In less than 36 months, five semiconductor projects have been approved for central and state government incentives. These include four chip packaging plants and one chip fabrication unit, all in various stages of construction, expected to be operational between 2025 and 2027.
As the first phase of ISM concludes, experts are urging the second phase of the project which is expected to be launched soon to focus on forging partnerships with global semiconductor leaders, expanding the ecosystem for raw materials like chemicals and gases, and intensifying efforts to develop skilled talent for the growing industry.
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Following the greenlight for a $2.75 billion assembly, testing, marking, and packaging (ATMP) unit by Micron, domestic heavyweights like the Tata Group, Murugappa Group, and Kaynes Semicon have stepped into the semiconductor arena with proposals for manufacturing and assembly units.
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The involvement of domestic companies, such as Tata Electronics, CG Power, and Kaynes Technology, signals to global players that India’s semiconductor ecosystem is open for business, said Pankaj Mohindroo, Chairman of the India Cellular and Electronics Association.
“We’ve laid the groundwork for semiconductor manufacturing. This is a great start, but it’s only the beginning of a long journey,” Mohindroo noted.
Nivruti Rai, managing director and CEO of Invest India, said that joint ventures with global and domestic partners can help overcome capital expenditure barriers and facilitate technology transfers.
“Creating favourable conditions for niche technologies like MEMS and sensors will drive innovation. India’s focus isn’t just on scaling fabs but also on building a cost-competitive, robust ecosystem,”
Rai further emphasised the importance of supporting local suppliers of raw materials, such as chemicals and gases, through adequate capital aid to enable them to compete globally.
Government support needed
Mohindroo also suggested that indigenous product design and IP development need direct government support to empower smaller companies and startups to compete on a global scale. “Investments in EDA tools, IP libraries, and R&D incentives are crucial for developing India’s own semiconductor design capabilities,” he added.
Initial discussions within government circles hint at longer incentive periods and additional benefits, such as long-term low-interest-rate loans, in the upcoming phase of the ISM.
Building a holistic semiconductor ecosystem will also involve nurturing the full supply chain, including tools critical for manufacturing, sub-assemblies, and components, Mohindroo stressed.
Shashwath TR, co-founder of Mindgrove Technologies, highlighted that the success of the new mega-plants in the Sanand-Dholera belt will depend on the emergence of ancillary plants to support them.
“Phase two should offer support for this ecosystem,” he said.
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L&T Semiconductor CEO Sandeep Kumar suggested that India should focus on scaling up production volume rather than only targeting high-value semiconductor products.
Competing with established global giants like Nvidia and Intel will require not only technological innovation but also strong infrastructure, sales, and branding.
“The challenge isn’t just creating superior products. It’s about the entire ecosystem — sales, branding, and customer trust—that the established players possess,” Kumar explained.
Experts also emphasized the need for a skilled workforce. Ajit Manocha, global semiconductor body SEMI president, pointed out that India’s large, English-speaking population will make it easier to train and re-skill graduates in semiconductor technologies.
Workforce development programs, scholarships, and partnerships between industry, academia, and government will be key to closing the talent gap, Mohindroo added.
