India Semiconductor Mission from Assembly Hub to Powerhouse
India Semiconductor Mission | India’s vision of building a $5 trillion economy depends on developing a world-class digital infrastructure. From 5G networks and electric vehicles to defence electronics and AI computing, semiconductor chips are central to achieving this goal. However, recent global shortages have disrupted supply chains, automotive production lines, telecom rollouts, and electronics manufacturing.
What’s more, this scenario is expected to continue until 2027 as several countries look to set up data centres. As tens of billions of dollars are poured into data centre infrastructure, the demand for memory chips has gone through the roof, sparking an unprecedented price rise for semiconductors.
Recognising this vulnerability, India has repositioned semiconductors from an emerging manufacturing segment to a national priority. The India Semiconductor Mission (ISM) is a well-structured plan targeting backend assembly and design services to build an integrated manufacturing capability. With the global semiconductor revenue exceeding $600 billion and poised to reach $1 trillion, robust supply chain resilience and domestic capacity are important for economic strategy. Therefore, India’s semiconductor roadmap is no longer aspirational; it is structural.
From Design Strength to Manufacturing Depth
The domestic semiconductor market was valued at about $38 billion in 2023 and projected to reach around $109 billion by 2030, driven by demand from smartphones, automotive electronics, industrial automation, and data centres.
India’s strongest foothold in the global semiconductor value chain has historically been in design services. Nearly 20% of the world’s semiconductor design engineers are based in the country, contributing to chip architecture, verification, embedded software, and system-on-chip (SoC) development for global technology firms.
In parallel, India has emerged as a preferred destination for back-end Assembly, Testing, Marking and Packaging (ATMP). With evolving policy support, the country is now stepping into front-end manufacturing — a move that carries strategic weight in the context of global supply chain diversification. A stable political environment, an expanding domestic market, and a strong engineering talent pool make it attractive for greenfield semiconductor investments. Yet, value capture has largely remained concentrated in ATMP operations, embedded firmware development, and design support services.
The strategic gap lies in limited domestic ownership of semiconductor intellectual property, inadequate wafer fabrication capacity, and a fragmented packaging ecosystem.
India’s next phase focuses on strengthening:
- Indigenous chip design start-ups
- Automotive-grade microcontrollers and power semiconductors
- Compound semiconductors and sensor technologies
- Globally competitive advanced packaging capabilities
India Semiconductor Mission: Building a Full-Stack Ecosystem
The launch of the India Semiconductor Mission (ISM) in 2021 marked the country’s first structured attempt to build a comprehensive semiconductor ecosystem. With an incentive outlay of ₹76,000 crore, ISM aimed to catalyse investment across:
- Semiconductor fabrication units (fabs)
- ATMP facilities
- Display manufacturing
- Design-Linked Incentive schemes ((DLI)
The mission provided regulatory clarity and targeted support for compound semiconductor facilities, chip design, and assembly units. To date, 10 projects have received approval, laying the foundation for a more resilient domestic semiconductor ecosystem. The projects are focused on technologies such as ATMP (memory packaging), greenfield semiconductor fab (logic/power), OSAT, display driver chips, Silicon Carbide (SiC) fab, Glass substrate, Discrete / legacy chips, and Advanced SiP & system-in-package.
ISM 2.0 broadens the roadmap to include semiconductor equipment manufacturing, materials production, and the development of full-stack Indian intellectual property (IP).
Key focus areas under ISM 2.0 include:
- Enhanced capital incentives for semiconductor and display manufacturers.
- Strengthened Design-Linked Incentive (DLI) schemes for chip manufacturing startups.
- Support for compound semiconductors aligned with EV and renewable energy sectors.
- R&D funding for prototyping and silicon validation infrastructure.
- Industry–academia partnerships to bridge skill gaps.
The mission now moves beyond assembly incentives toward deeper technological ownership. By 2030, India aims to manufacture chips catering to 70–75% of domestic demand. The long-term ambition includes participation in advanced technology nodes, positioning India among the leading semiconductor nations by 2035.
Strategic Focus: Where India Can Compete
Rather than focusing immediately on bleeding-edge 3nm or 5nm nodes, India’s pragmatic growth path lies in mature nodes (16–28nm and above), which dominate automotive, industrial, and power-electronics applications.
Automotive & EV Electronics – With rapid EV adoption, demand for microcontrollers, battery management systems, power management ICs, and silicon carbide (SiC) devices is surging. Automotive-grade chips represent a strategic entry point for India.
Industrial IoT & Smart Infrastructure – Smart cities, logistics networks, and utility modernisation are driving demand for application-specific integrated circuits (ASICs), sensors, and edge computing units.
Telecommunications & 5G/6G Hardware – India’s telecom expansion creates opportunities in RF components, embedded communication modules, and network processors.
Critical Challenges and Mitigation
While ISM 2.0 reflects policy recalibration in response to global competition, the concentration of advanced chip technologies remains with a limited number of players. Countries with established semiconductor ecosystems are offering aggressive incentives, making it necessary for India to refine its approach. Certain challenges stand out for India and need immediate mediation.
Technology Gap – India faces a significant technology gap in semiconductor fabrication, design, and manufacturing processes due to limited R&D, insufficient innovation, and inadequate technology transfer mechanisms.
However, supported by policy incentives, industry-led public-private consortia are advancing R&D by focusing on areas such as chip design, process technologies, and system integration. On this journey, India’s globally recognised software prowess is supporting the development of indigenous software tools tailored to semiconductor design.
Skilled workforce – The industry is highly specialised and requires a skilled workforce. However, there is a shortage of trained professionals and labour.
Leading institutions are now scaling their educational courses specifically for the semiconductor industry. Certification programmes focused on design, engineering and manufacturing help professionals to upgrade their skills. Industry-academia collaborations are on the rise, facilitating on-the-job training.
Financial constraints – The industry requires high capital investment, particularly for setting up fabrication plants and related infrastructure. The problem is exacerbated by high upfront costs and a long gestation period before returns are realised.
The government is creating an ecosystem to enable public-private partnerships to reduce capital risk. Additionally, incentives and tax breaks are being provided to facilitate easy access to loans. However, more needs to be done to attract FDI through diverse financial models to achieve equity participation and co-financing of projects.
Cybersecurity & IP risks – Semiconductor manufacturing entails sensitive intellectual property (IP), including cutting-edge designs and technologies. As India’s semiconductor industry expands, cybersecurity risk and IP theft can be concerning.
India is still in the process of strengthening its cybersecurity, including investing in secure networks, encrypting sensitive data, and setting up monitoring systems to detect potential threats. The nation needs to set up a national cybersecurity framework with stringent protocols for access control, data encryption, and threat monitoring, especially for semiconductor fabs. India also needs to enact IP protection laws for the semiconductor industry to safeguard innovation. This would provide the industry with legal backing to secure its proprietary designs and processes from unauthorised access.
Embedded Tech Expo: Showcase of the Evolving Ecosystem
As India’s semiconductor journey accelerates, industry forums are becoming crucial catalysts for ecosystem development.
The Embedded Tech Expo, hosted under the 33rd Convergence India Expo, is a dedicated platform for semiconductors, embedded systems, electronics manufacturing and next-generation hardware technologies. The expo convenes chip designers, ATMP players, EDA providers, electronics manufacturers, and system integrators — reflecting the sector’s transition from assembly-led growth to design-centric capability building.
It plays a catalytic role in advancing ISM’s goals by enabling cross-border collaborations, promoting research commercialisation, enhancing skill development, and showcasing India’s growing potential in the global semiconductor value chain.
About Convergence India Expo:
The Convergence India 2026 series, scheduled from 23–25 March at Bharat Mandapam, New Delhi, continues to play a central role in India’s digital evolution. The platform fosters dialogue and collaboration across ICT, IoT, Artificial Intelligence, telecom, embedded technology, electronics manufacturing, and smart mobility, supporting India’s expanding digital and electronics landscape.
