India’s semiconductor shine grows under Modi’s Viksit Bharat vision

Prime Minister Narendra Modi has reached the milestone of age 75 years, and his tenure can be measured in the multiple reforms he has pursued, both ambitious and controversial. Some of these have transformed India’s economic and policy landscape, while others, like demonetisation, continue to remain subjects of debate. Among his recent reform priorities, the focus on semiconductors stands out as a potentially transformative step for India’s technological and economic future.

In one of his speeches, PM Modi emphasised that the growth of the semiconductor industry will shape the next era of India’s economic rise. With initiatives like the recent Semicon India 2.0, the government has been laying the groundwork for creating a strong domestic semiconductor ecosystem in energy efficiency, sustainability and AI. Previously, Semicon 1.0 focused on basic chip manufacturing for consumer electronics.

The Semiconductor Mission has also been launched not only to build infrastructure for chip manufacturing like the recently unveiled indigenous chip Vikram 32 but also to attract global investment and foster collaboration with international leaders in technology. Encouragingly, several major semiconductor companies like Micron have shown interest in India, creating the possibility of establishing manufacturing hubs within the country.

India’s semiconductor industry is still in its early stages compared to global leaders. US, Taiwan, Japan, and China have advanced fabrication facilities, deep research ecosystems, and significant investments in semiconductor design and manufacturing. Taiwan’s TSMC and South Korea’s Samsung lead in cutting-edge chip production, while the US focuses on design, R&D, and high-tech equipment. Japan contributes through materials and components, and China is rapidly expanding its domestic capabilities with state support. In contrast, India depends heavily on imports, with limited fabrication capacity and R&D infrastructure. However, government initiatives and private sector investments are aiming to build a self-reliant ecosystem and close this gap over time. With that in mind, today India is home to multiple manufacturing plants like Kaynes Semicon Plant in Sanand, Gujarat, HCL-Foxconn JV in Uttar Pradesh, a TATA plant in Assam and a CG plant in Sanand. At the same time, Taiwan is looking for alternative geographies to set up new manufacturing units and India could offer itself as a low cost destination.

With initiatives like the recent Semicon India 2.0, the government has been laying the groundwork for creating a strong domestic semiconductor ecosystem in energy efficiency, sustainability and AI.

The importance of semiconductors cannot be overstated. They form the backbone of modern digital economies, powering everything from smartphones and computers to advanced defence systems and space technologies. For India, securing a domestic semiconductor ecosystem is not just about industrial growth, it is also about strategic autonomy and Make in India. In an era of heightened geopolitical tensions and supply chain vulnerabilities, India cannot afford to remain dependent on the United States or China or Taiwan for chips that underpin critical infrastructure. Achieving self-reliance in semiconductors will determine India’s resilience in the global digital economy towards a Viksit Bharat 2047.

However, the road to a robust industry in India is fraught with challenges. Semiconductor manufacturing is highly capital intensive and resource-intensive, requiring massive amounts of water and uninterrupted electricity- both resources that remain strained in many parts of India. Furthermore, as highlighted by Union Minister Ashwini Vaishnaw in a recent interview, India’s semiconductor ambitions cannot rest on design alone. Building strong manufacturing and testing capabilities and nurturing a talent pipeline for chip innovation are equally crucial. Without strengthening the manufacturing ecosystem, India risks becoming a follower in a high-stakes global market.

There are also concerns about execution. India has often launched visionary programs that falter at the implementation stage, leading to missed opportunities. While the vision for a semiconductor-driven future is ambitious and necessary, its success will depend on consistent follow-through, policy stability, and effective public-private partnerships. One of the major challenges so far has been that the private sector has not invested to its potential in the sector. The government has made commitments that have not been as soundly supported by the private sector as they could have. Even in the US, when the semiconductor industry started, the companies in those states played a key role- which is always critical to the development of a sector.

India must urgently build its semiconductor manufacturing ecosystem, first to serve its own growing technological and strategic needs, and then to become a trusted supplier for the world. Unlike the software industry, where service-based models and outsourcing allowed India to succeed globally, the semiconductor sector can be entirely domestic led with domestic demand and domestic manufacturing.

Prioritizing domestic manufacturing ensures supply security, reduces strategic risk, and builds self-reliance. Once the foundation is strong, India can scale production and export globally, becoming a key player in semiconductor supply chains. A decisive, inclusive approach- where both government and industry invest, is vital to future-proof India’s technology landscape. India’s semiconductor push is both an opportunity and a necessity. Yet, the real test lies ahead-whether this vision translates into tangible factories, design labs, and a skilled workforce. One hopes that the semiconductor story concretizes into real progress. India’s future as a digital powerhouse depends on it.

Rajesh Mehta is an International Affairs expert working in areas like Market Entry, Innovation & Public Policy.
Priya Sahgal