India has earmarked about USD 23 billion to build a semiconductor industry, with new fabrication and chip assembly projects set to test its manufacturing ambitions. The government hopes the drive will create skilled jobs, strengthen supply chains and give foreign technology companies another option beyond China.
Yet India must overcome a record of failed projects, weak infrastructure and unpredictable business rules. Several facilities have moved forward, but the country's ability to sustain a competitive industry remains uncertain.
Over the past five years, Prime Minister Narendra Modi's government has earmarked roughly USD 23 billion for semiconductor development. State governments have offered their own incentives. Together, those measures aim to attract manufacturers and develop the services and suppliers they need. The drive seeks to link these investments to a wider network of suppliers.
According to a WSJ report, India has approved about a dozen projects. One major investment is a USD 11 billion wafer fabrication plant in Gujarat. Tata Electronics and Taiwan's Powerchip Semiconductor Manufacturing Corp. are developing the facility, which expects to start operations in 2028.
The plant plans to make 90-nanometer chips for products such as cars, phones and power-management equipment. These are older-generation chips, rather than the advanced processors at the center of U.S.-China technology competition.
Other projects focus on assembly and testing. A facility in Assam expects to begin commercial production in 2027, while another plant in Gujarat started production in 2026. Those operations require more labor than leading-edge chip fabrication.
India enters the effort with an established base of chip designers and close ties to Silicon Valley. It has a large domestic market, which offers potential demand for electronic products and components.
Chris Miller, a Tufts University professor and author of Chip War, said electronics firms have sought manufacturing locations outside China. He cited India's design talent, government support and market size as advantages over smaller Asian economies.
India's experience with mobile phone assembly offers another starting point. Miller pointed to production in Tamil Nadu and argued that developing less complex operations first could provide a workable path.
Still, earlier attempts reveal the obstacles. India began building a public electronics sector in the 1950s, but its semiconductor ventures lost momentum after early progress. Later private investment proposals also failed to take shape.
A chip project near Hyderabad, announced in 2006, was expected to include USD 500 million from Advanced Micro Devices. It never materialized. Two proposed fabrication plants announced in 2014 also failed to take shape.
In their 2023 book, When the Chips Are Down, Pranay Kotasthane and Abhiram Manchi linked these setbacks to India's difficult business environment. They identified unstable policy, tax uncertainty, weak infrastructure and trade barriers as major constraints.
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Can India turn public incentives and early plant openings into a semiconductor industry that lasts?
Modi has made chips a priority in government and foreign relations. He inaugurated all five editions of the Semicon India conference and regularly meets semiconductor executives. He appointed Ashwini Vaishnaw, a technocrat, to lead the electronics and information technology ministry.
The Center for Strategic and International Studies said in a 2025 report that India was attempting to build an industry ecosystem in only a few years. Comparable networks elsewhere took decades to develop.
Success would give India a greater place in global technology supply chains and could expand high-quality employment. For the United States, Indian production could offer more geographic diversity in an industry concentrated in North America and East Asia.
Semiconductor manufacturing, however, demands heavy investment and dependable operating conditions. Foreign investors must assess whether India can deliver stable rules, adequate infrastructure and reliable long-term support as its new plants scale up.
India's USD 23 billion semiconductor initiative combines chip fabrication, assembly and testing with strong government support. Its prospects rest on stable policy, infrastructure and the ability to avoid past project failures. If plants meet their targets, India could strengthen global supply chains and deepen technology ties with the United States.