India's semiconductor sector has entered a decisive phase, moving from policy formulation to manufacturing and commercial production.
The Semicon India Programme, approved in 2021 with an outlay of ₹76,000 crore, laid the foundation for domestic manufacturing. It has since supported 12 approved manufacturing units with cumulative investment exceeding ₹1.64 lakh crore, five of which had commenced commercial production by September 2026.[2][3][9]
Building on this progress, the Union Cabinet approved Semicon 2.0 in July 2026 with an outlay of ₹1,27,500 crore, aims to strengthen capabilities across the semiconductor value chain. These developments took centre stage at SEMICON India 2026, where global companies and investors explored partnerships and opportunities in India's semiconductor ecosystem.[2][3]
For global companies considering expansion into Asia, India offers opportunities across semiconductor manufacturing, design and the supporting supply chain.
Key Takeaways
- Policy support now spans the full value chain: Semicon 2.0 expands from fabrication to design, equipment, materials, packaging, research and talent.[2]
- The global industry is paying attention: SEMICON India 2026 brought together more than 600 exhibitors, including around 300 international companies from 52 countries, highlighting the growing global engagement with India's semiconductor ecosystem.[3]
- International partners are already in the ecosystem: Approved projects include technology partnerships involving companies from the United States, Taiwan, Japan and Thailand.[1][2]
- Separate route for every kind of strength: Fabs, packaging, design, equipment and materials each offer a distinct entry.
- Investor facilitation is built in: A dedicated portal handles information and grievances.[6]
- Verify before you budget: Confirm scheme rules and eligibility before government support enters project economics.
- Delivery will decide returns: Timelines, demand, yields, skilled labour and infrastructure will count for more than announcements.
Semiconductor Investment in India: The Current Landscape
India's semiconductor manufacturing base is taking shape through fabrication, specialised chip production and packaging facilities. The approved portfolio includes a silicon fab, a silicon carbide fab, a gallium nitride-based micro-LED display fab and nine assembly, testing and packaging units. The first silicon fab is scheduled for commissioning in 2028.[2]
International technology partnerships are helping develop these capabilities. Micron is investing ₹22,516 crore in assembly and testing operations in Gujarat. Tata Electronics is developing a fabrication plant with Taiwan's PSMC, while CG Power's joint venture draws on technology from Japan's Renesas and Thailand's Stars Microelectronics.[1][2]
India is also developing the engineering talent needed to support the sector. Government figures reported in September 2026 show that around 70,000 design engineers had been trained over four years, while students from approximately 400 engineering colleges had access to industry-grade EDA tools.[7]
SEMICON India 2026: What It Means for Global Investors
The fifth edition of SEMICON India ran from 17 to 19 September at Yashobhoomi, New Delhi, under the theme "Silicon to Systems: Building the Ecosystem." It brought together more than 600 exhibitors, around 300 of them international, and recorded 56 MoUs, announcements and strategic initiatives.[3]
For ministries and missions tracking technology cooperation, the international programme stands out. Country pavilions represented Japan, South Korea, Malaysia, the Netherlands, Singapore and Sweden, and six country roundtables covered the United States, Japan, Singapore, Europe, South Korea and Malaysia. Their agendas included commercial partnerships, resilient supply chains and research.[3] At the inauguration, the Prime Minister virtually commissioned production lines at CDIL Semiconductor in Mohali and Suchi Semicon in Surat.[3]
The Union Cabinet approved Semicon 2.0 on 15 July 2026 with an outlay of ₹1,27,500 crore. It rests on six pillars: design, machines and materials, additional fabs, advanced ATMP/OSAT, research and development, and talent.[2]
For international companies, the expanded policy focus creates more ways to participate in India's semiconductor ecosystem. Equipment and materials manufacturers can assess supplier opportunities, while design firms and packaging specialists can explore local operations or technology partnerships. The applicable scheme guidelines will determine which projects qualify for government support.[2]
Emerging Sectors in India's Semiconductor sector
India's semiconductor ecosystem offers different entry points for manufacturers, technology companies and specialist suppliers. The following areas highlight where international businesses can assess investment, partnership and supply opportunities.
Semiconductor Fabrication and Compound Chips
Semicon 2.0 aims to draw more manufacturers into silicon, compound semiconductor, discrete component and display fabs.[2] Foreign companies can consider greenfield facilities, technology partnerships and joint ventures, weighing technology, capacity, demand and access to utilities.
ATMP/OSAT and Advanced Packaging
Packaging readies chips for end products. The government notes that the world now views India as an alternative location for such units, and aims to bring some of the most advanced ATMP technologies here.[2] The India–Malaysia roundtable explored pairing Malaysia's back-end strengths with India's design and engineering base.[3]
Chip Design and Semiconductor IP
Twenty-four design projects from start-ups and MSMEs have received financial support, and 105 have access to industry-standard design tools. Their work spans satellite communications, drones, IoT devices, AI systems and smart meters.[2] Sixteen projects have completed tape-outs and 13 have attracted venture funding.[1]
Semiconductor Equipment, Materials and Supporting Services
Semicon 2.0 will incentivise manufacturers of machines, materials, chemicals and gases, and aims to strengthen precision manufacturing along the way.[2] Overseas suppliers can qualify as vendors to new facilities, set up local operations or partner with Indian engineering firms.
Investors should map their capabilities against approved projects and the six pillars, identify likely customers and partners, confirm incentive eligibility and assess infrastructure needs.
Regulatory and Compliance Requirements for Semiconductor Investment in India
Requirements vary by activity, ownership structure and location, so the regulatory position should be settled before capital is committed.
- 1. Foreign direct investment: India welcomes foreign investment in semiconductor manufacturing, although certain additional conditions apply to investments involving entities with beneficial ownership from countries that share a land border with India. Non-controlling beneficial ownership of up to 10 per cent may qualify for the automatic route, subject to applicable sectoral caps, conditions and reporting requirements. Proposals from such investors in specified manufacturing sectors, including electronic components and polysilicon and ingot-wafer, are subject to a 60-day processing framework. The applicable provisions also require majority shareholding and control to remain with resident Indian citizens or qualifying entities owned and controlled by resident Indian citizens.[5]
- Government incentives: Semicon 1.0 and Semicon 2.0 are separate programmes, so eligible costs, milestones and disbursement terms should be read from the guidelines of the scheme concerned.[2]
- Land and facility approvals: Plan for land use, building permissions, environmental clearances, pollution-control consents, factory approvals, and water, power, safety and labour requirements. The National Single Window System’s ‘Know Your Approvals’ facility can help identify potentially applicable central and state approvals.[8]
- Technology and intellectual property: Settle ownership and licensing for designs and processes, and review export-control and technology-transfer limits.
- Project execution: Allow time for construction, equipment installation, hiring and customer qualification.
The India Semiconductor Mission launched its Investors Support portal on 26 May 2026 at ism.gov.in/investment. It offers information on schemes, policies, approved projects and regulatory requirements, and a single-window channel through which investors can register concerns for resolution with nodal officers across ministries and state governments.[6]
Semiconductor Investment Outlook: What Investors Should Watch
Investors should track the implementation of Semicon 2.0, including scheme guidelines and project approvals, while monitoring the progress of approved facilities towards commercial production. Before committing capital, companies should assess customer demand, production costs, manufacturing yields and capacity utilisation.
Access to skilled talent, reliable utilities and qualified suppliers will also influence project viability. Depending on their capabilities, foreign companies can consider establishing local operations, forming technology partnerships, or supplying semiconductor facilities. These assessments can help investors identify a suitable entry point and evaluate the commercial risks.
Semiconductor Investment Outlook for Global Investors
The next phase of India's semiconductor growth will depend on scaling manufacturing, strengthening domestic capabilities and integrating more closely with global supply chains. For global investors, the rollout of Semicon 2.0, progress at approved facilities, and the development of local suppliers will shape the next phase of growth. Companies that align their technology and expertise with India’s evolving capabilities can position themselves to build long-term partnerships and establish a presence in the country’s growing semiconductor ecosystem.
