India is poised to launch a substantial fund dedicated to enhancing domestic chip making capabilities, as part of its strategic drive to emerge as a global manufacturing powerhouse.

This initiative, valued at approximately ₹99,943.75 Crores at current exchange rates, targets subsidies for chip design initiatives, manufacturing equipment, and the development of critical supply chains.

Sources close to the matter indicate that the fund could be unveiled within the next two to three months, although discussions are ongoing and details remain subject to potential revisions.

Prime Minister Narendra Modi's administration is intensifying efforts to propel India's semiconductor ambitions forward, which are currently nascent with only a limited number of significant projects in progress. This move aligns with a worldwide trend where governments are bolstering their chip sectors to achieve greater self-reliance and meet surging demand from sectors such as artificial intelligence, smartphones, automobiles, and consumer appliances.

The scale of India's proposed fund, while modest compared to international benchmarks, mirrors initiatives like the United States' ₹4.36 lakh crore Chips and Science Act, which underwrites expanded local production capacities. In China, state-backed investment vehicles channel funds into pivotal firms across the semiconductor ecosystem, underscoring a global race for technological sovereignty.

New Delhi seeks to attract leading chip manufacturers to India—the world's most populous nation—by leveraging its vast pool of engineering and design expertise alongside generous fiscal incentives. This strategy echoes the success with Apple Inc., which now assembles 25 per cent of its iPhones in the country, bolstered by similar production-linked subsidies.

The new semiconductor incentives will integrate seamlessly with existing federal schemes supporting smartphones and electronic components, fostering a cohesive ecosystem for domestic manufacturing and export growth. India's Ministry of Electronics and Information Technology, tasked with overseeing the fund, has yet to issue an official statement on the proposal.

This development builds upon the ₹83,500 crore incentive package introduced in 2021, which pledged to cover up to 50 per cent of project costs for chip fabrication and related facilities. That programme has catalysed key investments, including US-based Micron Technology Inc.'s assembly and testing plant in Gujarat's Sanand district.

The TATA Group, India's diversified conglomerate spanning sectors from salt to software, is advancing a semiconductor fabrication plant in Gujarat—Prime Minister Modi's home state—alongside a dedicated chip packaging facility. Other announcements include Foxconn Technology Group's test, assembly, and packaging unit, all spurred by government incentives.

Although India's initial projects emphasise less advanced chip technologies, ambitions remain high to ascend the value chain towards cutting-edge semiconductors. Federal Technology Minister Ashwini Vaishnaw has articulated a bold vision for India to rival frontrunners like Taiwan, South Korea, and the United States, targeting comparable chipmaking prowess by 2032.

This approx.1 Lakh Crores infusion signals a pivotal escalation in India's self-reliance campaign under the Atmanirbhar Bharat banner, addressing vulnerabilities in global supply chains exposed by recent geopolitical tensions and pandemics.

By nurturing indigenous capabilities, India aims not only to reduce import dependence—currently over 95 per cent for semiconductors—but also to position itself as a vital node in diversified, resilient tech manufacturing networks.

Success hinges on swift execution, attracting foreign direct investment, and bridging skill gaps through targeted training programmes. With established players like TATA and Micron paving the way, alongside potential partnerships with global giants, India could accelerate its timeline, potentially capturing a larger slice of the projected $1 trillion global semiconductor market by the early 2030s.

Challenges persist, including high capital intensity, water and power demands for fabs, and competition from subsidised rivals in Southeast Asia. Nevertheless, the fund's focus on design, equipment, and supply chains promises a holistic approach, fostering innovation from IP creation to high-volume production.

Agencies