In a world increasingly defined by the tiny silicon chips that power everything from smartphones and laptops to missiles, electric vehicles, and artificial intelligence systems, control over semiconductor manufacturing has become the most important strategic question in global geopolitics. The United States and China are engaged in a trillion-dollar race for chip supremacy. Taiwan — which produces over 90% of the world's most advanced semiconductors — sits at the centre of the most dangerous geopolitical flashpoint on the planet. And India, recognising both the strategic necessity and the extraordinary economic opportunity, has launched one of its most ambitious industrial programmes in history: the India Semiconductor Mission 2.0.
💡 Why Semiconductors Are the New Oil
Semiconductors — the integrated circuits etched onto silicon wafers that form the computing brain of every electronic device — are the foundational technology of the 21st century. Without them, modern civilisation stops. No smartphones. No computers. No internet infrastructure. No electric vehicles. No precision weapons. No medical equipment. No modern economy. The COVID-19 pandemic exposed just how catastrophically vulnerable the world is to semiconductor supply chain disruption: a global chip shortage triggered by pandemic-related factory closures caused the automotive industry alone to lose an estimated $210 billion in revenue in 2021 as car manufacturers could not source the chips needed to build their vehicles.
The strategic importance of semiconductors goes beyond economics. The United States has imposed sweeping export controls on advanced semiconductor technology to China, preventing Chinese companies from accessing the chips and chipmaking equipment needed to build the most powerful AI systems. This has made semiconductor manufacturing a national security issue of the first order for every major economy. Nations that can manufacture their own advanced chips are strategically self-sufficient. Nations that cannot are strategically vulnerable in ways that no military investment can fully offset.
🌍 Global Context: Taiwan Semiconductor Manufacturing Company (TSMC) manufactures approximately 90% of the world's most advanced chips. Taiwan's extraordinary geopolitical vulnerability — it is claimed by China as its own territory — means that a conflict in the Taiwan Strait would instantly remove 90% of the world's advanced chip supply. Every major economy is racing to diversify semiconductor manufacturing out of Taiwan as insurance against this catastrophic scenario.
🇮🇳 India's Semiconductor Mission — Phase 1
India launched its first Semiconductor Mission in December 2021 with an incentive package of approximately ₹76,000 crore ($10 billion) to attract semiconductor fabrication plants, display manufacturing facilities, and chip design companies to India. The programme offered up to 50% fiscal support for approved projects — an extraordinarily generous incentive structure that reflected the government's determination to establish India as a global semiconductor manufacturing centre.
The results of Phase 1 have been genuinely significant. The Tata Group — India's largest industrial conglomerate — partnered with Taiwan's Powerchip Semiconductor Manufacturing Corporation (PSMC) to establish India's first commercial semiconductor fab in Dholera, Gujarat. Micron Technology of the United States announced a $2.75 billion investment to build a semiconductor assembly, testing, marking, and packaging facility in Sanand, Gujarat — the single largest foreign direct investment in the Indian semiconductor sector in history. CG Power, in partnership with Japan's Renesas Electronics and Thailand's Stars Microelectronics, announced a semiconductor ATMP facility in Sanand. Kaynes Semicon announced India's first domestically-led semiconductor ATMP facility in Mysuru, Karnataka.
🚀 Mission 2.0 — What's New in 2026
Building on the foundation of Phase 1, India Semiconductor Mission 2.0 has significantly expanded both the ambition and the investment scale of the programme. The government has allocated an additional ₹1.25 lakh crore ($15 billion) in incentives, with a focus on moving India up the semiconductor value chain from assembly and packaging toward actual chip fabrication — the most technologically demanding and highest-value part of the semiconductor manufacturing process.
The flagship project of Mission 2.0 is the Tata Electronics semiconductor fab in Dholera, which broke ground in early 2026 and is expected to begin production of 28-nanometre chips by 2028. While 28nm is not the cutting edge of semiconductor technology — TSMC and Samsung are manufacturing 3nm and 2nm chips — it represents the technology node used in a vast range of applications including automotive electronics, industrial equipment, smartphones, and consumer electronics. Establishing a proven 28nm manufacturing capability in India is the essential foundation from which more advanced nodes can be developed over time.
🎓 India's Critical Advantage: Engineering Talent
India's most significant natural advantage in the semiconductor sector is human capital. India produces approximately 1.5 million engineering graduates annually — more than any other country except China. Indian engineers are already deeply embedded in the global semiconductor industry: Indians or Indian-origin professionals lead R&D teams at Intel, Qualcomm, AMD, Apple Silicon, and Google's chip design division. Indian engineers played central roles in designing the Apple M-series chips that transformed the personal computing industry. This deep reservoir of semiconductor engineering expertise is available to be deployed in India's domestic industry as the infrastructure to support it develops.
The government has launched a dedicated programme — Chips to Startup (C2S) — to build semiconductor design and manufacturing capabilities in India's engineering colleges. The programme is training 85,000 engineers over five years in chip design, VLSI technology, and embedded systems. India already has over 3,000 chip design companies — more than any country except the United States — and this design ecosystem is the strongest foundation for building a complete domestic semiconductor industry.
🤝 Strategic Partnerships
India has signed semiconductor cooperation agreements with the United States, Japan, the European Union, and South Korea — all of which are keen to help India develop as an alternative semiconductor manufacturing hub to Taiwan and China. The India-U.S. Initiative on Critical and Emerging Technologies (iCET), signed in 2023, specifically includes semiconductor supply chain cooperation as a priority area. Japan's major semiconductor equipment manufacturers — Tokyo Electron, Shin-Etsu Chemical, and Sumco — have all expressed interest in establishing operations in India as the manufacturing ecosystem develops.
🎯 India's 2030 Semiconductor Goal: The government's stated ambition is for India to have a complete semiconductor ecosystem — design, fabrication, packaging, and testing — capable of meeting a significant portion of India's domestic chip demand by 2030 and establishing India as a top-five global semiconductor manufacturing location by 2035. Whether this extraordinarily ambitious timeline can be met depends on execution quality, continued government commitment, and the ability to attract and retain the world-class engineering talent the sector demands.
