India’s Semiconductor Moment – From ISM 1.0 to ISM 2.0

In my recent interactions across the ecosystem, including participation in industry forums, technology discussions, workshops, and events such as SEMICON India engagements and AI-focused industry summits, it is evident that India’s semiconductor conversation has matured significantly. What was once largely discussed as a long-term aspiration is now evolving into a structured national effort involving government policy, industry participation, academic research, and global collaboration.

The focus today is no longer limited to attracting investments, but increasingly about building a sustainable semiconductor ecosystem across the entire value chain.

Through a combination of policy clarity, fiscal incentives (DLI/PLIs), global partnerships, and talent development, the Government of India is steadily building a full-stack semiconductor ecosystem from design to manufacturing, packaging, and innovation.

Semiconductors as a Strategic National Priority

Semiconductors are the backbone of modern electronics, powering everything from smartphones and cloud infrastructure to automotive systems and defense technologies. As geopolitical shifts reshape global supply chains, countries are increasingly prioritizing trusted and resilient semiconductor ecosystems.

Recognizing this strategic importance, the Government of India launched the India Semiconductor Mission (ISM) in 2021 with a financial outlay of ₹76,000 crore to support semiconductor and display manufacturing in the country.

ISM 1.0: Laying the Foundation

The first phase of the mission, commonly referred to as ISM 1.0, focused on establishing the foundational framework for semiconductor development in the country. The key elements included Fiscal incentives for semiconductor fabrication and packaging facilities, Support for ATMP/ OSAT units, promotion of compound semiconductor manufacturing, and encouragement for domestic chip design through the Design Linked Incentive scheme.

As of 2025–26, around 10 semiconductor projects worth nearly ₹1.6 lakh crore have been approved across multiple states, covering fabrication, compound semiconductors, advanced packaging, and testing facilities. Major semiconductor manufacturing clusters are emerging in states such as Gujarat, Andhra Pradesh, Assam, Odisha, and Uttar Pradesh, signaling the formation of regional semiconductor ecosystems. For example, Gujarat is emerging as a key hub with major investments in fabrication and packaging, supported by strong infrastructure and industry partnerships.

India’s semiconductor design capability has long been one of its strongest assets. Thousands of engineers in the country already contribute to global chip design programs, making India an important hub for semiconductor engineering talent.

The Emerging Direction of ISM 2.0 (acceleration)

As the ecosystem begins to take shape, discussions are now underway around the next phase of the mission, ISM 2.0. Stakeholder consultations involving industry leaders, ecosystem organizations, technology providers, and academic institutions have already begun to shape the next stage of India’s semiconductor strategy.

While ISM 1.0 focused on initiating investments and building ecosystem momentum, ISM 2.0 is expected to deepen capabilities across areas such as semiconductor design and IP development, advanced packaging and OSAT expansion, support for fabless semiconductor startups, stronger R&D and innovation networks, and enhanced industry–academia collaboration.

This transition reflects India’s shift from ecosystem creation toward ecosystem strengthening.

Ecosystem Partnerships and Global Collaboration

A successful semiconductor ecosystem cannot be built in isolation. India is actively engaging with global semiconductor leaders, equipment manufacturers, and technology partners to accelerate ecosystem development.

International collaborations are emerging with companies and technology hubs across the United States, Europe, Japan, and Taiwan, including engagements with semiconductor equipment and design companies.

One of India’s most significant advantages in the semiconductor sector is its talent base. As global demand for semiconductor professionals continues to rise, India’s engineering workforce and academic institutions will play an increasingly important role. Universities are gradually expanding semiconductor design curricula, VLSI research labs, and industry collaborations to support this talent pipeline.

Industry bodies are also helping strengthen ecosystem collaboration. Organizations such as the India Cellular and Electronics Association (ICEA), the India Electronics and Semiconductor Association, and platforms like SEMICON India bring together policymakers, global semiconductor firms, startups, and research institutions to drive dialogue and knowledge exchange.

Such collaborations are critical for ensuring that India’s semiconductor growth is supported by strong partnerships across government, industry, and academic and R&D networks across institutions such as C-DAC and leading IITs

Industry Participation: Where We See the Opportunity

As India’s semiconductor ecosystem evolves, industry participation will be essential not only in manufacturing investments but also in areas such as design innovation, system engineering, and enabling technologies.

From my perspective, the opportunity lies in supporting the ecosystem in areas that complement India’s strategic strengths. These include System-on-Chip (SoC) design and engineering services, virtualized design environments and advanced silicon development infrastructure, AI-driven semiconductor innovation and system-level integration, global engineering collaboration, and specialized talent development.

As semiconductor systems increasingly intersect with AI, cloud infrastructure, and high-performance computing, engineering organizations can play a meaningful role in supporting India’s ambitions across design and system innovation.

Our engagements across industry forums and ecosystem discussions over the past year have reinforced a key insight: India’s semiconductor opportunity will not be defined solely by fabrication, but by the broader convergence of design, software, AI, and system engineering capabilities.

The Road Ahead

India’s semiconductor journey is still at an early stage, but the direction is increasingly clear. Through sustained policy support, growing industry participation, and a strong talent base, the country is gradually building the foundations of a resilient semiconductor ecosystem.

The transition from ISM 1.0 to ISM 2.0 marks an important step in this journey, signaling a shift toward deeper innovation, stronger ecosystem collaboration, and long-term capability building.

If this momentum continues, India can emerge as a significant contributor to the global semiconductor value chain, particularly in areas such as chip design, advanced packaging, and system-level semiconductor innovation.

For many of us engaging with the ecosystem today, it is encouraging to see how quickly the conversation has evolved. The coming decade will likely determine how effectively India translates this momentum into a globally competitive semiconductor ecosystem.