India’s Electronics and Semiconductor Manufacturing Push in 2025
India has entered a new phase in its industrial growth story, one defined not just by assembling electronics, but by creating the chips and circuits that power them. The country’s push into electronics and semiconductor manufacturing is no longer just a policy ambition; it has begun to take shape through substantial investments, public–private partnerships, and visible construction activity. Yet, the journey is both monumental and fragile, the kind of transformation that can redefine an economy if executed with precision.
From Vision to Ground Reality
For over a decade, India has spoken about becoming a hub for electronics manufacturing. What makes 2025 different is that these conversations have started to translate into ground-level action. The India Semiconductor Mission (ISM), established under the Ministry of Electronics and Information Technology (MeitY), has become the nucleus of this movement. It coordinates large-scale incentives, facilitates industry approvals, and works with state governments to make high-value manufacturing viable on Indian soil.
Under this mission, the government has offered up to 50 percent fiscal support for approved projects, a crucial move in a sector where establishing a single fabrication plant (or “fab”) can cost anywhere between US$7 billion and US$12 billion. The aim is not only to attract global players but also to create local champions capable of competing on both quality and cost.
This renewed push found its most visible symbol in Tata Electronics’ semiconductor project in Dholera, Gujarat. With an investment exceeding ₹91,000 crore (around US$11 billion), the plant marks the first large-scale, end-to-end semiconductor manufacturing facility in India. The site has already begun early-stage construction, signaling a shift from policy to practice. Meanwhile, another significant proposal, the HCL–Foxconn joint venture near Jewar, Uttar Pradesh, has received cabinet approval, targeting production by 2027. These developments collectively indicate that India’s semiconductor dream is finally acquiring the one thing it had long lacked: momentum.
The Economic Scale of the Opportunity
The numbers behind this transformation tell a clear story. India’s semiconductor market, valued at around US$45–50 billion in 2025, is expected to double by 2030, according to market analysts and trade associations. This growth is driven primarily by surging demand for consumer electronics, automotive chips, and data infrastructure, all of which have seen accelerated investment post-pandemic.
This scale-up has dual benefits. On one hand, it promises to reduce India’s overwhelming dependence on imported chips, a vulnerability that became painfully evident during the global semiconductor shortage of 2020–2022. On the other, it opens doors for India to export to emerging markets in Southeast Asia, Africa, and even parts of Europe, where demand for mid-range semiconductors is outpacing supply.
In practical terms, the goal is not to rival Taiwan or South Korea overnight, but to capture a significant share of the global backend, design, and testing markets, which together represent nearly 35 percent of semiconductor value creation. This is where India’s existing strength in engineering, IT, and manufacturing management gives it a clear comparative advantage.
Building the Ecosystem Around the Fabs
The government has understood that semiconductor success is not achieved by building fabs alone. Each fabrication unit depends on a complex ecosystem of suppliers, technicians, and precision component manufacturers. To fill these gaps, the government has expanded the Production-Linked Incentive (PLI) schemes to cover passive electronic components such as resistors, connectors, capacitors, and sensors, the unsung but essential pieces of any electronic system.
By offering these incentives, India aims to nurture a supply chain that can feed both domestic assembly plants and export markets. The goal is to ensure that fabs and test facilities do not become isolated islands but part of an integrated industrial corridor. In fact, several state governments, including Tamil Nadu, Karnataka, and Gujarat, have begun setting up specialized industrial parks and skill training programs for semiconductor technicians.
The human capital dimension is equally important. Operating a fab requires engineers trained in lithography, materials science, and cleanroom protocols, skills that are not yet widely available in India. Recognizing this, institutions such as IIT Madras and the Indian Institute of Science have launched dedicated semiconductor training programs in partnership with global firms. Over time, this could help India cultivate a domestic pool of technical experts capable of running and maintaining world-class facilities.
The Challenges That Still Stand in the Way
Despite the optimism, the semiconductor story is far from straightforward. The capital intensity of the sector is staggering. A fabrication facility takes several years to build and can only break even if it runs at near-full capacity, a target that depends on both domestic and export demand. If global markets slow or geopolitical tensions rise, utilization rates can fall dramatically, threatening profitability.
Infrastructure is another concern. Semiconductor manufacturing requires uninterrupted electricity, high-purity water, and advanced waste management systems. While states like Gujarat and Tamil Nadu have made impressive progress, replicating these conditions across multiple regions remains challenging. Furthermore, the global supply chain for critical materials, such as photoresists, rare gases, and specialized chemicals, remains heavily concentrated in Japan, South Korea, and the United States. Building domestic alternatives will take time and consistent policy support.
Then there is the issue of talent readiness. India’s strength in chip design is undeniable; many global semiconductor firms already rely on Indian engineers for R&D and software integration. But running a wafer fab is a different game altogether, one that requires hands-on operational expertise, process control specialists, and technicians trained to handle extreme precision. This is an area where industry partnerships and skill exchange programs will be critical.
Signs of Real Progress
For those watching the sector closely, there are a few tangible markers that indicate real progress. The first is the physical construction of facilities like Tata’s Dholera fab, a clear sign that capital is being deployed, not just promised. The second is the rise of domestic suppliers capable of producing essential inputs like substrates and wafers. Companies in Gujarat and Maharashtra are beginning to scale up small but vital components of the value chain.
Another important sign is the growth of local design ecosystems. Indian startups in chip design, electronic design automation (EDA), and testing solutions are gaining visibility. If this trend continues, India could become a design-to-manufacture hub, where products are conceived, prototyped, and built entirely within national borders.
A Future Built Layer by Layer
India’s push into electronics and semiconductors is a long-term play. It is not a race for quick wins but a deliberate effort to build industrial depth. The government’s policy structure has given private players confidence to invest; companies like Tata, HCL, and Foxconn have begun turning policy promises into physical assets. But success will depend on the next phase, how effectively India can bridge the supply chain gaps, train a new generation of engineers, and build reliable infrastructure at scale.
If these pieces fall into place, India could emerge as a credible player in global electronics manufacturing, not just assembling the world’s devices, but creating the chips that make them work. The next few years will decide whether this transformation becomes a defining chapter of India’s industrial future or remains an ambitious policy experiment. For now, the direction is clear, the momentum is visible, and the stakes could not be higher.