India’s Semiconductor Sector Outlook 2025: Growth, Investments, and Policy Incentives

India’s semiconductor sector capabilities are rapidly expanding, aiming to become a major player in the global market, which is projected to exceed US$1 trillion by 2030. With a solid policy foundation, large-scale investments, and international partnerships, India is transitioning from being a consumer to a key contributor in the global chip ecosystem.

India’s semiconductor sector market growth trajectory

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India’s semiconductor market, valued at approximately US$38 billion in 2023, is projected to grow to US$45–50 billion by the end of 2025 and further expand to US$100–110 billion by 2030, according to a recent government press release cited by The Economic Times. This growth trajectory underscores the country’s strategic focus on establishing itself as a key player in the global semiconductor value chain.

As per the official statement, India is “poised to claim a significant share of the projected US$1 trillion global semiconductor market by 2030,” highlighting ongoing policy initiatives to enhance domestic manufacturing capabilities and attract investment across the chip design, fabrication, and packaging segments.

From policy to production: Building India’s chip ecosystem

India’s semiconductor strategy has moved beyond policy formulation into the implementation phase. Fabrication, design, and assembly hubs are being established across the country, setting the stage for large-scale production.

These developments are not merely theoretical; they are supported by concrete, high-value investments.

Major investments transforming the sector

Several large-scale semiconductor projects have been announced across India in recent years, signaling growing investor confidence and the country’s ambition to become a global manufacturing hub in this critical sector. These projects are backed by leading domestic and international companies and span key regions prioritized under India’s semiconductor mission. Notable developments include, among others:

• Micron Technology (June 2023): The US-based chipmaker announced a ₹22,516 crore (US$2.71 billion) investment to establish an Assembly, Testing, Marking, and Packaging (ATMP) facility in Sanand, Gujarat. This project marked one of the first major global investments under India’s semiconductor incentive program.
• Tata Electronics and Powerchip Semiconductor Manufacturing Corp. (Taiwan) (February 2024): A joint venture between Tata Group and Taiwan’s Powerchip committed ₹91,000 crore (US$10.96 billion) to build a state-of-the-art semiconductor fabrication plant in Dholera, Gujarat. The facility is expected to have a production capacity of 50,000 wafers per month.
• CG Power, Renesas (Japan), and Stars Microelectronics (Thailand) (February 2024): This tripartite collaboration will invest ₹7,600 crore (US$915 million) in a semiconductor manufacturing plant in Sanand, Gujarat. The facility aims to produce up to 15 million chips per day, catering to both domestic and export markets.
• TSAT – Tata Semiconductor Assembly and Test (March 2024): Tata Group also announced a ₹27,000 crore (US$3.25 billion) investment in Morigaon, Assam. The plant is projected to produce 48 million chips per day, representing a significant boost to India’s northeastern industrial development.
• Kaynes Semicon (September 2024): The Indian electronics firm committed ₹3,307 crore (US$398 million) to set up a chip manufacturing facility in Sanand, Gujarat. The plant is designed to deliver a daily output of 6.33 million chips, supporting demand from sectors such as automotive and industrial electronics.
• HCL-Foxconn Joint Venture (May 2025): In one of the most recent announcements, HCL and Taiwan’s Foxconn formed a joint venture to establish a semiconductor fabrication unit in Jewar, Uttar Pradesh, with a total investment of ₹3,700 crore (US$446 million). The plant aims to produce 20,000 wafers per month, translating to an annual capacity of approximately 36 million units.

These investments reflect India’s strategic push to localize semiconductor production, diversify global supply chains, and attract advanced technology players amid shifting geopolitical dynamics. With robust policy backing, financial incentives, and growing talent development programs, India is rapidly positioning itself as a competitive destination for semiconductor manufacturing and innovation.

Strength across the value chain: Equipment, materials, and services

India’s semiconductor strategy is deliberately built to reinforce every link in the chip-making value chain—equipment, materials, and services—ensuring that India not only assembles chips but also supplies critical inputs and expertise:

Equipment

India boasts a vibrant ecosystem of micro, small, and medium enterprises (MSMEs) that manufacture precision components for wafer-processing and fab instrumentation. Supported by the Production-Linked Incentive (PLI) scheme for semiconductor equipment, these firms produce everything from high-purity vacuum pumps and chemical delivery systems to specialized wafer carriers. By deepening local sourcing, India reduces import dependencies and accelerates technology transfer through co-development partnerships with global equipment leaders.

Materials

The subcontinent’s rich endowment of industrial chemicals, specialty gases, and minerals makes it a natural upstream supplier for chip fabrication. Domestic producers of high-purity silicon, fluorochemicals (etchants and resists), and noble gases (neon and argon) are scaling up capacity under government‐backed incentives. Recent initiatives to certify Indian gas suppliers against international purity standards and to establish cluster-based chemical parks are designed to meet the stringent material specifications of advanced nodes and to export worldwide.

Services

India’s comparative advantage in talent and digital infrastructure positions it as a back-end powerhouse for R&D, design, testing, and related services. A workforce of over one million engineers skilled in AI, big data analytics, cloud computing, and IoT supports everything from chip design verification to yield optimization. Leading integrated service providers and independent design houses leverage this expertise, offering end-to-end solutions—from intellectual property (IP) development and electronic design automation (EDA) support to failure analysis and reliability testing—making India an indispensable partner for global chipmakers looking to accelerate time-to-market.

Together, these coordinated strengths, from homegrown equipment suppliers and bulk materials production to world-class design and test services, form the pillars of India’s vision to emerge as a self-reliant and globally competitive semiconductor nation.

Institutional backing

India Semiconductor Mission (ISM)

India Semiconductor Mission (ISM), launched in December 2021, represents the government’s flagship effort to catalyze India’s emergence as a global electronics powerhouse. Backed by a ₹76,000 crore (US$9.2 billion) corpus, ISM provides targeted funding across three pillars, namely: semiconductor fabrication, display manufacturing, and chip design.

Functioning under the Department of Telecommunications, ISM is governed by a steering committee of global semiconductor veterans and chaired by the Secretary of Electronics and Information Technology. This nodal agency oversees the rollout of multiple incentive schemes, including:

• Fabrication‐Linked Incentive (FLI): Capital subsidies and operating support to establish greenfield and brownfield wafer fabs, with a focus on advanced nodes.
• Display Manufacturing Incentive (DMI): Grants for new and expanding display fabs, enabling India to produce high‐resolution panels for smartphones, TVs, and automotive applications.
• Design‐Linked Incentive (DLI): Financial assistance for chip design startups and IP houses to offset costs related to prototyping, EDA tools, and patent filings.

By streamlining approvals, coordinating land and utility provisioning, and facilitating technology partnerships with leading global players, ISM aims to integrate India more deeply into international electronics supply chains.

Through capacity‐building programs, such as design‐thinking workshops, patent clinics, and talent‐exchange initiatives, ISM also seeks to develop a robust domestic ecosystem that spans R&D, manufacturing, and services.

Strategic collaborations and policy incentives

India’s semiconductor trajectory is underpinned by a robust mix of targeted policy incentives and strategic international partnerships, designed to deepen technology capabilities and secure resilient supply chains:

SEMICON India

Launched to catalyze domestic investment across chip design, manufacturing, and equipment segments, SEMICON India offers performance-linked grants, capital subsidies, and fast-track clearances. By aligning state-level facilitation with central incentives, the programme lowers entry barriers for global and local firms, accelerates project commissioning, and fosters clustering of manufacturing ecosystems around key hubs.

India–US Initiative on Critical and Emerging Technology (iCET)

Under iCET, India and the United States collaborate on joint R&D, workforce development, and supply-chain diversification in semiconductors and other frontier technologies. The framework includes co-funded research projects in advanced packaging and materials, exchange programmes for engineers and policymakers, and joint workshops to share best practices on fab security and export controls.

Production-Linked Incentive (PLI) schemes and infrastructure subsidies

Complementing ISM’s flagship funding, sector-specific PLI schemes for semiconductor fabs and electronics manufacturing commit over ₹76,000 crore (US$9.2 billion) in incremental incentives.

Coupled with state-sponsored subsidies for land, power, and water, these measures shrink effective project costs by up to 30 percent, making greenfield and brownfield investments financially viable even for advanced-node facilities.

Collectively, these initiatives demonstrate India’s balanced approach: attracting global technology partners, nurturing homegrown capabilities, and embedding manufacturing competitiveness through well-calibrated incentives, thereby reinforcing the nation’s pursuit of technological self-reliance and supply-chain resilience.

Semiconductors and India’s Digital and Defence Future

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Semiconductors lie at the heart of India’s ongoing digital revolution. From powering next-generation smartphones and data-centre accelerators to enabling ubiquitous IoT deployments, these tiny chips translate partial conductivity into precise electronic control. Beyond consumer devices, their impact extends to critical national domains—defense, space exploration, and secure communications—where reliability and autonomy are paramount.

A striking example of indigenous capability came during the Chandrayaan-3 mission. The Vikram lander’s navigation and hazard-avoidance systems relied on domestically designed semiconductors coupled with onboard AI algorithms to select a safe touchdown zone on the lunar surface autonomously.

This demonstration highlights not only India’s growing prowess in advanced chip design but also the strategic importance of securing end-to-end technology, from silicon wafer to satellite subsystem, for mission-critical applications.

Looking ahead: Toward India’s self-reliant digital economy

India’s strategic investment in semiconductors is reshaping the contours of its digital economy and unlocking new avenues for growth. Backed by landmark initiatives such as the ISM and targeted PLI schemes, the country is building a vertically integrated ecosystem, from precision equipment and critical materials to world-class design and testing services.

This concerted effort will not only accelerate the uptake of emerging technologies (AI, 5G, IoT) across domestic markets but also fortify India’s national security posture by ensuring a reliable supply of mission-critical chips.

For business investors, the opportunity is clear: early engagement in India’s semiconductor landscape offers access to a rapidly expanding consumer base, preferential policy incentives, and partnerships with a growing network of homegrown suppliers and global engineering talent.

As import dependencies wane and production capacities scale to meet both local and export demand, India is poised to emerge as a trusted node in the global chip supply chain. In this environment, investors who align with India’s vision, from fab construction and materials manufacturing to design services and IP development, stand to benefit from a market projected to nearly triple in value by 2030.

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