India Bets $18 Billion to Create a Semiconductor Powerhouse

New Delhi — India approved 10 semiconductor plans totaling $18.2 billion in six states as it looks to cut down imports and play a role in the global chip market as supply chains divert away from China.

The projects feature two fabrication facilities and several testing and packaging units, of which Tata Electronics' $11 billion Gujarat fab is leading the charge in collaboration with Taiwan's Powerchip. Another feature is the nation's first compound semiconductor fab in Odisha in a U.K.–India collaboration.

India's "Semiconductor Mission" aims at a complete domestic supply chain, from design to production and packaging. New policies now provide up to 50% of project expenses across all chip sizes, reflecting a wider effort to lure global investors.

But experts caution that India has daunting challenges ahead of it, ranging from poor infrastructure and availability of ultra-pure chemicals to loopholes in intellectual property legislation. "India doesn't need a few fabs or ATP facilities. It needs a dynamic, long-term ecosystem," Stephen Ezell of the Information Technology and Innovation Foundation stated.

Global players such as companies from Taiwan, the U.K., the U.S., and South Korea have expressed interest, and ARM has recently announced plans to design high-end 2nm AI chips from Bengaluru. Even so, experts believe India's role is likely to be limited to non-core design validation unless structural reforms can boost its ecosystem.

Experts think the next 3–4 years will determine if India can turn from a huge electronics consumer to an authentic semiconductor hub.