With the increasing global race in the semiconductor industry, New Delhi prepares for the fifth edition of Semicon India to be hosted between September 17 and 19. This event comes at a crucial point of the Indian semiconductor venture. The phase which had begun with the India Semiconductor Mission trying to attract factories and investment is now entering an advanced level. Semiconductors are the backbone of the Artificial Intelligence (AI), telecommunication, automotive, satellite, missile, radar and drone industries as well as many infrastructures.
India continues to strengthen its position in the semiconductor industry. The first phase of Semicon India was successful, as the government approved 12 semiconductor manufacturing projects across six states involving a total investment of more than ₹ 1.64 lakh crore. Commercial production is already beginning for Micron, Kaynes, and CG Semi, with another facility to be launched in 2026. The government has now authorised the second phase of Semicon with a budget of ₹ 1.27 lakh crore that is focused not only on manufacturing but also on chip design, semiconductor equipment and materials, advanced packaging, R&D, and skill development. This is a significant shift. Initially, India had to attract companies to invest money in the country. Now that the challenge has been overcome, it is necessary to ensure the establishment of an entire ecosystem.
India's semiconductor policy cannot be examined in isolation from the larger US-China competition in the technology realm. Since 2022, the US and its allies in Silicon Valley have been tightening their grip on advanced chips and semiconductor production, which are directed towards China. The US has made it clear that the advanced computing chips are relevant in military and security terms. This has led to a situation where the export controls have developed over time. The US revised its microchip export policy towards China in January 2026 to show that semiconductors are now a part of the strategic framework in new technology. The lesson for India is that it does not need to take sides in a technological world of blocs. However, it should be careful in relying on too few overseas suppliers, as that may turn out to be a strategic liability.
{{/usCountry}}India's semiconductor policy cannot be examined in isolation from the larger US-China competition in the technology realm. Since 2022, the US and its allies in Silicon Valley have been tightening their grip on advanced chips and semiconductor production, which are directed towards China. The US has made it clear that the advanced computing chips are relevant in military and security terms. This has led to a situation where the export controls have developed over time. The US revised its microchip export policy towards China in January 2026 to show that semiconductors are now a part of the strategic framework in new technology. The lesson for India is that it does not need to take sides in a technological world of blocs. However, it should be careful in relying on too few overseas suppliers, as that may turn out to be a strategic liability.
{{/usCountry}}China has shown us a great example. The policies limiting exports from the US and its allies have influenced China to boost its efforts in domestically manufacturing semiconductors, equipment, and supply chains. The market penetration of Chinese domestic semiconductor equipment will rise from 25% to 35% between 2024 and 2025, according to the Center for Strategic and International Studies (CSIS) estimates. This gives rise to the lesson that restrictions on supply can prompt countries to invest heavily in becoming self-reliant in technology. In this way, India should consider the need for semiconductor resilience not just as an industrial-policy goal but as an economic and strategic security need.
Another vulnerability is the known risk of geographic concentration. Taiwan occupies a key position within the global semiconductor industry, especially within the advanced end of the market. Taiwan accounts for over 60% of the global semiconductor production and approximately 90% of advanced chips manufactured globally.
This situation presents both a risk and an opportunity for India. Any disruption in the Taiwan Strait due to a conflict, blockade, sanctions, or even a significant natural event would have repercussions far beyond the borders of East Asia. This means that the sectors of the Indian economy including automobile; electronics, telecommunications, aerospace, and defence might experience shortages in critical components.
NITI Aayog has highlighted this vulnerability. Its 2026 semiconductor roadmap states that approximately 90-95% of current semiconductor consumption in India is being fulfilled through imports and alerts that dependency on concentrated global supply chains poses potential risks for various sectors including automobile, health care and defence.
Moreover, merely establishing a semiconductor fab will not ensure semiconductor independence. Manufacturing semiconductors presumes the presence of advanced equipment, electronic design automation solutions, silicon-grade gas and chemicals, materials, reconstituted wafers, and other necessary elements such as precision techniques, packaging, testing, transport, and workforce. The new Semicon 2.0 initiative aims to remedy this deficiency by including the elements of equipment and material provision among its six pillars, thus correcting the overly narrow approach of its predecessor, which focused solely on the establishment of fabs.
India also has a key competitive advantage in chip design; 24 projects in the field of semiconductor design from startups and MSMEs received funding. 105 more small enterprises were granted access to the software used for electronic design automation. The companies are working in different fields including satellite communication, aviation, telecommunication, and AI. The ability to design could be one of the key areas for India's entry to the global semiconductor value chain instead of trying to replicate every aspect of Taiwan’s or South Korea’s industrial model, thus allowing India to integrate design, packaging, some manufacturing capability, equipment and electronics systems.
The country’s experience in electronics manufacturing should inspire some optimism. According to PIB report, the electronics production increased almost fourfold in under a decade from ₹1.9 lakh crore in 2014-15 to about ₹12 lakh crore by 2024-25, and electronics exports soared from almost ₹38,000 crore to around ₹3.3 lakh crore over the same period. However, manufacturing semiconductors will require much more technical expertise compared to the assembling of finished electronics, so mobile experience should be perceived as a starting point, not an evidence of already achieving semiconductor self-sufficiency.
The issue of the defence aspect needs to get more focus. Today military systems increasingly rely on software and many electronic devices. Radar systems, electronic warfare systems, communications systems, unmanned systems, missiles, precision weapons all rely on microelectronics. NITI Aayog has stated that dependence on semiconductors is a national security issue because the electronic parts of defence systems are manufactured outside of India.
Defence procurement can act as a major customer in this case. The Union government can provide a stable market for strategically significant chips and let the commercial markets work in areas that are less essential. Besides, India should narrow down the semiconductor mission objectives with defence procurement plans. With the joint efforts of defence research institutes, PSU defence manufacturers, private sector defence companies, and semiconductor start–ups, all target distance between users and products with the help of locally produced components can be mapped out.
The upcoming stage should put less emphasis on how many projects have been sanctioned and should rather give importance to how thoroughly the capability has been built. First and foremost, the success of semiconductors should be assessed by measuring commercial production, exports, domestic valuation, Indian intellectual property, and the number of local suppliers created for each of its various plants. Secondly, semiconductor clusters must be established around the manufacturing and packaging units, thus integrating equipment manufacturers, chemical suppliers, testing labs, universities and logistic suppliers into one system. Thirdly, developing semiconductor specialists should become a topmost priority for the country. The last point is that government procurement should open the door to the market for competitively important domestically manufactured chips (primarily for the needs of defense, space exploration, telecommunications and key infrastructure projects).
India should embrace the concept of strategic openness instead of completely relying upon local production. There is something inherently global about the semiconductor supply chains. Thus, the task is to cut back on overdependence, not eliminate imports. The country should aim to diversify its suppliers, build its own capabilities where it is beneficial and necessary, and work closely with its partners from the US, Japan, South Korea, Taiwan, and Europe. That is why Semicon India 2026 is taking place at the perfect time. It is worth noting that India’s semiconductor policy has already gone beyond expectations and operations at various facilities are commencing.
The true measure of India’s semiconductor self-sufficiency will not lie in its ability to make yet another announcement regarding a new fab. Instead, the measure will be based on India’s ability to design chips, develop intellectual property, produce pivotal material and equipment, train leading talent, package and test sophisticated devices, and keep supplying its most vital economic and military systems.
(The views expressed are personal)
This article is authored by Janvi Singhi, independent researcher on geo-economics and strategic affairs.