Introduction
Semiconductor chips are building blocks of electronic technology. They are the backbone of modern electronics, powering computers, mobile devices, telecommunications, automobiles, defence systems and artificial intelligence. The chip industry is a USD 500 billion business that is expected to grow to 1.3 trillion in less than 5 years. It is an R&D focussed industry and the global supply chain is highly specialised and concentrated in a few regions. India does not have any high-volume production chip manufacturing facilities (or fabs) and has been importing all its chips from Taiwan, South Korea and China. In response, India launched the Semicon India Programme (2021) and later expanded it into India’s Semiconductor Mission 2.0, which signals the broader vision of Aatmanirbhar Bharat due to which the domestic chip market is witnessing rapid growth. A provision of Rs. 1,000 crores has been made for ISM 2.0 for FY 2026–27.
To address domestic chip manufacturing capabilities, India has approved fiscal support of 50% for Silicon Semiconductor Fabs, Display Fabs, Compound Semiconductors / Silicon Photonics / Sensors (including MEMS) Fabs, Semiconductor Packaging (ATMP / OSAT) and Semiconductor Design. Design Linked Incentive scheme supports chip design startups and MSMEs through R&D support and incentives of up to Rs.15 crore per company. Under DLI, 23 chip design projects have been sanctioned and to date, 10 projects worth over ₹1.60 lakh crore have been cleared across Gujarat, Assam, Uttar Pradesh, Punjab, Odisha, and Andhra Pradesh.
Analysis of Findings
1) The ‘Vikram’ chip: In September 2025, ISRO’s Semiconductor Lab in Mohali unveiled India’s first fully indigenous 32-bit microprocessor, named ‘Vikram’. It’s designed to survive the harsh conditions of space launches.
2) Microprocessor Development Programme (MDP): India aims to build sovereign capabilities in advanced processor design to improve efficiency and modern digital infrastructure. It has launched DHRUV64, a fully indigenous 64-bit microprocessor developed by C-DAC. This provides India a chance to reduce imports and increase long-term self-dependence.
3) The supply chain hole: A chip needs hundreds of supporting components including resistors, capacitors, PCBs, specialty chemicals, ultra-pure gases. India currently makes almost none of these domestically. Value addition in electronics stands at a paltry 3–5%. The newly launched Electronics Component Manufacturing Scheme (with ₹22,919 crore) aims to lift that to 15–20% over three to five years.
4) Semiconductor Talent Pipeline: India is focusing on building a skilled work force under the comprehensive approach for designing, manufacturing and advanced packaging of domestic chip production. The development for Semiconductor Talent Pipeline includes Chips to Start up Programme, Academic Programmes under All India Council for Technical Education (AICTE), SMART Lab at NIELIT Calicut, Industry Partnership with Lam Research, and FutureSkills PRIME Programme.
5) Collaboration with ASML: Tata Electronics, a pioneering leader in India’s electronics and semiconductor manufacturing sector, and ASML, one of the world’s leading semiconductor equipment manufacturing companies, in May 2026, announced the signing of a Memorandum of Understanding (MoU) to advance the semiconductor manufacturing ecosystem in India. Through this partnership, ASML will enable the establishment and successful ramp of Tata Electronics’ upcoming 300 mm (12 inch) semiconductor fab in Dholera, Gujarat.
Recommendations
1) Technological Advancements
India should focus on satisfying the three criteria of lithography which are: resolution, accuracy and productivity. It should set up a separate Research Centres to develop varied subsystems. Various projects have been set up in different states for semiconductor manufacturing, like 3D Glass Solutions Inc and SiCSem Private Limited, which are establishing semiconductor manufacturing facilities in Odisha, Continental Device India Private Limited which is expanding its semiconductor manufacturing in Punjab and Advanced System in Package Technologies Private Limited which is doing the same in Andhra Pradesh. Hence, research centres dedicated especially for chip production will similarly increase India’s self-dependency.
2) Advanced Fabs
India should focus on setting up deeper technologically advanced fabs i.e. chip making factories, and perhaps a dedicated sovereign chip fund. Currently, the semiconductor fabs scheme provides up to 50% fiscal support for setting up semiconductor wafer fabrication units, covering advanced and mature technology nodes. Other schemes like display fabs scheme, compound semiconductors and ATMP/OSAT scheme, and design linked incentive scheme supports compound semiconductor and chip assembly.
3) Fixation of power & water
States should offer high-quality renewable electricity and ultra-pure water because fabs require energy 24×7. Without that, even the best fiscal policy will fail.
4) Collaboration with Semiconductor Chip Producers
India must collaborate with other semiconductor chip producers just as it did with ASML. This will help India in building a stronger base in the lithographic technology and improve its chip production.
Conclusion
The India Semiconductor Mission 1.0 marked the beginning of India’s self-reliance journey in the semiconductor industry. ISM 2.0 extended it further with the aim of moving India from policy ambition to visible action. The ISM 2.0 policies lay a foundation for the development of digital infrastructure for the production of semiconductor chips, fabs and innovation. This mission anchors India’s long-term ambition to be among the world’s leading semiconductor nations in the coming decade. It aims towards the integration of supply chains and focuses on design, start-up and partnership.
By 2029, India is expected to achieve the capability to design and manufacture chips required for nearly 70–75 per cent of domestic applications. Advancing on this foundation, the next phase under Semicon 2.0 will focus on advanced manufacturing, with a clearly defined roadmap to achieve 3-nanometre and 2-nanometre technology nodes. By 2035, India aims to be among the top semiconductor nations globally.
References
PIB Delhi. (2026, February 7). *India Semiconductor Mission 2.0: A major push in budget 2026 towards semiconductor self-reliance*. Press Information Bureau, Government of India.
https://www.pib.gov.in/PressReleasePage.aspx?PRID=2224839®=3&lang=1[reference:0]
PIB Delhi. (2025, April 2). Government of India spurs chip manufacturing with fiscal support, global MoUs and talent development initiatives. Press Information Bureau, Government of India.
https://www.pib.gov.in/PressReleasePage.aspx?PRID=2117925®=3&lang=2[reference:1]
India Semiconductor Mission. (2025, October 7). Vision & objectives. Government of India.
https://www.ism.gov.in/vision-and-objectives[reference:2]
PRS Legislative Research. (n.d.). Science & technology policy brief: Semiconductor chip manufacturing. Retrieved May 14, 2026, from https://prsindia.org/policy/science-technology-brief/science-technology-policy-brief-semiconductor-chip-manufacturing
Economic Times. (2025, September 2). Ashwini Vaishnaw unveils first ‘Made in Bharat’ chip at Semicon India 2025. ET Manufacturing. https://manufacturing.economictimes.indiatimes.com/news/hi-tech/ashwini-vaishnaw-unveils-first-made-in-bharat-chip-at-semicon-india-2025/123649563
India Brand Equity Foundation. (2024, October). India’s semiconductor push: Building a robust chip manufacturing ecosystem. IBEF. Retrieved May 14, 2026, from https://www.ibef.org/research/case-study/india-s-semiconductor-push-building-a-robust-chip-manufacturing-ecosystem
ASML. (2026, May 16). Tata Electronics and ASML announce a strategic partnership to advance the semiconductor manufacturing ecosystem in India [Press release]. https://www.asml.com/en/news/press-releases/2026/tata-electronics-and-asml-announce-strategic-partnership
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