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India has been a silent power in the global tech world for decades. While you might not see many Indian brand names on the outside of a computer processor, there is a high chance the chip inside was designed by an engineer in Bangalore or Hyderabad.
According to a BBC report, nearly 20% of the world’s semiconductor design talent is based in India. However, designing a chip and actually making one are two very different things. Until recently, India lacked the heavy-duty factories, known as ‘fabs,’ needed to turn semiconductor designs into physical silicon.
Driven by the hard lessons of the COVID-19 pandemic, which saw global supply chains break down and car production grind to a halt, India is no longer content just being the drawing board for global tech firms. The country is trying to build a chip industry from the ground up.
The launch of the India Semiconductor Mission (ISM) 2.0 and billions in government support are the latest examples of the initiatives taken to achieve this dream. The goal is simple; move from being a design house to becoming a global manufacturing hub.
Building a top-tier chip factory is one of the most expensive and complex tasks on Earth. A single advanced machine can cost more than a large airplane. Instead of trying to compete with giants like Taiwan on the most advanced 2-nanometer AI chips right away, India is using a smarter, bottom-up strategy.
The focus has shifted first to the third stage of production, Outsourced Semiconductor Assembly and Test (OSAT). This stage involves taking the raw silicon wafers produced elsewhere, slicing them into individual chips, and putting them into protective packaging. It is a 10-to-12-step manufacturing process that is less expensive than building a full fabrication plant but just as vital.
Companies like Kaynes Semicon have already started production in Gujarat, focusing on chips for cars, telecoms, and defense. These may not be the glamorous chips found in the latest high-end gadgets or smartphones, but they are the workhorses of the modern economy. By serving its own domestic market first, India is building the scale and manufacturing culture it needs before moving toward more complex, smaller chips.
The Indian government is backing this dream with investment and clear rules. The Union Budget for 2026-27 introduced ISM 2.0, which signals a move from just creating an ecosystem to actually producing goods. This new phase sets aside Rs. 8,000 crore specifically to support manufacturing and design this year.
The roadmap is ambitious. By 2029, India wants to be able to design and make the chips for 70% to 75% of its own needs, ranging from home appliances to advanced defense tech. Under the first phase of this mission, ten major projects have already been approved, representing an investment of about Rs. 1.60 lakh crore. This includes everything from silicon power plants to specialized packaging units across six different states. The plan is to make India a reliable ‘Plan B’ for the world. The nations wants to be looked as a trusted partner as global tensions rise.
The biggest hurdle to building a chip industry is people. Chip manufacturing requires a level of precision and documentation, quiet advanced from making traditional electronics. To fix this, India has launched huge training programs like ‘Chips to Startup,’ which gives hundreds of universities and over 1,000 startup engineers access to high-end design tools. Partnerships with global firms like Lam Research aim to train 60,000 engineers in specialized manufacturing and cleanroom protocols over the next decade.
India is also creating its own intellectual property so it doesn't have to pay high fees to foreign companies forever. The development of indigenous microprocessors like ‘DHRUV64’ shows that the country is moving toward digital sovereignty. This 64-bit chip, along with others like SHAKTI and THEJAS, allows India to build secure, homegrown tech for 5G, automotive electronics, and industrial automation. Since these chips use open-source architectures, they are cheaper to build and allow for more innovation within Indian startups.
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Semiconductors have become the oil of the 21st century. They power everything from the hospital machines that save lives to the satellites that provide our internet. As the Indian chip market grows from $38 billion in 2023 to a projected $110 billion by 2030, being able to produce these parts locally is a matter of national security. A reliable supply of chips means the economy remains unaffected during another global crisis or a trade war.
Furthermore, the impact on jobs is good. For 2026-27 alone, the government projects that new semiconductor units will create thousands of high-quality roles for engineers and technicians. This helps keep India’s best and brightest talent within the country, working on cutting-edge tech rather than moving abroad.
The progress is already visible on the ground. According to IT Minister Ashwini Vaishnaw, four semiconductor plants are expected to be ready by the end of 2026. This includes a rapid rollout in Sanand, Gujarat, where facilities have moved from foundation to production in just 14 months, a speed that has surprised many global observers. Looking further out, the country’s first major fabrication unit in Dholera is slated to be ready by 2028. Hence, aiming for those advanced 3-nanometer and 2-nanometer technologies.
India’s journey is a long one, and it will take patient capital and years of steady work. However, the pieces are falling into place. By combining its world-class design talent with a new focus on assembly, testing, and eventually full-scale fabrication, the country is slowly turning its semiconductor dreams into a silicon reality.
The goal set by the current government is to be a top three semiconductor nation by 2047. India seems to be hellbent on proving that you can build a high-tech industry from scratch if you have the right mix of policy, talent, and timing.
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