The future of India’s chip industry

India’s push for a domestic semiconductor industry faces significant hurdles, according to a report by NITI Aayog’s Frontier Tech Hub. The country lacks fabrication units, with the first expected in Dholera, Gujarat, by 2028, and relies heavily on imports even for basic electronics assembly. The India Semiconductor Mission (ISM), a ₹76,000 crore initiative, supports fabs, packaging, and design tools, offering up to 50% subsidies for high-risk projects and output-linked incentives for others. The report, *Future of India’s Semiconductor Industry*, stresses that India’s local ecosystem cannot yet meet domestic demand, citing geopolitical risks like supply chain disruptions from Taiwan. It warns that reliance on foreign chips for defense systems poses national security threats. Developing talent and optimizing production processes—such as yield testing—will take years, the report notes, urging long-term government commitment. Key challenges include the four-to-five-year gestation period for fabs, reliance on global equipment suppliers, and the need for specialized talent. The report advocates for building sovereign design capabilities, R&D excellence, and AI-driven semiconductor engineering to transition India from a design services hub to an innovator of differentiated technologies. While details of ISM’s second phase remain unclear, the report estimates a $45-60 billion investment over a decade, prioritizing projects with lower risk and assured returns. It advises shifting focus from frontier chips (3-7 nm) to mature, advanced nodes aligned with strategic relevance. The goal is capital efficiency and selective depth in high-priority areas, avoiding over-reliance on speculative high-tech ventures. The report concludes that India’s semiconductor ambitions require a decade-long, mission-mode approach, balancing ambition with pragmatism to ensure sustainable growth.