For years, India’s semiconductor ambition was spoken about largely in the future tense. We wanted fabs. We wanted global chipmakers to invest here. We wanted to reduce our dependence on imported semiconductors and establish India as a serious alternative in a highly concentrated global supply chain.
That conversation is beginning to change.
At SEMICON India 2026, the government revealed that Semicon 2.0 has already attracted investment proposals worth between $11 billion and $12 billion. What makes the number particularly interesting is where that money wants to go. The proposals are not limited to chip fabrication. They span semiconductor equipment, materials, specialty gases, chemicals, and substrates- the less visible parts of the industry without which a fab cannot function.
That, to me, is the real story.
India is beginning to move from attracting individual semiconductor projects to building the industrial ecosystem around them.
A Fab Alone Does Not Make a Semiconductor Industry
Semiconductor manufacturing is extraordinarily complex. A chip may eventually emerge from a fabrication plant, but behind it sits a network of equipment manufacturers, chemical suppliers, materials specialists, packaging companies, design firms, precision engineering businesses and highly trained people.
This is why the second phase of India’s semiconductor programme matters.
Semicon 1.0 helped establish the foundation. India has approved 12 semiconductor projects across fabs and packaging, and five manufacturing plants have now begun commercial production. Semicon 2.0, backed by an outlay of ₹1.275 lakh crore, expands the focus across six areas: chip design, materials and machines, additional fabs, packaging, research and development, and talent.
That shift is important because the countries that matter in semiconductors are not simply places where factories happen to be located. They are places where ecosystems have been built over decades.
India cannot replicate those ecosystems overnight. But it can start creating enough depth that companies have a reason to manufacture, design, source, and innovate here rather than merely assemble one part of the value chain.
We are already seeing signs of that progression. Applied Materials has announced plans to invest $5 billion in India over the next decade, focused on areas including research, workforce development and supply-chain capabilities. India’s semiconductor market, meanwhile, is expected to rise from around $64 billion in 2026 to approximately $200 billion by 2035.
India therefore has something many aspiring semiconductor hubs do not: a huge market waiting at home.
Demand Could Become India’s Biggest Advantage
The semiconductor opportunity is sometimes discussed purely as an import-substitution exercise. I think that understates it.
India is simultaneously expanding electronics manufacturing, electric mobility, renewable energy, telecommunications, defence manufacturing, data centres and AI infrastructure. Every one of these sectors needs chips.
Our semiconductor consumption is expected to reach roughly $110 billion by 2030.
That domestic demand can become a powerful advantage if we connect it with domestic capability.
The objective should not be to manufacture every semiconductor India consumes. Semiconductor supply chains are too global and specialised for that to be either practical or necessary. The smarter objective is to identify where India can build genuine competitive depth and where dependence creates strategic vulnerability.
Design is an obvious strength. India already has a large pool of semiconductor engineering talent. Under the current programme, 105 startups are developing chips, around 70,000 design engineers have been trained in four years, and the government is now targeting 200 chip-design companies.
But design talent alone does not create an industry.
The opportunity is to connect that talent with manufacturing, packaging, precision engineering, materials, equipment, research and eventually Indian intellectual property.
That is when India begins capturing substantially more value from the electronics it consumes and exports.
Execution Is Now the Hard Part
The scale of the announcements should not make us underestimate the difficulty ahead.
Semiconductor fabs require enormous capital, highly reliable power and water, specialised infrastructure, global technology partnerships and thousands of skilled people. Yields have to reach commercially viable levels. Suppliers have to arrive at the right time. Projects have to move from approvals to construction and from construction to competitive production.
There have already been reminders that semiconductor timelines can slip. India has approved major projects and commercial production has begun at packaging facilities, but the country has yet to produce chips from a large-scale fabrication plant. The Tata Electronics fab in Gujarat, for example, has faced delays.
This is precisely why the next stage should be judged less by announcements and more by execution.
How quickly do proposed investments become operating facilities? How much local value is actually created? How many Indian suppliers become part of global semiconductor supply chains? Can the engineers we train build careers here? Can Indian design companies create commercially successful IP? And can plants achieve the quality, yield and cost levels global customers demand?
Those will be much more meaningful measures of success than the number of MoUs signed.
There is another challenge India should anticipate early: resilience. As domestic semiconductor capability expands, cyber risk, geopolitical disruption and dependence on single sources of equipment or materials become more consequential. Industry leaders are already calling for diversified suppliers, stronger cybersecurity and strategic inventories for critical inputs.
In other words, building semiconductor capacity is one challenge. Building semiconductor capacity that can survive global shocks is another.
From Make in India to Build an Industry in India
India has spent decades demonstrating its strength in software and technology services. Semiconductors represent a different test.
This is capital-intensive, infrastructure-heavy, precision manufacturing where success is measured in yields, reliability and the ability to improve continuously over many years.
But it also creates an opportunity that extends well beyond chips.
A serious semiconductor ecosystem can create demand for precision engineering, specialty chemicals, advanced materials, clean rooms, industrial equipment, logistics, research institutions and highly skilled employment. The capability built for semiconductors can strengthen several other advanced manufacturing industries around it.
That is why I find the latest $11–12 billion of proposals significant.
Not because another large investment number makes for a good headline.
But because the nature of those proposals suggests the conversation is finally broadening from “Who will build a fab in India?” to “Who will build the ecosystem that makes those fabs competitive?”
For India, that is the more important question.
The ambition has been established. Capital is beginning to arrive. Plants are beginning to produce. Talent is being developed, and global suppliers are showing greater interest.
Now comes the difficult part: converting all of that momentum into an industry that can compete globally for decades.
