India's semiconductor push: ambitions, challenges and the India Semiconductor Mission

A new government policy report has set out both the scale of India's ambition in semiconductors and the steep challenges ahead. The two main messages are clear: India faces serious hurdles in building world-class chip manufacturing, but national interest requires pursuing this field firmly despite the difficulties.

Semiconductors, or chips, sit inside almost all electronics, from phones and laptops to defence equipment. Yet India still does not have a single fabrication unit (fab) in operation. The first is expected to open in Dholera, Gujarat, by 2028, with around ten more at various stages of development. Several chip packaging and testing facilities have been heavily supported by central and some state governments.

Much of this effort runs through the India Semiconductor Mission (ISM), a fund of about ₹76,000 crore. It is largely earmarked for fabs, incentives for component manufacturing and subsidised access to industry-grade chip design tools for students and academia. The most ambitious fab projects have received capital subsidies of more than 50 percent, while others get incentives linked to output.

The report stresses that these are still early days, as even chips used in domestic electronics assembly are mostly imported. It warns that geopolitical risks, such as a disruption in Taiwan, could badly hit the global supply chain, and that relying on foreign-made chips in defence systems raises national security threats. Building a fab typically takes four to five years before production begins, and developing skilled talent takes years more. The report calls for sustained, mission-mode commitment over a decade or more, and for a second phase needing an estimated $45-60 billion in state spending, focused on lower-risk, "mature" and strategically relevant chips rather than only the most cutting-edge ones.

For exams, this is a high-value science, economy and security topic. Aspirants should remember why chips are strategically important, the India Semiconductor Mission and its ₹76,000 crore corpus, the planned first fab at Dholera by 2028, and the supply-chain and national-security reasons behind India's drive to make chips at home.