India is reportedly preparing to roll out a new semiconductor support fund worth around $11 billion (~ ₹1 lakh crore). The proposed fund would expand the government’s push to attract global semiconductor manufacturers and strengthen local capabilities across fabrication, packaging, testing and chip design, reports Bloomberg. The move builds on India’s earlier $10 billion semiconductor incentive program launched in 2021, which aims to develop a full chipmaking ecosystem in the country. Notably, semiconductors are critical components used in smartphones, cars, data centers and AI systems, and the country is currently heavily dependent on imports to meet its growing demand.
The new funding initiative is expected to serve as the next phase of India’s semiconductor strategy. Government officials are reportedly considering using the fund to provide subsidies and financial incentives to companies setting up semiconductor fabrication plants, assembly and testing units, advanced packaging facilities and chip design centers in the country. A significant portion of the support is also expected to go toward strengthening the domestic supply chain for semiconductor manufacturing, including materials, equipment and supporting infrastructure.
Semiconductor manufacturing is one of the most capital-intensive industries in the world. Building a single advanced fabrication plant can cost between $10 billion and $20 billion, while the equipment required for cutting-edge production – like lithography systems, wafer processing tools and ultra-clean manufacturing environments – adds billions more to the total cost. Because of these high barriers to entry, governments around the world have increasingly stepped in with financial incentives to attract chipmakers and secure domestic production capacity.
India’s earlier semiconductor incentive package announced in 2021 under the India Semiconductor Mission committed around $10 billion in government support for semiconductor fabrication, display manufacturing and chip design. That program was designed to cover up to 50% of project costs for semiconductor fabs and display manufacturing units.
The latest move also comes months after the Indian government approved about 22 electronics component projects worth $4.6 billion (around ₹41,863 crore) aimed at boosting domestic production of critical electronic parts. At the time, the government also stated that it had set an ambitious target of reaching $500 billion in total electronics output by the fiscal year 2031. Estimates suggest that the country’s semiconductor demand could reach between $80 billion and $100 billion by 2030.
All these efforts become even more crucial as China is also tightening its technology and manufacturing ecosystem. Recently, the country mandated that chipmakers setting up or expanding fabrication plants must source at least 50% of their equipment from domestic suppliers, while also rolling out state-backed funds worth over 150 billion yuan (~ $21 billion) to support hard-technology sectors.
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