Semiconductor Manufacturing in India: New Investments, Emerging Opportunities and Industry Growth
India's semiconductor ambitions are moving from policy announcements towards commercial production, creating opportunities across chip manufacturing, packaging, testing and the wider electronics supply chain.
Semiconductors are fundamental to modern electronics, powering smartphones, computers, automobiles, telecommunications equipment, industrial systems and artificial intelligence infrastructure. As countries seek more resilient technology supply chains, India is working to establish a stronger domestic semiconductor manufacturing ecosystem.
Government-backed investment programmes, new manufacturing facilities and partnerships with international technology companies are helping advance this effort. For manufacturers, component suppliers, technology businesses and investors, these developments are opening new avenues to evaluate opportunities across India's semiconductor value chain.
However, semiconductor manufacturing is a technically complex and capital-intensive industry. Understanding where opportunities exist, what capabilities are required and how to enter the market remains essential for businesses considering investment.
India's Semiconductor Manufacturing Industry Gains Momentum
The Government of India's Semicon India Programme, launched in 2022, aims to develop capabilities across semiconductor design, fabrication, assembly, testing, packaging and related manufacturing activities.
According to the Press Information Bureau's update dated 1 April 2026, the government had approved 10 semiconductor projects with investment commitments of approximately ?1.6 lakh crore. The update also reported that commercial production had commenced at two facilities, with additional plants expected to begin production during 2026.
Subsequent developments have reinforced this progress. In July 2026, the government announced that CG Semi's outsourced semiconductor assembly and test (OSAT) facility in Sanand, Gujarat, had commenced commercial production. The announcement described it as the country's third semiconductor plant to enter commercial production that year.
These milestones indicate progress in developing domestic manufacturing capabilities. They also highlight the importance of building the supporting ecosystem required to operate semiconductor facilities, including specialised equipment, materials, testing infrastructure, skilled personnel and reliable suppliers.
Sources: Press Information Bureau, Government of India, 1 April 2026 and 4 July 2026.
Government Initiatives Supporting Semiconductor Manufacturing
Government policy remains an important factor in India's semiconductor development strategy.
The modified semiconductor and display manufacturing programme provides support for eligible projects across semiconductor fabrication, compound semiconductors, display manufacturing and assembly, testing, marking and packaging. The programme is intended to encourage capital investment and develop domestic technological capabilities.
The Union Budget 2026–27 also announced India Semiconductor Mission 2.0, with an emphasis on semiconductor equipment and materials manufacturing, full-stack chip design, domestic intellectual property and stronger supply chains. The government announced an allocation of ?1,000 crore for the mission in FY 2026–27.
These initiatives indicate that India's semiconductor strategy extends beyond establishing chip fabrication plants. Developing the capabilities required to support manufacturing operations is also an important part of the broader industrial opportunity.
Businesses evaluating potential investments should examine the relevant scheme guidelines, eligibility criteria, application conditions and financial requirements before incorporating incentives into their investment decisions.
Source: Press Information Bureau, Government of India, 7 February 2026.
Where Are the Business Opportunities in India's Semiconductor Ecosystem?
Semiconductor manufacturing encompasses several specialised activities. Each presents different requirements in terms of investment, technology, expertise and customer relationships.
- Semiconductor Fabrication
Semiconductor fabrication involves manufacturing integrated circuits on silicon or other semiconductor wafers using highly specialised processes.
Establishing a fabrication facility requires substantial capital investment, advanced equipment, tightly controlled manufacturing environments and specialised technical expertise. Businesses exploring this segment must assess technology access, infrastructure, utilities, talent availability and long-term customer demand.
The development of fabrication capacity can also generate demand for supporting materials, equipment, maintenance services and specialised industrial infrastructure.
- Semiconductor Assembly, Testing and Packaging
Assembly, testing and packaging are essential stages in the semiconductor production process. These activities prepare fabricated semiconductor devices for integration into electronic products and verify their performance against required specifications.
India's emerging OSAT and assembly, testing, marking and packaging (ATMP) ecosystem presents opportunities for businesses involved in packaging materials, testing equipment, production automation and related services.
For example, the government reported the commencement of commercial production at CG Semi's Sanand facility in July 2026. The announcement identified automotive, two-wheelers and industrial equipment among the intended application areas for the chips produced there.
Such developments illustrate how semiconductor manufacturing investments can support demand across multiple downstream industries.
- Semiconductor Equipment and Materials
Semiconductor facilities depend on specialised production equipment, precision components, process chemicals, gases, substrates and other materials.
India Semiconductor Mission 2.0 places additional emphasis on developing domestic capabilities in semiconductor equipment and materials. This creates areas for businesses to investigate, particularly where their existing engineering, manufacturing or materials expertise aligns with industry requirements.
Entry into these segments requires detailed assessment of technical specifications, qualification processes, production standards and customer procurement requirements. Semiconductor suppliers often need to demonstrate consistent quality and reliability before becoming part of an established manufacturing supply chain.
- Power Semiconductors and Compound Semiconductors
Power semiconductor devices are used to manage and convert electrical energy in applications such as electric vehicles, renewable energy systems, industrial equipment and power supplies.
Compound semiconductors and specialised devices can serve applications requiring particular electrical, optical or thermal characteristics.
Businesses exploring these segments should assess the relevant application markets, product specifications, competing technologies and expected customer requirements. Their suitability depends on the company's technical capabilities and investment capacity.
- Semiconductor Design and Supporting Services
Semiconductor design is another important part of the ecosystem. Chip design companies, engineering service providers, design verification specialists and intellectual property developers can contribute to the industry without necessarily operating a fabrication facility.
India's existing technology and engineering talent base provides a foundation for businesses evaluating these opportunities. Nevertheless, commercial success depends on specialised expertise, access to design tools, intellectual property considerations and relationships with customers or manufacturing partners.
Challenges Businesses Must Evaluate Before Entering the Market
Despite growing policy support and investment activity, semiconductor manufacturing presents considerable barriers to entry.
Capital requirements: Fabrication, packaging and testing facilities can require substantial investment in equipment, infrastructure, process development and working capital. The scale depends on the specific manufacturing activity.
Technical expertise: Semiconductor processes require specialised knowledge, stringent quality controls and trained personnel. Businesses must assess whether the necessary capabilities can be developed or accessed.
Customer qualification: Semiconductor customers typically have demanding requirements for performance, reliability, consistency and traceability. Qualification timelines can affect the period between initial investment and commercial revenue.
Supply-chain dependencies: Access to specialised materials, production equipment, spare parts and technical services can influence operational reliability and costs.
Location and infrastructure: Reliable utilities, industrial infrastructure, logistics, skilled labour and proximity to relevant suppliers and customers can influence the suitability of a manufacturing location.
Regulatory and incentive requirements: Businesses must understand applicable approvals, environmental obligations, scheme eligibility and documentation requirements before proceeding with investment.
These factors make it important to evaluate a specific opportunity rather than treating semiconductor industry growth as sufficient evidence of project viability.
How Market Research Can Support Semiconductor Market Entry
A structured market assessment can help businesses identify the most suitable entry point into India's semiconductor ecosystem.
The process begins by defining the intended activity, whether semiconductor design, packaging, testing, equipment manufacturing, materials supply or another supporting service.
Market sizing and demand research can then help identify target customers, relevant applications and potential demand drivers. Competitive analysis can establish which suppliers already serve the market, their capabilities and the potential for differentiation.
Location assessment can compare industrial infrastructure, supply-chain access, talent availability and operating considerations. Financial analysis can examine investment requirements, operating costs, expected utilisation and different revenue scenarios.
Finally, regulatory research can help identify applicable approvals and potentially relevant government programmes.
The resulting assessment can support decisions about whether to enter a market, pursue a partnership, refine the investment plan or investigate a different segment of the semiconductor value chain.
OMR Global's Market Entry Blueprint for Electronics and Semiconductor Businesses
For companies considering semiconductor-related investments, OMR Global's Market Entry Blueprint offers a structured approach to evaluating market opportunities before committing significant resources.
The service brings together market sizing, competitive analysis, location assessment, regulatory and licensing research, and government scheme guidance. Depending on the selected plan, the assessment may also include revenue projections, scenario analysis and risk considerations.
For semiconductor businesses, this research can help organise the questions surrounding target markets, customer demand, competitive positioning and investment requirements.
Whether a company is exploring semiconductor packaging, specialised materials, equipment manufacturing or a related electronics segment, a structured market assessment can provide a clearer basis for evaluating entry strategies.
Conclusion
India's semiconductor ecosystem is progressing through new investments, commercial production milestones and initiatives designed to strengthen domestic manufacturing capabilities.
The opportunity extends beyond chip fabrication to include packaging and testing, equipment, materials, power semiconductors, design and specialised support services. However, each segment has distinct technical, financial and commercial requirements.
For businesses considering entry into this market, understanding the specific opportunity is as important as understanding the industry's overall direction.
Explore OMR Global's Market Entry Blueprint to assess your target market, evaluate the competitive landscape and develop a more informed market entry strategy.