India Allocates ₹76,000 Crore to Boost Semiconductor Industry
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Union Government Allocates Over ₹76,000 Crore to Strengthen India's Semiconductor Ecosystem
The Government of India has announced a significant allocation exceeding ₹76,000 crore under the central incentive programme to accelerate the development of the country's semiconductor and display manufacturing ecosystem. This initiative, part of the India Semiconductor Mission (ISM), is intended to provide a comprehensive policy and fiscal framework to catalyse India’s emergence as a global leader in electronics manufacturing, chip design, and semiconductor fabrication.
Background of the Semiconductor Incentive Programme
The approval for the India Semiconductor Mission came from the Union Cabinet in December 2021 with a dedicated outlay of ₹76,000 crore. The mission was conceived to provide targeted financial support aimed at fostering investments in semiconductor fabrication, advanced chip design, and display manufacturing.[1] The rationale behind this programme is to position India as a central player in the global electronics and semiconductor value chain. This allocation is among the largest ever for technology infrastructure, and reflects a coordinated effort between various ministries, global industry partners, and Indian technology enterprises.
India's Semiconductor Market Potential
Industry sources estimate the Indian semiconductor market was valued at approximately $38 billion in 2023. This figure is projected to grow to $45–50 billion in 2024–2025, with expectations to surpass $100–110 billion by 2030.[1] These projections highlight the importance of a domestic semiconductor sector for ensuring supply chain resilience, creating high-skill jobs, and meeting rising demands from automotive, telecom, IT hardware, and emerging sectors such as AI and IoT.
Key Components of the Allocation and Programme Objectives
The ₹76,000 crore outlay is distributed across several focus areas intended to promote the entire semiconductor ecosystem:
- Semiconductor Fabrication: Financial incentives for establishing advanced fabrication (fab) units within India, enabling a shift from import reliance towards domestic production.
- Display Manufacturing: Incentives targeted at building state-of-the-art display fabrication facilities to support both domestic electronics and global display markets.
- Chip Design: Support for indigenous chip design capabilities including EDA tool access, prototyping infrastructure, and global-standard training modules.
- Integrated Value Chain: Development of an integrated, self-sufficient value chain including raw materials, ancillary industries, and skilled workforce pipelines.
The mission is led by a team of experts from across the global semiconductor and display industry, charged with ensuring effective policy and programme implementation. The ISM functions as the nodal agency for coordinating investments, facilitating approvals, and monitoring progress across all verticals.[1]
Recent Milestones and Developments
A major stride under the incentive programme came in May 2025 with the inauguration of two advanced semiconductor design facilities in Noida, Uttar Pradesh and Bengaluru, Karnataka. These centres are notable as the country’s first dedicated to advanced 3-nanometer chip design. Prior to this, India’s semiconductor design industry had already reached 7nm and 5nm geometries. The move to 3nm signifies entry into a highly advanced era of chip design and innovation.[1]
“The achievement of designing at 3 nanometers is truly next-generation... With this technological advancement, India is stepping onto the global stage in terms of semiconductor innovation,” stated Shri Ashwini Vaishnaw, Union Minister for Electronics & IT, Railways, and Information & Broadcasting, at the inauguration event.
Private Sector Participation
The central financial outlay has enabled several public-private joint ventures and business initiatives. Prominent among these are:
- HCL-Foxconn JV, Jewar, Uttar Pradesh: This joint venture has attracted an investment of ₹3,700 crore for a fabrication facility with a planned output of 20,000 wafers per month, equivalent to 36 million units per year.
- Kaynes Semicon Pvt Ltd: With an investment of ₹3,307 crore, this unit’s manufacturing capacity is estimated at 6.33 million chips per day, supporting various high-tech and industrial applications.
Such partnerships demonstrate how the central incentive package is not only attracting domestic investment but also driving global technology companies to establish a manufacturing footprint in India.
Policy Implementation and Administrative Framework
Implementation of the semiconductor incentive package is overseen by the India Semiconductor Mission. The programme’s administrative framework is structured to streamline scheme approvals, optimize regulatory processes, and align state-level incentives with the central framework for cohesive impact.
Key elements of the framework include:
- Single-window clearance for project approvals and regulatory matters
- Flexible financial incentives tailored to the requirements of fab units, display plants, and design centres
- Monitoring and audit systems to ensure timely project execution and transparency
- Liaison with state governments to facilitate land acquisition, utility provisioning, and local policy harmonization
- Collaboration with academic and research institutions for talent development and R&D support
The nodal agency under ISM ensures that proposals are evaluated for technological merit, commercial viability, and alignment with national priorities for self-reliance and supply chain security.
Strategic Importance and Anticipated Impact
The government's impetus to semiconductor manufacturing is shaped by the recognition of chips and microelectronics as foundational to national economic security, innovation, and emerging technologies. The ₹76,000 crore allocation is likely to have a far-reaching impact across the following dimensions:
Reducing Import Dependence
Despite being a major electronics consumer, India has historically relied on imports for critical semiconductor components. Strengthening domestic manufacturing is expected to reduce foreign exchange outflows and mitigate risks of supply chain disruptions.
Boosting High-Technology Exports
Enhanced capacity in fab manufacturing and design services will enable Indian companies to export not only finished electronics but also be part of global supply chains for semiconductors, displays, and embedded systems.
Creating Employment and Skilling Opportunities
The execution of multiple fabrication, packaging, and design projects is projected to generate thousands of high-skilled jobs in engineering, research, and operations. In parallel, allied sectors including materials, logistics, and automation will create jobs in manufacturing and services.
To sustain this ecosystem, the government has also focused on incentivising universities and technical institutions to set up semiconductor training labs and courses, thereby ensuring a steady pipeline of skilled professionals.
Driving Innovation in Key Sectors
The presence of domestic fabs and design facilities is vital for deploying advanced electronics in critical sectors such as automotive, industrial automation, telecom, healthcare devices, and defence electronics. This will strengthen India’s capabilities in emerging technologies including artificial intelligence, 5G/6G communication, and the Internet of Things (IoT).
Attracting Global Investment
The government's central incentive programme is structured to attract global semiconductor leaders, foundries, and fabless companies to invest and collaborate within India. Priority is given to proposals bringing in advanced nodes, eco-friendly manufacturing, and innovation partnerships.
Challenges and the Road Ahead
While the scale and ambition of the central incentive package mark a new chapter for the Indian electronics sector, the road to establishing a globally competitive semiconductor industry involves several challenges. These include:
- High capital expenditure and long gestation periods for setting up fabrication units
- Technology licensing and access to next-generation process nodes
- Developing a complete supply chain for materials, gases, and high-purity chemicals
- Intellectual property rights management and ecosystem for innovation
The government has expressed its commitment to continual policy calibration, easing regulatory bottlenecks, and facilitating industry partnerships to overcome these challenges. Early project successes, such as the 3-nanometer design centres and major fabrication proposals in Uttar Pradesh and Karnataka, are expected to build momentum and confidence among global stakeholders.[1]
Conclusion
The allocation of more than ₹76,000 crore towards strengthening India's semiconductor and display ecosystem under the central incentive programme is a landmark step in the nation’s journey toward technological self-reliance, economic growth, and global competitiveness. With sustained support from both government and industry, India is poised to build a robust semiconductor industry that underpins the future of its digital economy, manufacturing exports, and innovation capacity.
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