India aims to become a semiconductor manufacturing hub. What are the challenges faced by the semiconductor industry in India ?…

India’s push to become a semiconductor hub is strategic for digital sovereignty, defence and green-tech supply chains, but the industry faces structural constraints. Challenges: Fab construction is highly capital intensive, with advanced facilities costing $5–10 billion, and long gestation periods deter private investment. India lacks a complete ecosystem: fab-grade silicon wafer manufacturing, specialty chemicals, gases and raw materials are largely imported. Skilled talent in chip design, process engineering and fabrication is scarce, while power and water reliability remain uneven. Geopolitical technology denial regimes restrict access to advanced lithography and IP, and fragmented global supply chains expose India to bottlenecks. R&D spending is also limited compared with global leaders.

India Semiconductor Mission: Launched under the Semicon India Programme, the $10 billion mission offers fiscal support up to 50% of project cost for silicon and display fabs, and also up to 50% for ATMP/OSAT, compound semiconductors, silicon photonics, sensors and discrete semiconductors; design-linked incentives for design companies are separate. It establishes the India Semiconductor Research Centre, prioritises mature-node (28nm+) manufacturing initially, and promotes state partnerships in Gujarat, Tamil Nadu and Assam. The mission integrates design, fabrication, packaging and testing. Recent approvals and state-level proposals include Micron’s ATMP unit (Assembly, Testing, Marking and Packaging) in Gujarat, CG Power-Renesas-Stars Microelectronics in Gujarat, Tata-PSMC in Gujarat, Tata OSAT in Assam, HCL-Foxconn in Uttar Pradesh and SiCSem (silicon carbide) in Odisha.

The first indigenous chips, such as the ISRO–SCL Vikram processor shown at Semicon India 2025, and pilot-line output from OSAT units mark early progress. With sustained power, water, skills and IP support, India can convert mission incentives into a resilient semiconductor value chain.