India Invests $23 Billion to Build Domestic Semiconductor Industry

The Government of India has earmarked approximately $23 billion over the last five years to establish a domestic semiconductor industry. Led by Prime Minister Narendra Modi and Minister Ashwini Vaishnaw, the initiative aims to integrate India into global supply chains and reduce Western reliance on China by leveraging the country's large domestic market and pool of chip designers.

The government has approved about a dozen projects to date. An assembly and test facility in Gujarat began production this year, while a similar facility in Assam is expected to start commercial production in 2027. A major $11 billion wafer fabrication plant in Gujarat, a joint venture between Tata Electronics and Powerchip Semiconductor Manufacturing Corp., is slated for 2028. This plant will focus on 90-nanometer legacy chips for mobile and automotive applications.

Despite these investments, critics highlight a history of failed semiconductor projects in the region. They point to a challenging business environment characterized by policy unpredictability and poor infrastructure as significant hurdles to the mission's long-term success.