Semiconductor Industry in India | 16 Aug 2025

Source: PIB 

Why in News? 

The Union Cabinet approved 4 new semiconductor projects in Odisha, Punjab, and Andhra Pradesh under the India Semiconductor Mission (ISM), bringing the total to 10 projects  across 6 states. 

What are the Key Trends and Opportunities Shaping the Growth of India's Semiconductor Market? 

• Market Size: India's semiconductor consumption market, valued at USD 52 billion in 2024-25, is expected to reach USD 103.4 billion by 2030 with  Compounded Annual Growth Rate (CAGR) of 13%. 
  • Mobile handsets, IT, and industrial applications account for approx 70% of revenue, while automotive and industrial electronics offer significant scope. 
  • Taiwan, South Korea, Japan, China, and the US dominate the semiconductor industry.  
  • India’s imports of Integrated circuits (ICs), memory chips, and amplifiers surged by 2,000%, 4,500%, and 4,800% from FY16–24, with China supplying nearly one-third of these imports.

• Key Opportunities for India: 
  • Large Market Potential: India has emerged as the world's second-largest market for 5G smartphones, trailing only behind China, holding a 13% share, behind China’s 32%. 
  • Surging Domestic Demand: Growing consumption of mobile devices, computers, and digital technologies, coupled with the 5G rollout and AI adoption, is driving strong demand for advanced semiconductors. 
  • Global Partnerships & Support: Collaborations with global semiconductor leaders and countries like US and Japan facilitate technology transfer and enhance India’s capabilities.  
    • Semicon India Programme and expansion of manufacturing and digitalisation strengthen India’s semiconductor ecosystem. 

What is the India Semiconductor Mission (ISM)? 

• About: ISM, approved in 2021, aims to boost India’s global electronics value chain presence and establish it as a global manufacturing hub. 
  • It operates under the Ministry of Electronics and Information Technology (MeitY). 
• Objective: To support chip design startups, promoting indigenous IP and technology transfer, fostering research, innovation, and industry-academia collaboration. 
  • It aims to reduce import dependence to strengthen India’s global semiconductor presence. 
• Mission Focus: 
  • Set up chip manufacturing fabs 
  • Create packaging and testing units (ATMP/OSAT) 
  • Support chip design startups 
  • Train engineers and technical talent 
  • Attract global semiconductor investments 
• Key Schemes under ISM: 
  • Semiconductor Fabs Scheme: Providing up to 50% fiscal support for wafer fabrication(fabs) units. 
  • Display Fabs Scheme: Up to 50% financial assistance for AMOLED/LCD display fabs to promote domestic innovation. 
  • Compound Semiconductors & ATMP/OSAT Scheme: Up to 50% support for compound semiconductors, MEMS/sensors, silicon photonics, and downstream packaging/testing facilities. 
  • Design Linked Incentive (DLI) Scheme: Promotes semiconductor design startups and Micro Small Medium Enterprises (MSMEs) by financial support  up to Rs 15 crore per company  across product development stages.  

What are the Key Challenges to India’s Semiconductor Industry? 

• Infrastructure & Innovation Challenges: Semiconductor fabrication involves 500–1,500 complex steps in cleanrooms, requiring advanced infrastructure, technology, and skilled talent.  
  • High costs of fab setup, R&D, and equipment, coupled with India’s weak semiconductor research and dependence on imported components and IP, limit innovation and technological self-reliance. 
• Skilled Workforce Gap: India currently employs about 220,000 semiconductor professionals, but the industry faces a projected shortfall of 250,000 to 350,000 skilled workers by 2027 across the semiconductor value chain 
• Technology & Global Competition: Taiwan and South Korea dominate global semiconductor production (80% of chip foundries), while ASML (Netherlands) controls EUV lithography, and Nvidia and ARM lead chip design, limiting India’s access to advanced technologies. 
• Environmental & Regulatory Challenges: Semiconductor manufacturing uses hazardous chemicals, toxic metals, and high energy, creating environmental risks and added compliance costs.  
  • Complex regulations, IP issues, export controls, and policy uncertainty increase operational challenges for manufacturers. 

What Steps Should India Take to Strengthen Its Semiconductor Industry? 

• Skill Development: Establish specialized training programs in chip design, fabrication, and testing to build a skilled workforce. 
• Boost R&D & Indigenous IP: Increase investment in research and development, support indigenous product design, and develop intellectual property, enabling startups and smaller companies to compete globally. 
• Incentives & Policy Support: Strengthen government initiatives like India Semiconductor Mission (ISM) and state-level policies (e.g., UP Semiconductor Policy 2024) to attract investments and promote semiconductor manufacturing. 
• Chip Diplomacy & Niche Focus: Promote international collaboration (“chip diplomacy”) and focus on niche technologies like MEMS and sensors to position India in specialized segments of the global market. 
• Private Sector Participation & Strategic Opportunities: Encourage private investment and collaborations, such as Tata-PSMC fab in Gujarat. 
  • Leverage geopolitical shifts (US-China tensions) to expand India’s semiconductor footprint. 

Conclusion 

India’s semiconductor sector is growing rapidly, driven by ISM, PLI, and SEMICON India, rising domestic demand, and global partnerships. Strengthening infrastructure, technology, and skills will be key to making India a global hub for semiconductor manufacturing and design.