Economic Survey: Chip access vital for strategic autonomy; India stepping up semiconductor push

FILE PHOTO: Illustration picture of semiconductor chips on a circuit board

• India launches Rs 76,000-crore scheme to boost domestic semiconductor ecosystem
• 10 chip manufacturing, packaging projects approved in 6 states by Aug 2025
• Scheme aims to cut import dependence and strengthen supply chain resilience

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In an era of tightening export controls and shifting geopolitical alignments, access to semiconductors has become central to economic competitiveness and strategic autonomy, the Economic Survey 2026 has said. Countries lacking domestic chip capacity face the risk of production disruptions and external constraints across critical sectors.

To reduce these vulnerabilities, India has launched a Rs 76,000-crore incentive framework under the India Semiconductor Mission (ISM) and the Semicon India programme, the survey released on January 29 said.

The scheme offers fiscal support of up to 50% of project costs for semiconductor and display fabrication plants, compound semiconductor units and assembly, testing, marking and packaging (ATMP) facilities. A dedicated Design Linked Incentive (DLI) scheme has also been introduced to strengthen indigenous chip design capabilities.

Microprocessors, though largely invisible in daily life, power essential systems ranging from energy grids and telecom networks to financial markets, healthcare infrastructure and transportation. The COVID-19 pandemic exposed the fragility of global semiconductor supply chains, with shortages affecting more than 169 industries worldwide and triggering price spikes and production delays.

The Survey notes that semiconductor design is among the most research-intensive industries globally, requiring years of multidisciplinary R&D, deep intellectual property capabilities and a highly skilled workforce. As a result, advanced chip design remains concentrated in a handful of nations, with the United States, South Korea, Taiwan and Japan accounting for nearly 80% of global integrated circuit design revenues.

Manufacturing presents even steeper barriers. A cutting-edge fabrication facility can cost around $10 billion, relying on nanometre-scale precision and highly specialised equipment supplied by a small group of companies across a few countries. The supply chain for wafer fabrication and testing equipment is similarly concentrated, dominated by the US, Japan and South Korea.

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Against this backdrop, India’s semiconductor push seeks to build an end-to-end domestic ecosystem spanning design, fabrication and packaging. As of August 2025, ten semiconductor manufacturing and packaging projects have been approved across six states, with cumulative proposed investments of around ₹1.6 lakh crore.

State governments are complementing the national effort with additional policy incentives and infrastructure support. As execution accelerates, the Survey suggests these measures will enhance supply chain resilience, reduce import dependence and position India as a credible participant in the global semiconductor value chain.