India is preparing to deploy $13 billion in the second phase of its national semiconductor mission, aiming to build a full-spectrum domestic chip ecosystem spanning design, manufacturing, assembly, and testing. The drive is fuelled by a strategic imperative: the country currently imports between 90 and 95 per cent of its semiconductors, according to a NITI Aayog report, while domestic demand is projected to exceed $200 billion by 2035.

Projects on the Ground

The Centre has already approved 12 semiconductor projects across six states, with companies including Micron, Kaynes Semicon, and CG Semi beginning commercial production this year. The initial output is concentrated in assembly, testing, and packaging rather than advanced wafer fabrication — reflecting where India's industrial readiness currently stands.

The most closely watched project is a joint venture between Tata Electronics and Taiwan's Powerchip Semiconductor at Dholera, Gujarat, which is targeting its first chip output in December. Separately, Tata has signed an $11 billion memorandum of understanding with Dutch lithography giant ASML for advanced chipmaking equipment, with applications spanning the automotive and artificial intelligence sectors.

The Talent Equation

India's most durable competitive edge in semiconductors lies in its large base of chip-design engineers — a pool built over decades through its IT services industry. However, the country faces a more acute shortage of fab-floor operators and process engineers capable of managing wafer production and converting raw silicon into functioning chips.

The government is moving to close that gap. Union Minister Ashwini Vaishnaw has stated that India aims to develop 100,000 semiconductor engineers, and notably, 85,000 have already been trained within four years — against an original target that had projected the same milestone would take ten years. Semiconductor design programmes are now offered at 355 universities, including institutions in smaller cities and towns, broadening the talent pipeline beyond traditional tech hubs.

This comes amid a global context that favours India's ambitions: the worldwide semiconductor industry is projected to face a shortage of approximately 1 million workers by 2032, according to industry estimates, potentially handing India a structural workforce advantage if its training programmes scale effectively.

Financial Incentives and State Support

To attract private and foreign investment, the Centre is offering subsidies covering up to 50 per cent of semiconductor manufacturing project costs. State governments are providing additional financial support, creating a layered incentive structure designed to reduce the capital risk for chipmakers considering India as a production base.

This is the second phase of the India Semiconductor Mission, building on the first phase which laid the regulatory and institutional groundwork. The scale of the current commitment — $13 billion — signals a significant escalation in ambition.

The Bigger Strategic Picture

Analysts note that India's semiconductor strategy is effectively an attempt to move beyond the 'Make in India' framing toward what policymakers are calling 'Engineer in India' — positioning the country's engineering workforce as the foundational asset for a complete chip ecosystem rather than merely an assembly destination. The critical test, however, will be whether design-side talent can be complemented by the manufacturing skills, process infrastructure, technology access, and industrial supply networks that competitive chip production demands. India's success in bridging that gap will determine whether the $13 billion investment translates into genuine strategic autonomy or remains concentrated in the lower-value tiers of the global semiconductor supply chain.