India is poised to broaden its semiconductor incentive program as the initial ₹65,000 crore (approximately $10 billion) earmarked for the sector is nearly fully committed. According to S. Krishnan, Secretary of the Ministry of Electronics and Information Technology (MeitY), the expansion aims to attract equipment, material, gas, and chemical suppliers, areas that were not sufficiently covered in the initial plan under the India Semiconductor Mission (ISM).
Current Status of the Semiconductor Mission
The Indian government has committed approximately ₹62,900 crore, which is 97% of the total ₹65,000 crore fund, towards incentives for semiconductor production. This leaves limited funds to accommodate new projects, potentially only a few smaller ones. The initial ₹65,000 crore was part of a larger ₹76,000 crore outlay for the India Semiconductor Mission (ISM), with the remaining funds allocated for modernization of the Semiconductor Laboratory in Mohali and the design-linked incentive scheme.
Under the Semiconductor Fabs Scheme, the Indian government is extending fiscal support of up to 50% of project cost to approved applicants for setting up semiconductor fabrication plants in India. Similar fiscal support is available to approved applicants for display fabs. For compound semiconductors, silicon photonics, sensors, and ATMP/OSAT facilities, the scheme extends fiscal support of 50% of capital expenditure.
The ISM, launched in December 2021 with an outlay of ₹76,000 crore, aims to foster chip manufacturing, packaging, testing, and design capabilities. It also promotes collaboration between academia and industry to boost R&D and develop a skilled talent pool.
As of August 2025, India has approved 10 semiconductor projects with cumulative investments of over ₹1.6 lakh crore across six states. These projects include fabrication plants, advanced packaging facilities, and OSAT units. The government's 50% financial support for eligible costs has de-risked capital-intensive ventures, attracting both domestic and foreign capital.
Need for Expanded Incentives
Secretary Krishnan has emphasized that India requires not only chip fabrication and testing plants but also a robust ecosystem of equipment, material, gas, and chemical suppliers. These areas are crucial for a self-reliant semiconductor industry but were not adequately addressed in the initial ISM plan. By broadening the scope of incentives, India aims to attract more investment and expertise in these critical areas.
The expansion of incentives also aligns with the government's vision of "Atmanirbhar Bharat" (self-reliant India). By encouraging domestic manufacturing of chips and related components, India can reduce its dependence on imports and strengthen its position in the global semiconductor supply chain.
Progress and Future Outlook
India's semiconductor market was valued at approximately $38 billion in 2023 and is projected to grow to $100-110 billion by 2030. To meet this growing demand, India is taking significant steps to boost its domestic semiconductor industry. India's first packaged semiconductor chip is expected to debut by December 2025.
The government is also focusing on skill development to support the growth of the semiconductor industry. India aims to train 85,000 engineers in semiconductor specialization by 2032. Universities now have access to Electronic Design Automation (EDA) tools and industry-standard lab setups, fostering hands-on learning and innovation.
While India has made significant progress in establishing a semiconductor ecosystem, challenges remain. These include supply chain disruptions, regulatory hurdles, and technological bottlenecks. However, the scale of government support, the depth of private-sector commitment, and the global demand for semiconductors suggest that these challenges are manageable.
