The India Semiconductor Mission (ISM), launched under the Ministry of Electronics and IT (MeitY), is a specialised and autonomous agency created to build a sustainable semiconductor and display ecosystem in India. It aims to reduce import dependence, enhance technological sovereignty, and position India as a global semiconductor manufacturing and design hub.

Challenges Faced by the Semiconductor Industry in India

• Infrastructure and Utility Constraints

1. 1. 1. High Capital Requirement: A cutting-edge semiconductor fab requires USD 15–20 billion, making entry difficult.
      2. Water and Power Needs: A fab needs ~10 million litres/day of ultra-pure water and near-zero power outages, which many Indian industrial clusters lack.
      3. Logistics Limitations: Absence of specialised “chip corridors” and secure cold-chain-like transport systems for fragile wafers.

• Technology and R&D Limitations

1. 1. 1. Restricted Access to Advanced Nodes: Due to export controls (e.g., US-Japan-Netherlands restrictions), India faces barriers in accessing sub-10 nm technologies.
      2. Weak IP Ecosystem: India relies heavily on foreign EDA tools and has limited indigenous semiconductor IP.
      3. Low R&D Investment: India spends <0.7% of GDP on R&D, insufficient for a tech-intensive industry.

• Supply Chain and Raw Material Dependencies

1. 1. 1. Import Dependence: Nearly all semiconductor-grade gases, chemicals, wafers, and rare earths are imported.
      2. Absence of Upstream Ecosystem: India lacks domestic manufacturers of photolithography equipment, deposition machines, etc.

• Skilled Workforce Gap

1. 1. 1. Shortage of highly trained engineers in fabrication technology, photonics, packaging, and materials science.
      2. India is strong in chip design, but weak in manufacturing talent.

• Global Geopolitical Challenges

1. 1. US–China chip rivalry affects technology transfer.
   2. Global firms are cautious about relocating supply chains to new geographies without proven stability.

Key Strategic Elements of the India Semiconductor Mission (ISM)

• Semiconductor Fabs and Display Fabs Scheme

1. 1. 1. Support for setting up greenfield semiconductor fabs and display fabs through up to 50% fiscal support.
      2. Technology-agnostic incentives to attract leading global players.

• Design Linked Incentive (DLI) Scheme

1. 1. 1. Incentives for domestic chip design companies.
      2. Financial support across three stages:

• Chip Design Infrastructure Support

• Product Design Linked Incentive

• Deployment Linked Incentive

• Semiconductor Labs, R&D, and Capacity Building

1. 1. 1. Establishing Semiconductor R&D Accelerator with hubs at IIT Madras, IISc Bengaluru and other institutes.
      2. Focus on emerging areas like GaN, SiC, compound semiconductors, photonics, advanced packaging.
      3. Dedicated programs for developing 85,000+ trained professionals over the next decade.

• India as a Global Chip Packaging & ATMP Hub

1. 1. 1. Promotion of Assembly, Testing, Marking and Packaging (ATMP/OSAT) units to integrate into global value chains.
      2. Micron’s ATMP facility in Gujarat is an early example.

• Trusted Semiconductor and Supply Chain Strategy

1. 1. 1. Ensuring secure supply chains for defence, space, and critical infrastructure.
      2. Encouraging domestic sourcing of materials, specialty chemicals, gases, and equipment.

• International Partnerships and Strategic Collaboration

1. 1. Collaboration with the US, Japan, Taiwan, EU under frameworks like the India-US Initiative on Critical and Emerging Technologies (iCET).
   2. Technology transfer, skill-building, and joint research initiatives.

India’s semiconductor ambitions face structural challenges—high capital costs, skill shortages, technological barriers, and supply chain dependence. However, through the ISM’s comprehensive strategy encompassing manufacturing, design, R&D, packaging, talent development, and global partnerships, India aims to build a resilient semiconductor ecosystem. With sustained investment, policy stability, and collaboration, India can emerge as a trusted and competitive player in the global semiconductor value chain.