India’s Semiconductor Mission
The real opportunity is not the fab. It is everything the fab still imports.
Quick summary: India’s semiconductor mission has moved from policy to shipped product, with twelve approved projects and three plants in commercial production. A fab, short for fabrication plant, is the factory where raw silicon becomes finished chips. The bigger business opportunity may sit outside the fab itself. Equipment, materials, testing and design are part of the semiconductor supply chain that India still needs to build around its new manufacturing capacity.
Twelve manufacturing units have been approved under the India Semiconductor Mission, with a cumulative investment of over ₹1.64 lakh crore. Three projects, Micron, Kaynes Semicon and CG Semi, are in Sanand and have begun shipping products, according to the government’s July 2026 Cabinet approval of Semicon 2.0. The real question for an entrepreneur is not whether to believe in this mission. It is where the supply chain still has room for someone that are not Tata or Micron.
What the Mission Has Actually Built
Tata Electronics is building a fab in Dholera with Taiwan’s Powerchip Semiconductor Manufacturing Corporation, backed by an investment of ₹91,000 crore and designed for 50,000 wafer starts a month.
Micron’s Sanand facility carries an investment of ₹22,516 crore and a planned capacity of around 14 million units a week.
Kaynes Semicon runs a separate Sanand unit, while CG Power is developing another with Japan’s Renesas Electronics and Thailand’s Stars Microelectronics.
These are capital-heavy projects, none built by a small business.
The Real Bottleneck in India’s Semiconductor Economy
Equirus Securities research estimates India will import over 90% of fab equipment and 85% to 90% of speciality chemicals and gases fabs consume daily. NITI Aayog finds India imports 90% to 95% of the semiconductors it uses, spending close to $150 billion on imports between financial year 2017 and 2025. One number is about what Indian fabs still need to operate, the other what the wider economy still needs to buy from abroad. Both point to the same structural gap: building semiconductor plants does not automatically build the domestic supply chain around them.
Semicon 2.0: Who Actually Benefits From the Gap
The Design Linked Incentive scheme has supported 24 design projects from start-ups and MSMEs, and 105 start-ups in total, government figures show. That is design work, needing nowhere near fab-level capital. The bigger gap sits in gases, chemicals, precision tooling, cleanroom infrastructure, testing and packaging equipment.
Two deals show how it is being filled. Tata Electronics signed with Germany’s Merck in September 2025 for materials and gas distribution at Dholera and with the Netherlands’ ASML in May 2026 for lithography equipment. Both are foreign companies; neither names an Indian ancillary supplier winning this work,
Ashok Chandak, president of IESA and SEMI India, told ANI in March 2026 that India is entering a scale-up phase in design-led manufacturing; that scale-up is where ancillary suppliers could find room to enter.
What This Means for Your Business
The question is not whether India’s chip ambition is real. Three plants are already shipping product, and a fourth is expected this year. The actual question is whether your business sits in the layer the mission has just admitted it cannot yet supply domestically.
The India Semiconductor Mission launched an Investors Support Portal in May 2026 to connect ecosystem players and investors. For businesses considering this segment, that is a concrete place to start asking where the supply gaps are now.
Frequently Asked Questions
What does building semiconductors mean for India’s economy?
Twelve approved projects and ₹1.64 lakh crore in investment are already cutting reliance on imported chips, but the bigger near-term effect is on ancillary businesses, since equipment, materials, testing and design remain over 90% import-dependent.
What is India Semiconductor Mission 2.0?
India Semiconductor Mission 2.0 is the second phase of India’s semiconductor policy, approved in July 2026 with an outlay of ₹1.275 lakh crore, focusing on equipment, materials, chip design and supply-chain development.
Can SMEs supply India’s semiconductor fabs?
The clearest entry point is design work under the DLI scheme. The equipment and materials layer is currently being filled by foreign suppliers like Merck and ASML; no Indian ancillary supplier has yet been reported winning comparable work.
When will India’s first fully made-in-India chip be ready?
There is no single confirmed date that exists; reported timelines for Dholera vary by source and can be confirmed only by Tata Electronics.
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