29 January 2024

India's Semiconductor Self-Reliance Roadmap: Opportunities And Challenges

King, Stubb & Kasiva


King Stubb & Kasiva (KSK) - Advocates & Attorneys is a full-service law firm in India that has been operating since 2005 based in Delhi, Mumbai, Bengaluru, Chennai, Hyderabad, Kochi, & Italy with 120+ professionals. We specialise in M&A, litigation, arbitration, employment, labour, banking, finance, e-commerce, and emerging technology practices.
Semiconductors, the miniature marvels powering the digital age, form the invisible backbone of modern technology.
India Technology
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Semiconductors, the miniature marvels powering the digital age, form the invisible backbone of modern technology. From smartphones and medical devices to automobiles and artificial intelligence, these ubiquitous chips orchestrate the symphony of our interconnected world. In this context, India's burgeoning domestic market and ambitious technological aspirations necessitate a reassessment of its reliance on imported semiconductors.

Currently, India ranks as a major consumer of semiconductors but remains heavily reliant on external sources for their supply.1 This dependence poses strategic and economic vulnerabilities, highlighting the crucial need for a robust domestic semiconductor industry. Recognizing this imperative, the Government of India has embarked on a concerted effort to achieve self-reliance in this critical sector.

Spearheaded by the India Semiconductor Mission, this endeavour presents both formidable challenges and promising opportunities. The roadmap ahead demands navigating complex technological intricacies, building a skilled workforce, and fostering a flourishing ecosystem of players across the entire value chain. However, success promises not only economic diversification and job creation but also enhanced strategic autonomy and a potential driver for India's technology-driven future.

This article discusses the intricate tapestry of India's semiconductor self-reliance roadmap. We will analyze the multifaceted challenges and exhilarating opportunities, dissect the strategies adopted by different states, and examine the crucial role of budgetary allocations and the Production Linked Incentive ("PLI") scheme.

By embarking on this ambitious journey, India seeks to rewrite the script of its semiconductor dependence. As we explore the complexities and potential of this path, a key question remains – can India forge its own Silicon Valley and redefine its role in the global technology arena?

Challenges and Opportunities: Navigating the Semiconductor Landscape

India's pursuit of semiconductor self-reliance faces a constellation of challenges intertwined with promising opportunities.

Technological Hurdles

The sheer complexity and capital-intensiveness of semiconductor manufacturing present a formidable barrier. Setting up fabrication plants ("fabs") demands cutting-edge technologies, sophisticated materials, and a meticulous production process with razor-thin margins for error. Furthermore, attracting and nurturing a highly skilled workforce capable of operating and maintaining this intricate ecosystem is critical. Additionally, technology transfer restrictions imposed by established players can impede access to crucial know-how, necessitating the development of indigenous capabilities.

Market Realities

Navigating the global semiconductor market, dominated by established players like Taiwan and South Korea, poses another significant challenge. Building domestic demand for domestically produced chips is crucial to nurture a sustainable ecosystem. This requires fostering a robust domestic electronics sector and creating incentives for consumers to choose "Made in India" chips.

Glimmering Potential

Despite these challenges, the rewards of achieving semiconductor self-reliance are equally compelling. The potential for job creation across the entire value chain, from raw material extraction to chip design and fabrication, is substantial. Diversifying and strengthening the domestic electronics sector, coupled with enhanced technological self-reliance, can fuel broader economic growth. Furthermore, achieving self-sufficiency in this critical sector would bolster India's strategic autonomy, reducing dependence on external sources for a technology underpinning national security and critical infrastructure.

Niche Opportunities

While establishing comprehensive fabrication capabilities will take time, India can exploit specific avenues for immediate success. Focusing on niche segments like analog chips, used in power management and sensors, offers lucrative possibilities. Additionally, India's growing expertise in fabless design, where chips are designed without in-house fabrication, presents another promising pathway. Leveraging its large domestic market and flourishing electronics sector to create and cater to specific demand segments can provide a strong foothold in this competitive landscape.

State-level Strategies: Cultivating Silicon Valleys

India's journey towards semiconductor self-reliance involves not just national resolve but also concerted efforts at the state level. With a range of strategies and incentives being rolled out, several states are emerging as frontrunners in this race.

Tamil Nadu's Comprehensive Approach

The Tamil Nadu government has taken a proactive stance, unveiling a dedicated semiconductor policy that's brimming with attractive features.2 Financial incentives like land subsidies and capital grants aim to lure players. Infrastructure development initiatives, including designated semiconductor manufacturing zones like SIPCOT Siruseri, seek to provide a ready platform. Talent development programs, in partnership with academia and industry, aim to bridge the skilled workforce gap. This comprehensive approach holds promise in attracting investments. However, challenges remain. Complexities in land acquisition and concerns over operational costs require careful attention. Here is a brief of Tamil Nadu's Semiconductor and Advanced Electronics Policy 2024:3



Semiconductor & Electronics Manufacturing

  • Electronics sector captures 20% of global trade.
  • Increased demand for semiconductors globally.
  • Tamil Nadu is the Electronics Manufacturing Services ("EMS") hub of India.
  • The state achieved USD 5.37 billion in exports in 2022-23.
  • Strong base in semiconductor design with over 100 academic institutions.

Need for Semiconductor and Advanced Electronics Policy

  • Strategic focus due to evolving geopolitics and increased demand for intricate logic and memory chips.
  • Surge in investments in new technologies and advanced manufacturing.
  • Interest in areas like Storage for Logic ICs, Microcontroller Units for ADAS, and RF chips for wireless telecom.


  • Propel Tamil Nadu to the apex position in the semiconductor and advanced electronics industry.
  • Generate high-skilled employment and accelerate innovation.


  • Attract anchor investments in semiconductor and advanced electronics manufacturing.
  • Enable a semiconductor design ecosystem through incentives and collaboration.
  • Contribute 40% of India's electronics exports by 2030.
  • Create a skilled talent pool of 2,00,000 persons by 2030.

Advantage Tamil Nadu

  • Strong emphasis on technical education with leading institutions.
  • The skilled talent pool, R&D ecosystem, and testing infrastructure.
  • Robust logistics and connectivity.

Scope of the Policy

  • Covers semiconductor manufacturing projects, advanced electronics manufacturing, and high-end design/research entities.

Structured Package for Semiconductor Manufacturing

  • Eligibility criteria and incentives for semiconductor manufacturing projects approved by the Government of India.

Structured Package for Advanced Electronics Manufacturing

  • Eligibility criteria and incentives for new/expansion projects in advanced electronics manufacturing.

Incentives for High-end Electronics Design/Research

  • Incentives for global research/design entities engaged in semiconductor design, equipment design, high-end product development, and ESDM software.

Promotion of Electronic-Waste Recycling Ecosystem

  • Commitment to scaling the e-waste recycling ecosystem for sustainability and business opportunities.

Funding Mechanisms

  • Various funding avenues, including equity/debt financing, research and technology adoption fund, and emerging sector seed fund.

Policy Implementation

  • Nodal agency, term of policy, applicability for expansions, and operational guidelines.

Gujarat's Potential

Vibrant Gujarat seems to be heating the silicon scene. Tech titans Micron and SEMI's investments, alongside MoUs with Simmtech, ArcelorMittal Nippon Steel ("AMNS"), and Cisco, paint a vibrant picture for the state's semiconductor ambitions. This echoes the Gujarat Semiconductor Policy's key goals:

  • Attracting major players, fostering collaboration, and building a robust talent pipeline.
  • AMNS and Micron's MoU align perfectly with the policy's focus on skill development, while Simmtech's PCB manufacturing commitment directly addresses the policy's emphasis on upstream components.

With these pieces falling into place, Gujarat is poised to become a major player in India's semiconductor revolution.4

The 10th Vibrant Gujarat Summit

The 10th edition of the summit witnessed the signing of MoUs worth Rs 26.33 lakh crore for 41,299 projects.5 The highlights are as follows:



Investment (in crore Rs)


Torrent Group

Various projects, renewable energy, solar park


Investments announced during Vibrant Gujarat 2024.

Gujarat Maritime Board

Port sector, jetties, infrastructure development

₹800 (with Indian Navy)

MoUs signed on the second day of the summit.

Indian Navy and Coast Guard

Jetties, infrastructure development

₹800 (with GMB)

Collaboration with Gujarat Maritime Board.

Indian National Space Promotion and Authorisation Centre (IN-SPACe)

Semiconductor design ecosystem, talent development


MoU with Gujarat Knowledge Society.

Deendayal Port Authority

Port infrastructure development


MoU signed with Umeandus Technologies.

Jio Energy and Gujarat Government

Renewable energy


Agreement in the field of renewable energy.

Leela Ship Recycling Pvt Ltd

Ship recycling expansion


MoU signed with GMB for expansion plans.

Open Network for Digital Commerce (ONDC)

Digital platform


MoU with the Gujarat government for vendors and retailers.


The semiconductor unit at Sanand in Ahmedabad


Setting up a unit at Sanand in Ahmedabad.

ArcelorMittal Nippon Steel, Micron Technology, Cisco

Semiconductor sector, B2B MoUs


B2B collaborations in the semiconductor sector.

Kaushalya Skill University

Skilling of the workforce for Industry 4.0


14 agreements for skill requirements for the future workforce.

Gujarat Maritime University and Gujarat Pipavav Port Ltd

Port-related centre of excellence


MoU signed for setting up a port-related centre of excellence.

Additionally, a sectoral breakup looks as follows: 6


Investment (Rs.)

Power, Oil, and Gas (including green energy)

₹17.6 Lakh Crore

Chemicals, Petrochemicals, GIDC Large Projects

₹5.34 Lakh Crore

Engineering, Auto, and Other Industries

₹5.24 Lakh Crore

Urban Development

₹3.7 Lakh Crore

Financial Services

₹2.2 Lakh Crore


₹1.96 Lakh Crore

Gujarat Semiconductor Policy 2022-27

Furthermore, Gujarat's Semiconductor Policy sweetens the deal for chipmakers with juicy capital grants, interest subsidies, and tax breaks, making Gujarat a magnet for investment. It goes beyond just cash, though, actively fostering collaboration through industry-academia partnerships, skill development and collaboration with universities. Here is a breakdown:




Strengthen the electronics system design and manufacturing ecosystem and become part of the global semiconductor sector's value chain.

Policy Duration


Key Sectors Targeted

Semiconductor fabrication units, display fabrication units, silicon photonics, semiconductor assembly, testing, marking, and packaging facilities.

Semicon City

'Semicon City' to be set up over 5000-10,000 acres at Dholera Special Investment Region ("SIR") as a dedicated manufacturing base.

Job Creation Goal

Aim to generate about 2 lakh (200,000) jobs in the next five years.

Eligibility Criteria

Projects approved under the 'Scheme for setting up of Semiconductor Fabs in India' and 'Scheme for setting up of Compound Semiconductors /Silicon Photonics / Sensors Fab and Semiconductor Assembly, Testing, Marking, and Packaging ("ATMP") / OSAT facilities in India' by ISM.

Support for Eligible Projects

Facilitate land allotment, approvals processes, and access to utilities, Fiscal incentives and support packages offered.

Land Subsidy

75% subsidy on the first 200 acres of land for the FAB project; an additional 50% subsidy on extra land is required.

Stamp Duty and Registration Fee

One-time reimbursement of 100% for eligible projects.


Access to potable water at ₹12 per cubic meter for five years; 10% annual increase for the next five years. Capital subsidy for desalination plant if built in the initial five years.


Power tariff subsidy of ₹2 per unit for 10 years. Exemption from electricity duty.

Capital Assistance

40% of the capital expenditure assistance from the central government was disbursed over five years.

Non-Fiscal Incentives

Ease of doing business support, single window clearance, effluent and hazardous waste management, uninterrupted power and water supply, and facilitation in land procurement.

Administrative Agencies

High-Powered Committee ("HPC") for projects with a proposed investment of INR 10 billion or more. State-Level Empowered Committee ("SLEC") for projects with a proposed investment of less than INR 10 billion.

Policy Support Throughout Cycle

Self-certification, single window clearance, effluent and hazardous waste management, uninterrupted power and water supply, facilitation in land procurement.

Comparing Tamil Nadu and Gujarat reveals interesting contrasts. While Tamil Nadu focuses on a comprehensive ecosystem, Gujarat's expertise in attracting large investments could prove advantageous. However, concerns regarding its existing infrastructure and talent pool need to be addressed.

Odisha's Emerging Focus

Odisha, a rising star in India's manufacturing landscape, is also entering the game. The state recently announced a draft semiconductor policy offering attractive incentives like 100% land cost reimbursement, capital grants, and subsidized power tariffs.7 Additionally, Odisha boasts deep water ports and a strong focus on developing industrial corridors, making it a potentially attractive destination for chipmakers. However, its talent pool and existing infrastructure require further development. Here is a breakdown of Odisha's Semiconductor Manufacturing and Fabless Policy:8




Electronics and semiconductors are crucial for economic growth and strategic security. ICT sector growth.


  • Develop an end-to-end semiconductor ecosystem in Odisha.
  • Transform Odisha into a semiconductor hub.


  • Create a semiconductor ecosystem for economic growth and self-reliance.
  • Build state-of-the-art infrastructure for collaboration.
  • Attract chip design companies and startups.
  • Generate high-end jobs and an industry-ready talent pool.
  • Deliver at least two chip designs annually.

Implementing Agency


Odisha Computer Applications Centre ("OCAC").

Land: Concessional rates, and additional discounts for mega projects.

Stamp Duty: 100% exemption.

Capital Investment Subsidy: 25% Capex contribution.

Electricity Duty & Inspection: 100% exemption for 10 years.

Power Tariff Reimbursement: Rs. 2.00 per unit for 10 years.

Interest Subsidy: 5% per annum up to INR 25 crores for 7 years.

Water Supply & Incentives: INR 7.65/cubic meter for 10 years.

Implementation & Monitoring

SGST Reimbursement: 100% of net SGST paid.

Policy Amendments

Raw Materials: 10% capex incentives.

Fabless Companies: Seed money, milestone reimbursements, patent registration support.

Manufacturing Incentives: Production Linked Incentive (PLI) and additional incentives.

Semiconductor Trained Manpower & Skilling: Support for education and training programs.

  • Apex Committee and Policy Advisory Group.
  • OCAC as the Nodal Agency.
  • Periodic reviews by the Electronics & Information Technology Department.

State Government reserves the right to amend any provision.

Ultimately, the "ease of doing business" plays a pivotal role in attracting investments. States must streamline regulatory processes, expedite approvals, and establish transparent governance mechanisms. A comparative analysis of different states' regulatory environments and business facilitation efforts is crucial. Identifying which state fosters the most conducive environment for semiconductor players will be a key determinant of investment flow.

Budget and PLI Angle: Fueling the Engine

Government support, both financial and strategic, is vital for propelling India's semiconductor ambitions. Budgetary allocations dedicated to research and development, infrastructure development, and skill development schemes play a crucial role in laying the foundation.

Additionally, the PLI has emerged as a key instrument in attracting investments and fostering domestic chip design companies. By offering financial incentives tied to production and design milestones, the PLI has spurred interest from global players and Indian startups alike. Analyzing its effectiveness in attracting investments and supporting domestic companies is crucial for making necessary adjustments and maximizing its impact.

However, continued and consistent government support is critical for long-term success. Sustaining budgetary allocations, ensuring timely disbursements, and demonstrating unwavering commitment will inspire confidence and attract long-term investments.

Looking Forward

As India charts its semiconductor self-reliance roadmap, the convergence of state-level strategies and national initiatives, particularly through the PLI scheme and Budget 2024 considerations, will be pivotal in determining the success of this ambitious journey. The challenges are formidable, ranging from technological complexities and global market dynamics to creating a skilled workforce and overcoming infrastructure hurdles. However, the potential rewards, such as job creation, economic diversification, and enhanced strategic autonomy, underscore the importance of India's pursuit. The states, exemplified by Tamil Nadu, Gujarat, and Odisha, play a crucial role in cultivating semiconductor hubs, each with its unique strengths and challenges. The Budget's allocations and the effectiveness of the PLI scheme are linchpins, influencing investment flows and domestic industry growth. As India strives to rewrite its semiconductor dependence narrative and carve its place in the global technology arena, a sustained commitment from both the government and states is imperative for long-term success and leadership in the semiconductor landscape.


Question 1: What major obstacles does India confront on its journey toward semiconductor self-sufficiency?

India grapples with formidable technological challenges in semiconductor manufacturing, characterized by intricate processes, substantial capital requirements, and the need for cutting-edge technologies. Additionally, overcoming technology transfer restrictions imposed by established players further complicates the quest for self-reliance.

Question 2: How do individual states contribute to India's pursuit of semiconductor independence?

States like Tamil Nadu, Gujarat, and Odisha play a pivotal role in fostering semiconductor hubs. They implement tailored policies, provide financial incentives, and prioritize talent development, creating an environment conducive to attracting crucial investments. Variances in regulatory environments and business facilitation become decisive factors in investment decisions.

Question 3: What significance do Budget 2024 considerations and the PLI scheme hold for India's semiconductor goals?

Government backing, both in terms of finances and strategic initiatives, stands as a linchpin for India's semiconductor ambitions. Budget allocations for research, infrastructure, and skill development are crucial foundations. The PLI scheme, enticing investments and domestic chip design require consistent government support for sustained success.










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