Is This Region Poised to Emerge as the Next Global Semiconductor Hub?
With an investment of over Rs 1.27 lakh crore, India has launched the second phase of its semiconductor program. This initiative comes as a semiconductor supercycle gains momentum globally, driven by the rising demand for artificial intelligence technologies. According to KPMG’s 2026 Global Semiconductor Outlook report, industry leaders are now focused on accelerating production rather than merely anticipating market cycles.
India’s semiconductor industry is projected to reach $1.6 trillion in revenue by 2030, as noted by McKinsey. The sector is increasingly recognized as one of the world’s most profitable, with significant growth observed in the US and South Korean markets due to AI-driven semiconductor demand. Semiconductors are essential across various sectors, including electronics, electric vehicles, telecommunications, and defense, making a self-reliant ecosystem crucial for India amid global economic uncertainties.
India’s Big Semiconductor Push
India’s semiconductor mission aims to create an integrated ecosystem encompassing chip design, fabrication, advanced packaging, research, and talent development. The initiative is divided into two phases: Semicon 1.0, which had an outlay of Rs 76,000 crore, and the newly approved Semicon 2.0, with a Cabinet nod of Rs 1,27,500 crore. To date, 12 semiconductor projects with investment commitments exceeding Rs 1.64 lakh crore have been approved, with three facilities already in commercial production.
The first phase provided fiscal support of up to 50% for various semiconductor-related facilities. Semicon 2.0 prioritizes domestic production of semiconductor equipment and materials, aiming to develop a comprehensive Indian semiconductor intellectual property stack. The Indian semiconductor market is estimated at around $38 billion in 2023, with projections of reaching $100-110 billion by 2030. The government aims for India to meet 70-75% of its domestic semiconductor demand by 2029.
India Entering a Game-Changing Phase?
Experts view Semicon 2.0 as a transformative opportunity for India. Saurabh Agarwal from EY India emphasizes that this phase encompasses a broader scope, including design, fabrication, packaging, and talent development. If executed effectively, it could enhance domestic value addition in electronics, attract substantial investments, and create numerous engineering and manufacturing jobs.
The initiative aims to transition India from being a consumer of semiconductor technology to a producer. Over the next decade, semiconductors could become a significant growth engine for India, similar to the software industry over the past thirty years. Experts also highlight the potential for high-skilled job creation within the semiconductor sector and its supporting industries.
US, Taiwan, China, South Korea for Chips: What About India?
India is seen as uniquely positioned to carve out a differentiated semiconductor ecosystem. Experts suggest that while India may not immediately match the advanced chip fabrication capabilities of countries like Taiwan and South Korea, it can leverage its large pool of chip design talent and strong engineering capabilities. The growing government support and rising domestic demand further enhance India’s competitive edge.
Many leading chip companies already operate design and research centers in India, providing the country with deep expertise in chip design and innovation. However, challenges remain, particularly in commercializing engineering capabilities and identifying large global markets for semiconductor products. Experts stress the importance of converting India’s engineering talent into successful semiconductor businesses.
Road Ahead
The semiconductor sector requires long development cycles and significant investment in research and development. Achieving India’s semiconductor goals will necessitate a long-term strategy that addresses existing challenges while building domestic capabilities. Experts emphasize the need for consistent policy support, faster project clearances, and reliable infrastructure.
A stronger venture capital ecosystem is also crucial to support the lengthy development cycles typical in the semiconductor industry. Incentives should focus on outcomes such as intellectual property creation and product commercialization, rather than solely on design activities. Saurabh Agarwal notes that India’s policy should evolve from offering project-specific incentives to fostering a comprehensive ecosystem that supports research and development and creates demand for domestically produced semiconductor products.
Observer Voice is the one stop site for National, International news, Sports, Editor’s Choice, Art/culture contents, Quotes and much more. We also cover historical contents. Historical contents includes World History, Indian History, and what happened today. The website also covers Entertainment across the India and World.
