India's semiconductor ambitions: Bridging the gap with the US

Economic Times

5 days ago

As the global semiconductor industry undergoes rapid transformation, India stands at a pivotal juncture, poised to redefine its role in this critical sector. While the United States maintains a strong position with its robust infrastructure and significant investments, India's strategic initiatives and burgeoning talent pool signal a determined stride toward establishing itself as a formidable player.
Current landscape: An overview
The US semiconductor industry, valued at approximately $250 billion in 2025, commands nearly 47% of the global market share in design and manufacturing. This presence is underpinned by substantial investments exceeding $200 billion since 2020, bolstered by the CHIPS and Science Act, which allocates $52 billion to rejuvenate domestic semiconductor manufacturing and reduce reliance on Asian supply chains.[https://en.wikipedia.org/wiki/CHIPS_and_Science_Act]
In contrast, India's semiconductor market, though smaller at $54 billion, is projected to double to $108 billion by 2030. India's strength lies in its design capabilities, contributing 20% of the global semiconductor design workforce. However, it currently holds a mere 0.1% of global wafer fabrication capacity, highlighting a significant gap in manufacturing infrastructure. [https://www.india-briefing.com/news/indias-semiconductor-market-to-hit-us108-billion-by-2030-report-36926.html/]
Strategic initiatives and investments Recognising the strategic importance of semiconductors, the Indian government has launched several initiatives:
I ndia Semiconductor Mission (ISM): A $10 billion program aimed at establishing a comprehensive semiconductor ecosystem, focusing on domestic chip design, fabrication, and R&D capabilities. [https://semiconductorinsight.com/]
A $10 billion program aimed at establishing a comprehensive semiconductor ecosystem, focusing on domestic chip design, fabrication, and R&D capabilities. [https://semiconductorinsight.com/] Production-Linked Incentive (PLI) Scheme: Offers financial incentives to companies establishing chip fabrication units in India, aiming to attract global players and boost domestic manufacturing.
Offers financial incentives to companies establishing chip fabrication units in India, aiming to attract global players and boost domestic manufacturing. Chips to Startup (C2S) Programme: Launched in 2021, this initiative seeks to train 85,000 engineers across 113 institutions in VLSI and embedded system design by 2027, addressing the critical need for skilled professionals.
Launched in 2021, this initiative seeks to train 85,000 engineers across 113 institutions in VLSI and embedded system design by 2027, addressing the critical need for skilled professionals. These efforts are complemented by significant investments from global corporations. For instance, U.S.-based Lam Research plans to invest over $1 billion in Karnataka to boost India's semiconductor ecosystem, aligning with the government's vision to expand the industry. [https://www.reuters.com/technology/us-chip-toolmaker-lam-research-invest-over-1-billion-india-2025-02-12/]
Challenges aheadDespite these initiatives, India faces several challenges: Infrastructure deficits: Semiconductor fabrication requires advanced infrastructure, including uninterrupted power and water supply, cleanroom environments, and specialised equipment. India's current infrastructure falls short, as evidenced by delays in projects like the Vedanta-Foxconn initiative due to inadequate facilities.
Semiconductor fabrication requires advanced infrastructure, including uninterrupted power and water supply, cleanroom environments, and specialised equipment. India's current infrastructure falls short, as evidenced by delays in projects like the Vedanta-Foxconn initiative due to inadequate facilities. Skilled workforce shortage: While India produces approximately 600,000 engineering graduates annually, only a small fraction are job-ready for the semiconductor industry, particularly for fabrication-specific roles. This gap underscores the need for specialised training programs and industry-academia collaborations. https://www.india-briefing.com/news/workforce-trends-in-indias-semiconductor-industry-37067.html/]
While India produces approximately 600,000 engineering graduates annually, only a small fraction are job-ready for the semiconductor industry, particularly for fabrication-specific roles. This gap underscores the need for specialised training programs and industry-academia collaborations. https://www.india-briefing.com/news/workforce-trends-in-indias-semiconductor-industry-37067.html/] Supply chain dependencies: India remains heavily reliant on imports for semiconductor components, exposing it to geopolitical risks and supply chain disruptions. Developing a resilient domestic supply chain is imperative for long-term sustainability. [https://semiconductorinsight.com/report/india-semiconductor-manufacturing-market]
The path forwardTo bridge the gap with global leaders, India must adopt a multifaceted approach: Enhancing infrastructure : Investments in state-of-the-art facilities, reliable utilities, and logistical support are crucial to attract and retain semiconductor manufacturers.
: Investments in state-of-the-art facilities, reliable utilities, and logistical support are crucial to attract and retain semiconductor manufacturers. Strengthening education and training : Expanding programs like C2S and fostering partnerships between academia and industry can cultivate a skilled workforce tailored to the industry's needs.[https://www.india-briefing.com/news/workforce-trends-in-indias-semiconductor-industry-37067.html/]
: Expanding programs like C2S and fostering partnerships between academia and industry can cultivate a skilled workforce tailored to the industry's needs.[https://www.india-briefing.com/news/workforce-trends-in-indias-semiconductor-industry-37067.html/] Encouraging research and innovation : Increasing R&D spending and promoting innovation through grants and incentives can position India as a hub for semiconductor research.
: Increasing R&D spending and promoting innovation through grants and incentives can position India as a hub for semiconductor research. Building strategic alliances: Collaborating with global leaders and participating in initiatives like the United States–India Initiative on Critical and Emerging Technology (iCET) can facilitate technology transfer and joint ventures. [https://en.wikipedia.org/wiki/United_States%E2%80%93India_Initiative_on_Critical_and_Emerging_Technology]
India's journey in the semiconductor domain is marked by ambition and potential. While challenges persist, strategic initiatives, coupled with global collaborations and a focus on infrastructure and skill development, can propel India toward becoming a significant player in the global semiconductor landscape. The road ahead requires concerted efforts from the government, industry, and academia to realize this vision.
* This article is contributed by Dr. Satchidananda Tripathy, Assistant Professor, Department of Management, Paari School of Business, SRM University, AP.*The views and opinions expressed in the story are independent professional judgment of the experts and we do not take any responsibility for the accuracy of their views. The brand is solely liable for the correctness, reliability of the content and/or compliance of applicable laws. The above is non-editorial content and TIL does not guarantee, vouch or endorse any of it. Please take all steps necessary to ascertain that any information and content provided is correct, updated, and verified.
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