India Semiconductor Mission (ISM)

• India Semiconductor Mission (ISM), approved in 2021, aims to boost India’s global electronics value chain presence and establish it as a global manufacturing hub.
  • It operates under the Ministry of Electronics and Information Technology (MeitY). 
• Objective: To support chip design startups, promoting indigenous IP and technology transfer, fostering research, innovation, and industry-academia collaboration.
  • It aims to reduce import dependence to strengthen India’s global semiconductor presence. 
• Mission Focus:
  • Set up chip manufacturing fabs 
  • Create packaging and testing units (ATMP/OSAT) 
  • Support chip design startups 
  • Train engineers and technical talent 
  • Attract global semiconductor investments 
• Key Schemes under ISM:
  • Semiconductor Fabs Scheme: Providing up to 50% fiscal support for wafer fabrication(fabs) units. 
  • Display Fabs Scheme: Up to 50% financial assistance for AMOLED/LCD display fabs to promote domestic innovation. 
  • Compound Semiconductors & ATMP/OSAT Scheme: Up to 50% support for compound semiconductors, MEMS/sensors, silicon photonics, and downstream packaging/testing facilities. 
  • Design Linked Incentive (DLI) Scheme: Promotes semiconductor design startups and Micro Small Medium Enterprises (MSMEs) by financial support  up to Rs 15 crore per company  across product development stages.  

Initiatives to Promote India’s Semiconductor Industry in India 

• Production Linked Incentive (PLI) scheme: PLI for large-scale electronics manufacturing and IT hardware to boost domestic production and exports. 
• Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS): Strengthened component and semiconductor manufacturing ecosystem. 
• Electronics Manufacturing Clusters (EMC & EMC 2.0): Developed infrastructure and ecosystem for electronics manufacturing. 
• Public Procurement (Preference to Make in India) Order, 2017: Prioritizes domestically manufactured products in government procurement. 
• Tax Reforms: Rationalization of tariffs, exemption of basic customs duty on capital goods, and other incentives. 
• FDI Policy: Allows 100% FDI in electronics manufacturing, subject to applicable laws/regulations. 

What are the Key Challenges to India’s Semiconductor Industry? 

• Infrastructure & Innovation Challenges: Semiconductor fabrication involves 500–1,500 complex steps in cleanrooms, requiring advanced infrastructure, technology, and skilled talent.
  • High costs of fab setup, R&D, and equipment, coupled with India’s weak semiconductor research and dependence on imported components and IP, limit innovation and technological self-reliance. 
• Skilled Workforce Gap: India currently employs about 220,000 semiconductor professionals, but the industry faces a projected shortfall of 250,000 to 350,000 skilled workers by 2027 across the semiconductor value chain 
• Technology & Global Competition: Taiwan and South Korea dominate global semiconductor production (80% of chip foundries), while ASML (Netherlands) controls EUV lithography, and Nvidia and ARM lead chip design, limiting India’s access to advanced technologies. 
• Environmental & Regulatory Challenges: Semiconductor manufacturing uses hazardous chemicals, toxic metals, and high energy, creating environmental risks and added compliance costs.
  • Complex regulations, IP issues, export controls, and policy uncertainty increase operational challenges for manufacturers. 

What Steps Should India Take to Strengthen Its Semiconductor Industry? 

• Skill Development: Establish specialized training programs in chip design, fabrication, and testing to build a skilled workforce. 
• Boost R&D & Indigenous IP: Increase investment in research and development, support indigenous product design, and develop intellectual property, enabling startups and smaller companies to compete globally. 
• Incentives & Policy Support: Strengthen government initiatives like India Semiconductor Mission (ISM) and state-level policies (e.g., UP Semiconductor Policy 2024) to attract investments and promote semiconductor manufacturing. 
• Chip Diplomacy & Niche Focus: Promote international collaboration (“chip diplomacy”) and focus on niche technologies like MEMS and sensors to position India in specialized segments of the global market. 
• Private Sector Participation & Strategic Opportunities: Encourage private investment and collaborations, such as Tata-PSMC fab in Gujarat.
  • Leverage geopolitical shifts (US-China tensions) to expand India’s semiconductor footprint. 

India’s semiconductor sector is growing rapidly, driven by ISM, PLI, and SEMICON India, rising domestic demand, and global partnerships. Strengthening infrastructure, technology, and skills will be key to making India a global hub for semiconductor manufacturing and design.