India's government intends to take direct equity stakes in semiconductor startups, The Times of India reports, marking a shift in how New Delhi deploys public money to build a domestic chip industry.

Until now, state support for India's semiconductor push has flowed mainly through incentive schemes and subsidy programs. The reported move to acquire ownership positions would tie taxpayer returns directly to the success or failure of individual startups, giving the government a seat at the table — and a share of any upside — in companies working across the chip value chain.

The plan signals a more interventionist industrial policy. Rather than simply underwriting part of a company's capital costs, the state would become a shareholder, aligning its interests with those of founders and private investors. For early-stage semiconductor ventures, which typically face long development timelines and heavy capital requirements before revenue arrives, an equity backer with deep pockets can bridge financing gaps that venture capital often will not touch.

The Times of India did not specify which startups the government is evaluating, the size of the stakes it plans to hold, or the vehicle through which the investments would be made. The report also leaves open how the policy would sit alongside India's existing incentive framework for fabs, assembly and test plants, and chip design firms.

The timing matters. India has spent the past several years courting semiconductor manufacturers, offering billions of dollars in support to attract fabs and packaging facilities. Taking equity in startups adds a second track to that effort: nurturing homegrown companies rather than only attracting established players to build on Indian soil.

The approach carries clear risks. Government equity in private ventures raises questions about valuation discipline, exit strategy, and whether public officials can pick winners in a market where most startups fail. It also exposes the state to losses in a way that fixed subsidies do not, since equity holders absorb downside along with upside.

Yet the model has precedent. Governments across Asia have used state shareholdings to seed strategic industries, and semiconductor ventures in particular often struggle to raise private capital for the expensive, multi-year journey from design to production. A committed sovereign investor can make the difference between a startup reaching its next milestone or stalling.

For semiconductor entrepreneurs in India, the report suggests a new potential funding source beyond the incentive schemes already in place. For investors, it points to a landscape where the government could become a co-investor in deals — a presence that can validate a startup's prospects while complicating cap-table negotiations.

Details will determine the plan's substance: the selection criteria for startups, the size and terms of the stakes, and whether the government plans passive holdings or active board involvement. Each of those choices will shape how private capital responds.

If the policy proceeds as reported, India would join the small group of states that hold direct ownership in chip companies rather than merely subsidizing them — a bet that picking and holding winners can succeed where grants alone have moved the industry more slowly.