How we are building India’s semiconductor ecosystem

Semiconductors is a foundational industry. That means the output of the semiconductor units then powers other industries.Chips are now an integral part of almost all devices that we see around us, like cars, mobile phones, drones, aeroplanes, MRI machines, etc.The global electronics industry is estimated to be $4.3 trillion. And it is growing rapidly.Semiconductor chips are some of the most complex objects ever produced by the human race. Apple's A19 Bionic chip is 3 nm and one chip has roughly 30 billion transistors.

During the COVID pandemic the world realized the importance of chips and the global supply chain. Countries around the world have been trying to develop their semiconductor industries for decades. COVID gave them a big push.

India’s attempts at building semiconductor ecosystem:

India has been trying to build a semiconductor ecosystem as far back as 1960. Fairchild Semiconductor, one of the earliest chip companies in the world, explored setting it up in India.However the socialist economic planning and "production quotas" made them run away.Similar half-hearted efforts continued in the later decades, without success.There was a renewed push for semiconductors in the early 2010s. However the strategy and execution fell short of the intent. There were cases of semiconductor companies shipping their equipment to India only for customs to send it back.Things started to change after PM Modi took charge.

India’s success in electronics manufacturing:

PM Modi launched Make in India. There were a series of reforms in terms of allowing foreign direct investment taxation reforms, customs duty reforms, etc.In addition, the government launched multiple schemes to support manufacturing. These schemes incentivized manufacturing mobile phones and other electronics in India. Slowly, global electronics and mobile companies started their operations in India.

Today almost all electronics companies have a presence in India. We have more than 300 electronics manufacturing units. Electronics manufacturing has crossed $130 billion and exports have crossed $48 billion. Mobile phones are the single largest exported item crossing petroleum products and gems and jewellery.Electronics manufacturing now supports 2.5 million jobs!

Semicon India program:

Building on the success of electronics manufacturing, we brought out the Semicon India program in 2021.Since its early days we were clear about our strategy. We wanted to build a robust semiconductor ecosystem rather than running after vanity projects.We studied the development of the electronics industry around the world. We spoke to virtually every industry in this field. There was a lot of scepticism and even pessimism. We faced questions like:

"Does India really want to do it?"

"Do you know how hard it is to build clean rooms?"

“Do you know what ultrapure water is?”

“Do you know what lithography machines are?”

You would smile, take notes, and find your strategy.While developed countries were spending hundreds of billions of dollars on semiconductors, we were conscious of our realities.We started with a moderate $10 billion program to support setting up of Fabs and packaging units.

Success so far:

After initial skepticism we started getting a good response from the industry. In a span of 5 years we approved 12 units with cumulative investment of $20 billion.

It is immensely satisfying that three of those units have started commercial production today.

Micron started commercial production on 28 Feb 2026.Kaynes started commercial production on 31st March 2026. CG Power started commercial production on 4th July 2026.

Construction is going on at a torrid pace in other units.

Our success is not only in terms of how many plants and how much investment. We have been able to build the foundations of the semiconductor industry in this country.

Chip design in India:

Semiconductor industry requires specialized skills at every level. Some of the most complex tasks take place at the design level itself. We took a target of developing a pool of 85,000 skilled engineers in 10 years.We introduced new semiconductor-related courses and changed the curriculum.We started a program called Chips to Startup, in which we offered the EDA tools to our young engineers. Till date we have offered these tools to more than 320 universities and startups.During the last Semicon India event we presented 40 chips designed by Indian students using these tools to the Prime Minister.

Today almost all semiconductor design companies have large bases in India. Indian chip designers are designing some of the most advanced chips, at 2 nm and 3 nmprocess nodes.Under the Design Link Incentive scheme, we supported 105 startups. We gave financial support to 24 startups to the tune of $83 million. Fifteen of those startups have received VC funding to the tune of $118.5 million.

Industry taking note:

The semiconductor industry took note of this development and began actively exploring India for investments. Beyond the Semicon program global companies are investing more than $3 billion.

The conversations around boardrooms and economic forums have now changed. They are no longer sceptical but curiously optimistic.

Semicon 2.0:

Building upon the foundation we recently announced Semicon 2.0.

We will now focus on following pillars:

1. Chip design: We will expand the chip design ecosystem in India. We will focus on the 6 building blocks i.e. compute, memory, RF, power, networking, and sensors.

2. Machines: we will incentivise domesticmanufacturing of equipment needed for semiconductor manufacturing. If you think manufacturing chips is complex, imagine the equipment that manufactures those chips!

3. Materials: semiconductor manufacturing requires between 150 to 500 specialty chemicals, gases, and materials. We will support domestic manufacturing of these items.

4. Fabs: India currently is developing two fabs. First we will support the setting up of more fabs.

5. Packaging: packaging is an important part of the semiconductor ecosystem and we will continue to support it. Focus will be on advanced packaging.

6. Research: we now have 40 nm technology in India. First of all we will work on a clear strategy to get advanced nodes, that is, 7 to 3 nm, within the next 8 years.

7. Talent: we will now train 1 lakh design engineers in the coming years. Just like the IT sector, we want India to become the semiconductor design capital of the world.

Proving critics wrong:

India Semiconductor program has been criticized by many on both counts for doing too little or spending too much.

Building the semiconductor industry is like catering to a mango tree. A full-grown mango tree needs no tending, thrives on its own and gives hundreds of mangoes per year. That does not mean the sapling doesn't need attention.

A farmer cares for a mango sapling, gives it water, gives it fertilizer, and protects it. That's not misplaced priorities. While there may be hundreds of mango trees around in the world, it doesn't mean an Indian farmer should not grow one.

But you know, he does what he does!

Another criticism is that the world is moving to 5 nm, 3 nm, 2 nm, and we are still stuck at the legacy nodes. While the criticism is understandable, it is simplistic.One must learn to walk before sprinting in a full marathon.The countries which are developing 2 nm technology have many decades long journey. Ours is just 5 years old. Nonetheless you're just getting started. Tune in for more updates!