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Introduction

Semiconductors, central to the digital economy, are both an economic and geopolitical priority. The global chip shortage underscored supply chain vulnerabilities, prompting India to launch the Semiconductor Mission (2021). While policies aim to reduce import dependence and build domestic strength, challenges of technology transfer, skilled manpower, and ecosystem depth persist.

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Key Challenges to make India a Global Leader in the Semiconductor Value Chain

• Late Entry into Manufacturing: India was long told it “missed the bus” on semiconductors, with global chip-making concentrated in select regions, making it hard for India to catch up.
• High Capital Intensity: Semiconductor fabs require $10–20 billion investment with long gestation and uncertain returns, posing challenges to investor confidence in India.
• Energy and Water Requirements: Chip fabs need uninterrupted power and vast ultrapure water, a challenge in India’s energy- and water-stressed states.
  Eg: Taiwan’s chip industry faced huge water shortage during droughts, a challenge India must pre-empt through sustainable resource planning.
• Global Supply Chain Vulnerabilities: Semiconductor production is highly disruption-sensitive, with accidents or outages abroad impacting India’s industries and security.
  Eg: The global shortage during COVID slowed India’s auto and electronics sectors, exposing its reliance on imports.
• Critical Resource Dependence: Chip-making depends on rare earths and advanced machinery dominated by a few nations, challenging India’s self-reliance.
  Eg: The spotlight on rare earth magnets shows how control of critical resources shapes global power; likewise, semiconductors define the digital age.

Measures to Tackle These Challenges

• Accelerated Domestic Manufacturing: Under the India Semiconductor Mission, 10 plants are approved, with the first “Made in India” chip expected this year, marking India’s high-tech entry.
  Eg: A pilot line in Sanand has already started, and four more units are set to begin production within a year.
• Building a Strong Talent Pipeline: Government-backed training programs and global partnerships equip India’s engineers to meet rising demand in chip design, manufacturing.
  Eg: Lam Research will train 60,000 engineers, while more than 60,000 students used Electronic Design Automation (EDA )tools for over 1.2 crore hours in 2025.
• Ecosystem Development through Start-ups: Schemes like the Design Linked Incentive (DLI) are nurturing innovation-driven chip start-ups.
  Eg: Mindgrove Technologies is designing IoT chips using IIT Madras’ SHAKTI processor, while Netrasemi raised ₹107 crore in VC funding.
• Global Collaboration and Investments: Partnerships with leading global players are anchoring India’s fab and R&D ecosystem, ensuring access to critical technologies.
  Eg: Applied Materials, AMD, and Microchip are investing $1.1 billion in R&D in India, alongside collaborations with IISc and IITs.
• Integrated National Vision: Semiconductors are embedded in PM Modi’s vision of “Digital India to Product Nation,” linking infrastructure, digital access, and industrial electronics.
  Eg: Platforms like UPI and Aadhaar provided a digital foundation, while Semicon India Summit 2025 attracted 500 leaders from 48 countries, boosting India’s global standing.

Conclusion

India’s push into semiconductors marks a strategic effort to reduce import dependence and build self-reliance. Success depends on overcoming technology barriers, expanding skilled manpower, and fostering ecosystem depth. With strong global collaborations and government backing, India can emerge as a trusted hub in the semiconductor value chain.

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