Semiconductor Self-Reliance in India
Introduction
Semiconductors are the backbone of the modern economy. They are used in smartphones, automobiles, artificial intelligence, telecommunications, space technology and defence systems. The global chip shortage during the pandemic and geopolitical tensions showed that dependence on a few countries for semiconductors can become a strategic vulnerability.
For India, semiconductor self-reliance is therefore not just an economic objective but also a matter of national security and technological sovereignty. India aims to move from being primarily a consumer and designer of chips to becoming an important player across the complete semiconductor value chain.
Current Developments
• India launched the Semicon India Programme with an outlay of ₹76,000 crore to develop semiconductor manufacturing and design capabilities.
• As of early 2026, the government had approved 10 semiconductor projects involving about ₹1.6 lakh crore of investment, including fabs and packaging facilities.
• India has now moved from policy announcements towards actual production, with commercial production commencing at multiple semiconductor units.
• In July 2026, the Union Cabinet approved Semicon 2.0, with a total outlay of ₹1,27,500 crore. Its focus includes chip design, fabrication, packaging, equipment, materials and ecosystem development.
• India is also strengthening its semiconductor design ecosystem. The government reported that 105 startups had begun developing chips, showing growing domestic innovation.
• Recently, India-made semiconductor chips have also been reported as supporting major Indian space missions, demonstrating the strategic importance of indigenous chip capability.
Challenges
However, achieving complete self-reliance will be difficult.
1. High capital requirement: Semiconductor fabs require billions of dollars and have long gestation periods.
2. Technology gap: India is still dependent on other countries for advanced fabrication technology and equipment.
3. Limited ecosystem: A semiconductor industry needs not only fabs but also chemicals, gases, wafers, equipment and specialised supply chains.
4. Skilled manpower shortage: India has strong design talent, but manufacturing and fabrication require highly specialised engineers and technicians.
5. Water and power requirements: Semiconductor fabs require reliable electricity and large quantities of ultra-pure water.
6. Global competition: Countries such as the US, China, Taiwan and South Korea already have well-established semiconductor ecosystems.
7. Supply-chain dependence: Even if chips are assembled domestically, dependence on imported materials and equipment can limit true self-reliance.
Way Forward
India should adopt a full ecosystem approach rather than focusing only on semiconductor fabs.
• Strengthen R&D and indigenous chip design through universities, startups and research institutions.
• Develop domestic capabilities in semiconductor equipment, materials, speciality gases and chemicals.
• Focus initially on areas where India can become competitive, such as chip design, ATMP/OSAT, advanced packaging, compound semiconductors and power electronics.
• Build strong industry-academia partnerships and specialised semiconductor training programmes.
• Ensure reliable power, water, infrastructure and logistics around semiconductor clusters.
• Encourage public-private partnerships and stable long-term policy support.
• Deepen strategic partnerships with technologically advanced countries while gradually increasing domestic value addition.
• Promote indigenous chips for defence, space, telecom, EVs and AI, creating assured domestic demand.
9August 27, 2026 2.2K 25
