India’s Semiconductor Mission

India’s semiconductor ambitions are backed by a dedicated $10 billion incentive programme, a revised India Semiconductor Mission (ISM 2.0) and an Electronic Component Scheme outlay of Rs 40,000 crore. Micron Technology has begun construction of a $2.75 billion assembly and testing facility in Gujarat. Tata Electronics is investing in fabrication capacity. Over 50 GCCs already have dedicated semiconductor design units in India. The government’s roadmap estimates that India will need cumulative semiconductor investments of $135-180 billion over the next decade. For semiconductor companies, electronic component manufacturers and investors, India’s chip ambitions represent a generational market entry opportunity. T&A Consulting helps foreign semiconductor and electronics companies navigate India’s incentive frameworks, site selection and market entry strategy.

Introduction: From Chip Consumer to Chip Producer

India is the world’s second-largest consumer of semiconductors but produces virtually none domestically. The country imports approximately $40 billion worth of semiconductor products annually, creating a significant trade deficit in electronic components and a strategic dependency on supply chains concentrated in Taiwan, South Korea and China. The global chip shortage of 2020-2022 exposed the vulnerability of this dependency and accelerated India’s determination to build domestic semiconductor capacity.

The India Semiconductor Mission (ISM), launched in 2021 with an initial $10 billion allocation, has been upgraded to ISM 2.0 in Budget 2026 with a sharpened focus on high-value segments of the chip value chain: equipment, materials, full-stack Indian IP and advanced packaging. The government’s approach is pragmatic — rather than attempting to compete with TSMC in cutting-edge node fabrication immediately, India is building capability in assembly, testing and packaging (ATMP), fabless chip design and compound semiconductors, while attracting established global players for manufacturing partnerships.

The Investment Landscape

• Micron Technology. The US-based memory chip giant is constructing a $2.75 billion assembly and testing facility in Sanand, Gujarat. The facility will perform ATMP operations for DRAM and NAND flash memory, creating approximately 5,000 direct and 15,000 indirect jobs. Micron received approximately 50% of the project cost as government incentives under the ISM.
• Tata Electronics. The Tata Group is investing in semiconductor fabrication through a partnership with Powerchip Semiconductor Manufacturing Corporation (PSMC) of Taiwan. The facility, planned in Dholera (Gujarat), is expected to produce chips at 28nm and above. Tata Electronics is also building an ATMP facility in Assam.
• CG Power (Murugappa Group). Investing approximately $1.3 billion in an OSAT (Outsourced Semiconductor Assembly and Test) facility in Sanand, Gujarat, with technology partnership from Japan’s Renesas Electronics.
• Kaynes Technology. Building a $3 billion compound semiconductor facility in Sanand, Gujarat, focusing on silicon carbide (SiC) and gallium nitride (GaN) semiconductors for electric vehicles, renewable energy and telecommunications.
• GCC semiconductor design. Over 50 GCCs in India now have dedicated semiconductor design units, including operations by Intel, Qualcomm, AMD, Texas Instruments, Broadcom, Samsung Semiconductor and NXP. India already has approximately 20% of the world’s chip design workforce, making it the second-largest semiconductor design hub globally after the United States.

ISM 2.0 and Policy Framework

• Modified Scheme for setting up Semiconductor Fabs. Provides fiscal support of up to 50% of project cost for semiconductor fabrication facilities, subject to defined technology and investment thresholds.
• Modified Scheme for setting up Compound Semiconductors. Provides fiscal support of up to 50% of capital expenditure for compound semiconductor (SiC, GaN), silicon photonics and sensor fabrication facilities.
• Scheme for Semiconductor ATMP. Provides fiscal support of up to 50% of project cost for assembly, testing, marking and packaging facilities.
• Design Linked Incentive (DLI) scheme. Provides incentives of up to 50% of eligible expenditure for semiconductor design companies, covering chip design, validation and go-to-market costs for Indian-designed chips.
• Electronic Component Scheme. Budget 2026 increased the outlay to Rs 40,000 crore for the production of passive electronic components, printed circuit boards, sub-assemblies and other components, creating a domestic supply base for the semiconductor ecosystem.
• Talent development. The Chips to Startup (C2S) programme supports academic institutions in developing semiconductor design curricula. India’s target is to train 85,000 semiconductor professionals over the next five years to support the growing ecosystem.

India’s Strategic Position in the Global Chip Supply Chain

India’s semiconductor strategy is shaped by the global realignment of chip supply chains. The US CHIPS Act, the EU Chips Act and Japan’s semiconductor investment programme all seek to reduce concentration risk by building capacity outside Taiwan and South Korea. India’s proposition is complementary: it offers a large and growing domestic consumption market, a massive chip design talent pool, competitive construction and operating costs and fiscal incentives that rival or exceed those offered by competing locations.

India’s positioning is particularly strong in three areas. First, semiconductor design, where the country already has deep capability through GCCs and a growing domestic design startup ecosystem. Second, ATMP, where Micron’s entry validates India’s ability to attract Tier-1 global players. Third, compound semiconductors, where India’s electric vehicle and renewable energy growth creates natural domestic demand for SiC and GaN devices.

The intersection of India’s semiconductor ambitions with its trade agreement architecture (India-EU FTA, India-UK CETA, India-EFTA TEPA, US-India framework) creates additional value: semiconductors and electronic components produced in India can potentially access preferential tariff treatment in multiple major markets, making India an attractive export manufacturing base for the chip value chain.

Opportunities for Foreign Companies

• Semiconductor equipment and materials. India’s fab and ATMP buildout creates demand for lithography, deposition, etching, metrology, packaging and testing equipment. Equipment suppliers can establish India operations to support the growing installed base.
• IP and EDA tools. Electronic design automation (EDA) companies and IP licensors have a natural market given India’s large and growing chip design workforce.
• Technology partnerships. Indian companies seeking fabrication technology partnerships (like Tata-PSMC) create opportunities for foundries, process technology licensors and yield engineering firms.
• Component manufacturing. The Rs 40,000 crore Electronic Component Scheme creates incentives for foreign manufacturers of passive components, PCBs, connectors and sub-assemblies to establish India operations.
• Talent and training. Companies specialising in semiconductor training, curriculum development and workforce readiness have a growing market as India scales from 20,000 to 85,000+ semiconductor professionals.

How T&A Consulting Supports Semiconductor Market Entry

T&A Consulting provides advisory for foreign semiconductor and electronics companies entering India:

• Incentive navigation. We map and apply for available incentives under ISM 2.0, DLI, Electronic Component Scheme and state-level semiconductor policies.
• Site selection. We evaluate locations based on infrastructure, talent availability, supply chain proximity and state incentive packages.
• Partnership identification. We facilitate partnerships between foreign technology providers and Indian semiconductor companies, GCCs and research institutions.
• Entity setup and regulatory compliance. We manage incorporation, FDI compliance, environmental clearances and ongoing operations.
• Market assessment. We provide market intelligence on India’s semiconductor consumption, design ecosystem and supply chain development trajectory.

Contact us at: pnijhawan@taglobalgroup.com to explore semiconductor opportunities in India.

Sources & references:
PIB, India Briefing, Business Standard, IBEF, Flexiple