India’s $20 Billion Chip Push Runs Into the Fab Gap

By Tom Whitfield

India imported approximately $150 billion worth of semiconductors from 2017 through 2025 and has pledged more than $20 billion in government support for domestic production, two figures that define the commercial stakes of its newly declared “Techade.”

Prime Minister Narendra Modi has made the decade-long campaign to move the world’s most populous nation beyond IT services into semiconductor manufacturing, electronics production and artificial intelligence. The government has designated chip production an urgent national priority, aiming to reduce foreign-chip dependence, strengthen technological sovereignty and capture more of the global digital economy.

Those imports have powered consumer smartphones and advanced military systems. Early projects have reached commercial operation, but the program still lacks the scale of an established fab center.

What has India built so far?

Five assembly, testing and packaging (ATP) plants now operate commercially. They include Micron Technology, Indian firms Kaynes, CDIL and Suchi Semicon, and CG Semi, a joint venture involving India, Japan and Thailand. Seven more projects have government approval, including a major Tata Electronics chip facility under construction in Gujarat with Taiwan’s Powerchip Semiconductor Manufacturing Corporation, or PSMC.

Industry analysts draw a crucial distinction: ATP capacity packages chips made elsewhere, while a core fab performs wafer fabrication and associated process control. ATP plants do not require the same capital intensity, specialized process knowledge or technological mastery, so their output does not create domestic wafer-fabrication capacity. India has built the easier commercial layer first, although the approved pipeline could narrow that gap if the projects reach production.

India’s semiconductor market is estimated at $50 billion in 2026, while government projections put it above $110 billion by 2030 and above $200 billion by 2035. Those estimates show market promise, not factory capacity, and they do not establish when domestic fabs will reach production.

Can electronics supply chains support the chip build?

Production-linked incentive schemes helped lift India’s electronics production value from roughly $31 billion in fiscal 2014-15 to an estimated $133 billion in fiscal 2024-25. Apple and Samsung significantly expanded their Indian manufacturing footprints as multinational buyers pursued “China Plus One” diversification, shifting flagship smartphone and component production to India.

New Delhi also offers incentives to local component makers to reduce reliance on imported sub-assemblies. Local sourcing must therefore scale alongside finished-goods plants if the country wants to capture more value.

Can data centers sustain the AI push?

India holds only about 3% of global data-center capacity despite generating large volumes of digital data. The government reports nearly $70 billion of data-center projects under construction and another $90 billion announced. Investors include Indian groups Reliance Industries and Adani Group, plus Amazon, Microsoft and Meta, which gives the pipeline both domestic and global capital.

Visakhapatnam forms a focal point because its southeastern port location suits subsea-cable connections. Google announced a $15 billion AI and data-center hub there to link India with markets in Africa and Australia. The buildout could add capacity as India seeks an alternative to established global hubs, but announced capital is not the same as commissioned capacity.

Does the workforce offset automation risk?

India already supplies nearly 20% of the global chip-design workforce. Technology Minister Ashwini Vaishnaw said about 70,000 design engineers had been trained over the previous four years, supported by rapid expansion of semiconductor curricula across hundreds of engineering colleges. Prime Minister Narendra Modi called the design talent pool a “goldmine” for global technology firms.

The same labor pool faces disruption because India’s large legacy IT-services sector remains vulnerable to automation. Nomura, the Japanese investment bank, labeled India “ground zero” for AI-driven job disruption in Asia.

The government acknowledges those transition pains and expects AI-linked employment to nearly double to 1.25 million by 2027. New roles in AI development, maintenance and ethics could absorb some workers, but the forecast depends on enough new roles and successful worker transitions to match technological change.

Which constraints could break the strategy?

Arvind Gupta, head of the Digital India Foundation, identifies three obstacles that could determine whether the strategy holds:

• Patient capital. Advanced fabs and gigawatt-scale data centers require tens of billions of dollars over long periods. High global interest rates and the difficulty of attracting long-term foreign direct investment raise the cost.
• Talent retention. India trains engineers at scale, but top researchers still leave for the United States and Europe. Domestic firms must match global salaries and research environments to retain them.
• Foundational hardware. The global supply chain concentrates advanced lithography machines, and export controls restrict access to them. Diplomatic engagement will matter as much as purchasing power.

For New Delhi, semiconductors are a national-security priority as well as an industrial strategy. Supporters cite India’s market size, political commitment and engineering talent, while the United States, China and South Korea retain established fabs, supplier networks and skilled workforces. Execution will determine whether India moves from assembly and IT services into deeper technology production, rather than simply adding volume to the global supply chain.

The next test is whether the seven approved chip projects and nearly $70 billion in data-center projects already under construction can enter commercial operation. That progress could narrow India’s gap with established semiconductor centers in the United States, China and South Korea.