India’s Semiconductor Dream: How Far Has It Come and How Far Does It Have to Go?

“A chip is the smallest object that can determine the largest geopolitical outcomes.”

In 2025, the first chips from India’s nascent semiconductor manufacturing program are beginning to be produced. The country has invested tens of thousands of crore rupees in attracting semiconductor fabs and design centers. This post takes stock of where India’s semiconductor ambition stands, what the real challenges are, and why this sector matters so much for the country’s long-term economic future.
Economy & Policy
Author

Satvik Raman

Published

December 21, 2025

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Introduction

Semiconductors — the chips that power every electronic device from your smartphone to the car’s braking system — have become the central resource of the modern economy. Control over semiconductor manufacturing determines which countries can build advanced weapons, which companies can design competitive products, and which economies can remain at the technological frontier. India imports virtually all of the semiconductors it uses. Building the capacity to make them domestically has become a national priority, backed by tens of billions of dollars in government incentives and political commitment at the highest level.

In 2025, that investment is starting to show early results. The Tata Group’s semiconductor plant in Dholera, Gujarat, and the CG Power facility in Sanand are at various stages of construction and initial production. The Micron Technology facility in Sanand, which is India’s first major investment from a US chipmaker, is producing memory chips for testing and qualification. These are real milestones. But the honest assessment is that India’s semiconductor journey is in the very early stages of what will be a decade-long, capital-intensive process.

Why Semiconductors Are So Hard to Make

A modern semiconductor fabrication plant — called a fab — is one of the most complex manufacturing facilities that exists. Building a leading-edge chip fab costs upwards of $20 billion and requires thousands of specialized engineers with deep expertise that takes years to accumulate. The machines used to print circuits onto silicon wafers operate at tolerances measured in atoms. The chemical processes involved require materials of extraordinary purity. And the supply chains that support chip manufacturing are as complex as any in the world.

This complexity is why only a handful of companies globally can make the most advanced chips. TSMC in Taiwan, Samsung in South Korea, and Intel in the US are among the very few fabs capable of producing chips at the frontier of miniaturisation. Each of them is the product of decades of investment, iteration, and learning. India is starting from close to zero in this expertise.

What India Has Going For It

Despite the scale of the challenge, India has genuine advantages that make the semiconductor ambition worth pursuing. First, India has a very large pool of semiconductor design engineers. Much of the world’s chip design work is already done in cities like Bengaluru, Hyderabad, and Pune, where companies like Qualcomm, Intel, Texas Instruments, and Broadcom run significant design centres. India contributes meaningfully to the intellectual creation of chips even if the physical fabrication has not happened domestically.

Second, the geopolitical environment is favorable for India in ways that were not true even five years ago. The US and its allies are actively encouraging chip manufacturing to diversify away from East Asia, which means there is political and financial support available for countries like India that want to build this capacity.

Third, India’s scale matters. With a population of 1.4 billion and a rapidly growing economy, the domestic market for chips is large and growing. Proximity to that market, combined with lower labour costs than the US or Europe, makes India attractive for certain categories of chip manufacturing even if not for the most cutting-edge nodes.

What Remains Very Difficult

The honest challenges are significant. India currently lacks most of the ecosystem that supports chip manufacturing: the suppliers of ultrapure chemicals, the specialists in chip fab equipment, the ancillary industries that support a fab’s operations. Building that ecosystem requires not just the fabs themselves but hundreds of supporting companies, most of which do not yet exist in India.

Water is another constraint. Chip fabs use enormous quantities of ultra-pure water in their manufacturing processes. India’s water scarcity in many regions where industrial land is available creates logistical challenges that require careful planning.

And talent, while available in design, is scarcer in the specific disciplines of fab process engineering, yield management, and equipment maintenance that make a fab productive rather than merely operational.

Final Thoughts

India’s semiconductor ambition is the right ambition for a country that wants to be a serious technological and economic power in the twenty-first century. The early investments being made now — the Tata fab, the Micron facility, the CG Power plant — are real steps, not symbolic ones. But the road from these early steps to a position where India is a meaningful participant in global semiconductor supply chains is long, technically demanding, and financially enormous. For students interested in technology, engineering, and national policy, the semiconductor story is one of the most consequential areas to follow over the next decade.