Semiconductor chips are going to change life of every human being in near future, direct or indirect. As of now, this topic is quite important to most of the exam point of view being associated with the growth of the country. Therefore, today we’ll try to understand, what is going to change in India & How?
The semiconductor ecosystem in India has been rapidly changing in recent years. Government policies, global business partnerships, and promising domestic design startups have combined to make the country an attractive destination for chip manufacturing and design. The India Semiconductor Mission (a government initiative) and industry partnerships are key drivers of this change.
Market Size and Projections:
According to global estimates, India's semiconductor market is estimated to be approximately $38 billion in 2023; it is projected to reach between $45–50 billion in 2024–25 and exceed $100–110 billion by 2030.
While estimates vary slightly across market research reports (e.g., some report $45 billion for 2025, while others report different CAGRs), the trend is clear: rapid growth and high CAGR projections.
Analysis: Current domestic demand (particularly mobile, auto electronics, power/Internet of Things) and the diversification of global supply chains are driving rapid investment in India. (The above data is compiled from a combination of government press notes and market reports).
Government Policies and Incentives:
- India Semiconductor Mission (ISM)- Financial support and packages for chip fabs, OSAT/ATMP, design, and materials/equipment; share of project cost for fab projects (subject to availability).
- PLI and other schemes - Schemes such as the Production Linked Incentive have been providing subsidies/disbursements to electronics manufacturing and related sectors, supporting the industry.
Policy Analysis: Fabrication (fab) is capital-intensive; therefore, government funding and local ecosystem (infrastructure, water, power, skills) are crucial. Initiatives like ISM have been effective in attracting investment, but continuous follow-up and cluster development are needed for supply chains and relevant manufacturing categories (e.g., silicon carbide, display driver ICs).
Key Projects and Investments:
Vedanta Limited and its partners have signed MoUs for major display and semiconductor investments in Gujarat—estimated investments are substantial (approximately ₹1.54 lakh crore combined for display and semiconductor). This signals significant cluster and fab investment at the state level.
India Chip Private Limited, a joint venture between HCL and Foxconn, has announced plans to set up a display-driver/OSAT unit in Noida; this is seen as a major step to reduce domestic DDIC supply and increase skilled labor/OSAT capacity. HCL Technologies
Government Approvals: Several new semiconductor projects were approved during 2025-the total number of approved projects and the scale of investments are increasing (e.g., four more projects were approved in August 2025, bringing the total number to ~10 and total investments to billions of dollars).
Conclusion: Large-scale investments (like Vedanta/India Chip) indicate that India will not be limited to assembly/assembly but is also exploring participation in next-generation OSAT/display and some fab categories.
Supply-Chain Challenges and Risks:
- High Capital Requirements: Clean rooms, equipment, and process technology require significant capital investment—hence, foreign partnering/technology transfer is crucial.
- Raw Materials/Equipment Imports: Many equipment and some materials are still import-dependent—‘all-chain’ self-reliance is a long-term goal.
- Skilled labor and R&D: Relevant engineering/PhD/process skills are needed - design in-house and testing/OSAT capacity must be expanded.
Practical suggestion for policymakers and investors:
- Accelerate cluster-based development (including power/water/logistics) to ensure affordable and reliable infrastructure for fabs.
- Initial focus on OSAT and ATMP: It would be prudent to accelerate lower-end projects such as OSAT/ATMP and display-driver/power/SiC before developing full-stack logic chip fabs. (Projects like Vedanta and India Chip point in this direction.)
- Incentivize local design and equipment manufacturing (Design Linked Incentive, R&D grants)-A strong design ecosystem will enhance manufacturing value-add.
Key Takeaways:
- India's semiconductor market is growing rapidly—from $45–50 billion (2024–25) to $100 billion+ (2030 projections).
- Government policies like ISM and PLI are attracting investment; some large domestic-global projects (Vedanta-Foxconn, HCL+Foxconn/India Chip) are showing groundbreaking momentum.
- Challenges include capital intensity, skills gaps, and dependence on technologies from a few generations (advanced nanometers)—so a phased and cluster-first strategy is logical.
Reference taken from:
Press Information Bureau, The Economic Times, Indian School of Mines, CMO Gujrat, Indian Briefing, ORF Online, China Briefing etc.
