Source: The post Indian Semiconductor Industry has been created, based on the article “Shaping the future, chip by chip” published in “Indian Express” on 3 September 2025. Indian Semiconductor Industry.
UPSC Syllabus Topic: GS Paper- 3- Indian Economy and issues relating to planning, mobilisation of resources, growth, development and employment.
Context: Semiconductors have become the backbone of the modern digital and industrial economy, powering everything from smartphones and cars to satellites and defence systems. Recognising the strategic importance of this sector, India is making a concerted effort to become a major player in the global semiconductor value chain.
Importance of Semiconductors
- Semiconductors are indispensable to digital progress as they form the foundation for computing, data processing, artificial intelligence, and telecommunications.
- The pandemic highlighted the fragility of global supply chains, where a shortage of chips severely disrupted industries such as automobiles, consumer electronics, and networking.
- Without chips, there can be no secure communications, modern defense systems, or advanced healthcare technologies.
Opportunities for India
- Government Initiatives: The Government of India has launched the India Semiconductor Mission (ISM) along with schemes worth ₹76,000 crore to incentivise fabrication, assembly, and design.
- FDI & Global Partnerships: Leading global companies such as Micron, AMD, and Applied Materials have committed significant investments, which shows growing trust in India’s semiconductor ecosystem.
- Talent pool: India already contributes around 20 per cent of the global chip design workforce, and with over 60,000 engineers and 350 academic institutions engaged, the country has a strong base of skilled talent.
- Digital Infrastructure: India’s large domestic digital economy, supported by initiatives such as Digital India, UPI, Aadhaar, and 5G expansion, creates a robust internal market for semiconductor demand.
- Strategic Advantage: Strategic global collaborations with the US, Japan, EU, and Singapore are helping India integrate into the global supply chain while also building resilience against disruptions.
Challenges
- High Capital Intensity: Semiconductor manufacturing is extremely capital-intensive, requiring investments of billions of dollars and long gestation periods before profitability.
- Skilled Manpower Shortage: Despite having a strong design workforce, India faces the risk of a talent shortage, with global estimates suggesting a deficit of over 1.2 million semiconductor professionals in the coming decade.
- Geopolitical Risks: Geopolitical uncertainties, particularly the concentration of chip production in East Asia, pose risks for India’s ambitions to build a secure and reliable supply chain.
- Supply Chain Disruptions: Even minor disruptions in the semiconductor supply chain can cause ripple effects across industries worldwide, and India must prepare for such vulnerabilities.
Way Forward
- India should fast-track the construction and commissioning of approved fabrication plants to ensure early operational capacity.
- Stronger collaboration between academia and industry must be promoted to create a continuous pipeline of skilled engineers and researchers.
- The government needs to provide long-term policy stability and consistent incentives to attract global investments in this high-risk sector.
- India should also focus on developing its R&D capabilities and intellectual property in semiconductor design and manufacturing to move from being a participant to a leader in innovation.
Question: Discuss India’s opportunities and challenges in becoming a global semiconductor hub.
