India’s ambition to build a robust domestic semiconductor ecosystem is entering a decisive phase, as multiple large-scale projects move from policy announcements to on-ground execution. Backed by substantial fiscal incentives under the Semicon India Programme and growing participation from global and domestic players, the country’s semiconductor strategy is beginning to translate into tangible industrial capacity.
The government’s semiconductor initiative, steered by the India Semiconductor Mission, provides fiscal support of up to 50 percent of project costs for approved applicants. As of late 2025, officials confirmed that ten semiconductor-related projects had been approved across six states, representing a combined investment of approximately ₹1.60 lakh crore. The approvals span wafer fabrication, assembly and testing facilities, and supporting infrastructure, reflecting a broader attempt to establish an integrated semiconductor value chain within the country.
A key development in this push is the progress of Micron Technology’s assembly, test, marking and packaging facility in Sanand, Gujarat. The facility is expected to begin production in early 2026, marking one of the first major semiconductor manufacturing operations to become operational under the current policy framework. Industry observers see this as a critical milestone, not only for its output potential but also as a demonstration of India’s ability to execute semiconductor-grade infrastructure projects that demand highly reliable utilities, cleanroom environments and complex supply chain coordination.
In parallel, Tata Electronics has emerged as a central player in India’s semiconductor strategy. The company is developing a semiconductor fabrication facility in Gujarat with an announced investment of ₹91,526 crore, in partnership with Taiwan-based Powerchip Semiconductor Manufacturing Corporation (PSMC). The project is designed with a planned capacity of around 50,000 wafer starts per month. If executed successfully, it would represent a significant step toward establishing domestic wafer fabrication capabilities, an area traditionally dominated by a handful of countries.
Beyond fabrication, Tata Electronics is also investing in semiconductor packaging infrastructure. Its proposed facility in Assam, with an investment of ₹27,120 crore, is expected to handle high-volume packaging operations. Packaging and testing facilities, often referred to as OSAT or ATMP units, are considered strategically important because they can be built and operationalized more quickly than full-scale wafer fabs. They also align closely with India’s existing electronics manufacturing ecosystem, which includes smartphones, automotive electronics, consumer appliances and industrial devices.
Other companies are also contributing to the ecosystem. CG Power and Industrial Solutions is establishing a semiconductor facility in Gujarat through a joint venture that includes global partners Renesas and STARS Microelectronics. The project has received government approval and is positioned to enhance India’s advanced packaging capabilities. Similarly, Kaynes Technology has secured approval for a semiconductor unit focused on packaging technologies such as wire-bond interconnect and substrate-based packages, further diversifying the country’s capabilities in chip assembly and testing.
In northern India, a joint venture between HCL and Foxconn is setting up an OSAT facility in Uttar Pradesh’s YEIDA region. The project, with an announced investment of ₹3,700 crore, is expected to become operational later this decade. The geographical spread of projects across Gujarat, Assam and Uttar Pradesh reflects a deliberate policy approach to create multiple semiconductor clusters rather than concentrate activity in a single region.
The economic implications of these developments extend beyond chip production alone. Semiconductor facilities typically generate demand for a range of ancillary industries, including specialty chemicals, ultra-pure gases, precision engineering services, logistics, cleanroom construction and equipment maintenance. As these projects scale, they are expected to stimulate investment across the broader electronics and advanced manufacturing ecosystem.
For India’s electronics manufacturers, domestic packaging and testing capacity could gradually reduce dependence on overseas facilities, potentially improving supply chain resilience. The experience of recent global chip shortages highlighted the risks of concentrated manufacturing in limited geographies. Policymakers argue that building even partial semiconductor capabilities domestically can strengthen national supply security, particularly for strategic sectors such as telecommunications, defense and automotive manufacturing.
However, the semiconductor industry remains one of the most complex and capital-intensive sectors globally. Building facilities is only the first step; achieving stable production yields, meeting stringent global quality standards and securing long-term customer contracts are equally critical. Semiconductor fabrication and advanced packaging require uninterrupted power supply, high volumes of treated water, strict environmental controls and a highly skilled workforce trained in process engineering and equipment management.
Talent development is therefore emerging as a parallel priority. India has a strong base of semiconductor design engineers, but manufacturing operations demand specialized technical skills in process control, yield optimization and equipment maintenance. Industry and academic institutions are increasingly focusing on skill development programs tailored to semiconductor manufacturing needs.
While India’s semiconductor journey is still in its early stages compared to established manufacturing hubs, the scale and seriousness of recent investments suggest that the policy environment is beginning to attract sustained industry commitment. The coming years will determine whether these projects can move smoothly from construction to commercial production and achieve meaningful integration with global supply chains.
If current timelines are met and production ramps up as planned, India’s semiconductor push could mark a structural shift in its manufacturing landscape. From packaging and testing to wafer fabrication, the gradual build-out of capacity has the potential to strengthen the country’s industrial base, create high-skilled employment and position India as an emerging player in the global semiconductor ecosystem.
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Edited by Madhusudhan Reddy
Last Updated on: Thursday, February 26, 2026 12:02 pm by News Proton Team | Published by: News Proton Team on Thursday, February 26, 2026 12:02 pm | News Categories: Technology