnerships. The India Semiconductor Mission provides the framework to position India within global technology supply chains.