Execution Challenges Outweigh Plans in India’s Semiconductor Race
India is positioning itself to become a significant player in the semiconductor industry, but challenges in execution could hinder progress. A recent report by Equirus Securities highlights that while the strategy is in place, the country faces substantial obstacles, particularly its reliance on imported equipment and weaknesses in the domestic supply chain.
The report outlines that India’s semiconductor roadmap is modeled after successful strategies from leading Asian economies. It avoids the Chinese approach and instead incorporates elements from Taiwan’s government-backed R&D, Malaysia’s foreign direct investment-led manufacturing, South Korea’s domestic champions, and Singapore’s capital discipline. However, the report emphasizes that execution is the primary challenge. India must quickly develop a skilled workforce, enhance local supply chains, and achieve globally competitive quality standards.
India is focusing on semiconductor segments where it has a competitive advantage, leveraging a talent pool of approximately 300,000 chip designers, which constitutes about 20% of the global semiconductor design workforce. The strategy prioritizes outsourced semiconductor assembly and test (OSAT) and mature process nodes ranging from 28nm to 110nm, which are crucial for automotive, industrial, and consumer applications. The report notes that demand-led import substitution is critical, with chip consumption projected to exceed $155 billion by calendar year 2031.
Despite these strengths, India is expected to continue importing over 90% of its semiconductor manufacturing equipment and most specialty chemicals and electronic-grade gases. The report also identifies a shortage of manufacturing-specific talent, such as process engineers and cleanroom technicians, as a significant barrier. It sets an ambitious target of producing 85,000 industry-ready engineers by 2027, citing Micron’s Sanand ATMP facility as a successful example, which trained around 2,000 workers within three years of construction.
While India’s semiconductor policy is regarded as one of its most credible industrial initiatives, several gaps remain. These include the need for stronger incentives for chip design, a robust ecosystem for equipment and materials, and limited prospects for manufacturing chips below the 28nm node in the near term. The proposed 28nm fabrication facility at Dholera is expected to be viewed as a mature-node project by global standards, even after reaching scale. The report concludes that India’s dependence on imports for upstream equipment and raw materials is its most significant weakness, with projections indicating continued reliance on imports for over 90% of chip-making equipment and 85-90% of specialty chemicals and electronic-grade gases.
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