India must rapidly expand its semiconductor fabrication capacity and sustain long-term policy support to build a globally competitive chip ecosystem, the country’s top electronics industry bodies have said, calling for speeding up of infrastructure and incentives to keep pace with global momentum.
India Electronics and Semiconductor Association (IESA) and Semiconductor Equipment and Materials International (SEMI) India chairman Ashok Chandak said several global players are exploring direct investments or partnerships across the semiconductor equipment and supply-chain landscape.
“A single standalone fab may not be sustainable, and more fabs are needed for a competitive ecosystem, along with a thriving OSAT ecosystem. You need a surrounding ecosystem of materials, gases, chemicals, equipment, logistics, packaging, etc. Without multiple fabs, it’s hard for this support ecosystem to survive, let alone thrive,” Chandak told Moneycontrol in an interview.
While the government recognises this gap, India remains at a disadvantage due to a lack of materials, processes, and technology expertise compared to global leaders.
“We lack materials, processes, equipment, and technologies. We are late. We're behind countries like the US, Singapore, Korea, Japan, China, and Taiwan. That’s why additional handholding is needed, and the government understands that,” he said.
IESA is the leading industry body promoting India's semiconductor and electronics manufacturing ecosystem through policy advocacy and ecosystem development. SEMI India is focused on integrating India into the global semiconductor supply chain and supporting local manufacturing, packaging, and equipment players.
Forging the way forward
India allocated Rs 76,000 crore under the Semicon India programme, which is now set for an expansion through Semicon India Programme 2.0. “It is expected soon since most of the amount has been allocated for several projects… obviously, more needs to be done,” he said.
Approved in 2021, Semicon India aims to develop a sustainable semiconductor and display ecosystem to position India as a vital player in global supply chain.
Chandak underlined that semiconductors require long-term investment and sustained efforts. “Any single fab will need $5–10 billion, depending on technology. All major countries took decades to build their semiconductor ecosystems. India will require similar sustained efforts for decades.”
India has six semiconductor projects in the works, spanning fabs, Outsourced Semiconductor Assembly and Test (OSAT) units and Assembly, Testing, Marking, and Packaging (ATMP) facility.
Micron began work on an ATMP facility in Sanand in June 2023 with a Rs 22,516-crore investment.
In February 2024, Tata Electronics, in partnership with Taiwan’s PSMC, received approval for a fab in Dholera, Gujarat, with a Rs 91,000-crore outlay.
CG Power, Tata, and Kaynes Semicon are setting up OSAT plants. Most recently, in May 2025, an HCL-Foxconn joint venture received the green light to build a fab in Jewar, Uttar Pradesh.
Given the lower capital requirement and quicker timelines, Chandak said OSAT and ATMP projects are gaining traction.
“Compared to $5–10 billion for a fab, OSATs can start from $50 million and scale up to $500 million. Business turnaround is also faster. OSATs can be operational in one–two years, whereas fabs take 3–4 years. That’s why we’re seeing more OSAT proposals. It’s a lower-risk, more viable business model,” he said.
Chip (ping)-in
India is also exploring advanced packaging R&D. The global semiconductor market, valued at $650 billion, is expected to surpass $1 trillion by 2030, presenting a significant opportunity for India.
“There is an incremental demand which is coming up, which has to be met by somebody for both fabs and OSATs. That’s where India has the opportunity because of the existing plants, which will be operational soon,” Chandak added.
India’s domestic chip demand is projected to hit $103 billion by 2030, IESA estimates. This growth opens up room for both fab and OSAT investments. Chandak stressed that the role of state governments would be crucial to success.
“State governments have also been very proactive. Many have announced their own policies, providing support beyond what the Centre is offering. It’s not just about financial incentives — it also signals their commitment to ease of doing business. The states’ involvement is crucial to ensure that setting up and operationalising these projects is smooth and efficient,” he said.
On the design side, the government has also updated the Rs 1,000-crore Design Linked Incentive (DLI) Scheme, which supports domestic companies, startups, and MSMEs in semiconductor design.
“The DLI scheme encourages startups which are working on the fabless established model. There were a few challenges. Some of those are already taken care of, including the criteria for funding and reimbursement. For example, startups struggled with upfront capital because reimbursement only came after development. Now, the process allows for staggered reimbursements as development progresses, which eases the burden,” Chandak said.
As of July 30, Rs 803 crore worth of projects, including for Electronic Design Automation (EDA) tools, have been approved under DLI and are at various stages of development, minister for state for electronics and IT Jitin Prasada has told the Lok Sabha. Funds are released based on defined milestones such as chip deployment.
Prasada also said changes to the scheme would be made based on evolving needs and industry feedback.
Since its launch in December 2021, 278 academic institutions and 72 startups have been approved for access to EDA tools. Twenty-three startups or firms have received funding to design chips for surveillance, energy metering, networking and microprocessor IPs, among others.
On the inclusion of multinationals in DLI, Chandak said it is being considered but with clear safeguards.
“Otherwise, there's no reason for Indian taxpayers to fund it. So yes, the idea is being considered, but with conditions. Startups remain critical because product creation and ownership help retain economic value within India,” he said.
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