There is a moment in every industrial revolution when a country stops asking “can we?” and starts asking “how fast?”
India crossed that line the day it put a rupee figure — over ₹76,000 crore — behind a single sentence: the nation will
make its own chips. Not someday. Now. What follows is not a story of certainty, but of a country wagering its
industrial future on silicon, learning in real time what it takes to turn intent into an ecosystem.
The Great Initiative:
The India Semiconductor Mission (ISM) is, by any measure, the most ambitious industrial bet India has placed since
liberalization. Launched in December 2021 and expanded through ISM 2.0, it is designed to do something no single
scheme has attempted before: build an entire value chain — fabs, OSAT and ATMP packaging units, compound
semiconductors, chip design — inside one national program, backed by fiscal support of up to 50% of project cost at
the Centre level, layered with matching state incentives.
This is not a subsidy for a factory. It is an attempt to manufacture an industry from scratch, in a country that, until
recently, had never fabricated a commercial chip. The scale of ambition alone deserves recognition: Micron’s ATMP
facility in Sanand, Tata Electronics’ fab in Dholera and OSAT in Assam, and a widening set of approvals signal that
India has moved from white papers to concrete pours.
Implementation: From Announcement to Assembly Line:
Where ISM has genuinely delivered is speed of execution once a project is approved. Dholera’s fab construction
moved from ground breaking to cleanroom-stage progress in a compressed timeline that surprised even industry
veterans. Assam’s OSAT facility is on track to be among the first to produce “Made in India” packaged chips. The
India Semiconductor Mission’s single-window clearance mechanism has, for the first time, given global chipmakers a
defined bureaucratic path rather than a maze.
Yet implementation is where ambition meets friction. Fabs are not factories in the conventional sense — they demand
zero-defect construction tolerances, uninterrupted power, and water purity levels most Indian industrial parks were
never engineered for. Retrofitting that infrastructure mid-project, rather than building it in from day one, has cost
precious months. Execution has been fast by Indian industrial standards; it is still not fast by Taiwanese or Korean
ones.
The Bottlenecks Nobody Puts on a Press Release:
Behind the ribbon-cuttings sit three bottlenecks that will determine whether India’s semiconductor mission becomes
an ecosystem or a handful of isolated plants.
Talent depth, not talent quantity, is the real gap. India produces enormous numbers of engineers, but fab-floor
competence — process integration, yield engineering, cleanroom discipline — is a different skill built over years on
working fab floors, which India, until now, simply did not have.
Supply chain shallowness is the second constraint. A fab needs hundreds of specialty gases, ultra-pure chemicals,
and precision equipment suppliers within logistical reach. India imports almost all of it today, which means even a
domestic fab remains dependent on fragile global supply lines.
Water and power guarantees remain the quiet risk. A single fab can consume millions of liters of ultra-pure water
daily and cannot tolerate even momentary power fluctuations. Several state-level proposals have stumbled precisely
here — long after the incentive package looked attractive on paper.
Policy: The Pros, and the Honest Cons:
ISM’s design deserves credit for two structural choices: it did not limit itself to leading-edge fabs alone, recognizing
that mature-node manufacturing and packaging are more realistic near-term wins; and it built in state-level coincentives,
turning India’s federal structure into a competitive asset rather than a coordination headache.
The cons are equally real. Incentive terms have shifted across scheme iterations, introducing exactly the kind of
uncertainty that capital-intensive, multi-decade investments cannot absorb well. Approvals, while faster than before,
still move slower than the investment cycles of global chipmakers deciding between India, Vietnam, and the Middle
East. And the policy conversation remains fab-centric, with comparatively little structural support for the equipment,
materials, and design layers that make an ecosystem self-sustaining rather than import-dependent.
The Startup Undercurrent:
Away from the mega-fab headlines, a quieter and arguably more sustainable story is unfolding. Indian fabless design
startups are building analog, RF, and specialty chips for domestic defence, automotive, and industrial applications —
segments global giants often overlook. Design service firms are scaling India’s decades-old strength in chip design
services into product ownership. Equipment and materials startups, though still few, are beginning to emerge,
chipping away at India’s near-total reliance on foreign toolmakers.
These start-ups matter disproportionately. Fabs create jobs and headlines; a vibrant startup layer creates the
intellectual property, the founder generation, and the risk-taking culture that determines whether India’s
semiconductor story has a second and third act.
Global Connect - Friend-Shoring Meets Opportunity:
India’s semiconductor push did not happen in a vacuum — it is riding the geopolitical wave of “friend-shoring,” as the
US, Japan, and the EU actively diversify away from concentrated dependence on Taiwan and China. The India-US
Semiconductor Supply Chain partnership, Japan’s collaboration on talent and equipment, and deepening ties with the
Netherlands and South Korea have given India a seat at tables it was absent from a decade ago.
This global connect is India’s genuine structural advantage — not cheaper labour, not faster approvals, but
geopolitical trust at a moment when the world’s chip supply chain wants a hedge. Converting that trust into
technology transfer, joint R&D, and long-term equipment partnerships — rather than one-off deals — is the strategic
task ahead.
Building the Complete Ecosystem:
A semiconductor mission succeeds or fails not on its fabs, but on everything around them: the OSAT units that
package the chips, the gas and chemical suppliers that feed the fab, the equipment makers who service it, the
universities that train its workforce, and the downstream electronics and EV industries that buy what it produces.
India has pieces of all of these — strong electronics assembly, a growing EV sector, elite technical institutions — but
they remain loosely connected rather than deliberately integrated.
The mission’s next phase must move from funding individual projects to architecting the connective tissue between
them: demand commitments from domestic electronics manufacturers, structured university-industry talent
pipelines, and a genuine push into equipment and materials, not just assembly and packaging.
A Powerful Beginning, an Unfinished Story:
India’s semiconductor mission has done what many doubted it could: convert political will into poured concrete,
signed MoUs, and functioning cleanrooms within a few short years. That is a genuine, hard-won achievement. But a
mission is not an ecosystem, and a fab is not an industry. What India builds in the next five years — the suppliers, the
talent pipelines, the startups, the policy consistency — will decide whether this becomes the foundation of a selfreliant
semiconductor nation, or another ambitious chapter that never quite compounded into an industry of its own.