The Indian government is preparing to launch a massive semiconductor fund of about Rs 1 lakh crore (about ₹99,943.75 crore) to strengthen domestic chip manufacturing capabilities. This initiative is part of the strategy to make India a major manufacturing hub globally. According to the information, this fund can be announced within the next two to three months, although final discussions in this regard are still going on and changes in the details are possible.
The government led by Prime Minister Narendra Modi is making continuous efforts to accelerate India’s ambitions in the semiconductor sector. At present, the projects in this sector in the country are in the initial stage and only a few big projects are in progress. The proposed fund aims to provide subsidies for chip design, procurement of manufacturing equipment and development of critical supply chains.
Globally too, many countries are making huge investments to increase self-reliance in semiconductor production. America has launched a plan to boost local production capacity through the Rs 4.36 lakh crore Chips and Science Act. At the same time, China is also investing in major companies of the semiconductor industry through state-backed investment funds. In this way, competition in chip manufacturing for technological dominance in the world has intensified.
A key goal of New Delhi’s strategy is to attract the world’s leading chip companies to invest in India. The government is encouraging companies to set up production here through India’s vast engineering and design talent as well as attractive financial incentives. With the help of similar production-linked incentive (PLI) schemes, Apple is now assembling about 25 percent of its iPhones in India.
This new semiconductor fund will work in coordination with the already running government schemes related to smartphones and electronic components, thereby creating a strong industrial ecosystem to promote domestic manufacturing and exports. This proposed fund will be monitored by the Ministry of Electronics and Information Technology, although an official statement has not yet been issued by the Ministry.
Earlier in the year 2021, the Central Government had announced an incentive package of ₹83,500 crore, under which a provision was made for the government to bear up to 50 percent of the cost of chip fabrication and related projects. Under this scheme, American company Micron Technology Inc. had announced setting up a semiconductor assembly and testing plant in Sanand district of Gujarat.
Apart from this, Tata Group is also developing semiconductor fabrication plant and chip packaging unit in Gujarat. Foxconn Technology Group has also announced plans to set up testing, assembly and packaging units.
Although India’s initial projects focused on relatively less advanced chip technologies, the government aims to move toward cutting-edge semiconductor manufacturing in the coming years. Union Technology Minister Ashwini Vaishnav has set a target for India to achieve semiconductor capacity at par with leading countries like Taiwan, South Korea and America by the year 2032.
India currently imports more than 95 percent of its semiconductor needs. In such a situation, this new investment of about Rs 1 lakh crore is being considered as a big step towards strengthening the supply chains and reducing import dependence under the ‘Self-reliant India’ campaign.
Experts believe that if plans are implemented quickly, foreign investment is attracted and skilled human resources are created, India can capture a significant share of the $1 trillion global semiconductor market by the beginning of the coming decade. However, challenges such as heavy capital investment, large demand for electricity and water, and subsidy-based competitors from Southeast Asia still remain.
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