India’s semiconductor sector is in the midst of a sweeping transformation, marked by ambitious government investment, strategic private partnerships, and a newfound focus on self-reliance. On August 19, 2025, the pace of this revolution quickened yet again, as Tamil Nadu unveiled a bold new scheme to support fabless chip design firms, while the national ecosystem continued to mature with a sharp emphasis on ultra-pure chemical production and international collaboration. The developments signal India’s intent not just to catch up with global leaders, but to shape the future of semiconductor manufacturing and design.
The roots of this transformation trace back to 2021, when India launched its $18.23 billion semiconductor mission. According to AInvest, this initiative—known as the India Semiconductor Mission (ISM)—has already greenlit 10 major projects, including state-of-the-art fabrication plants, advanced packaging facilities, and OSAT (Outsourced Semiconductor Assembly and Test) units. Six chip fabrication units are currently under development, stretching from Gujarat to Assam. The government’s decision to cover 50% of eligible project costs has helped de-risk these capital-intensive ventures, attracting both domestic and foreign capital in unprecedented amounts.
One standout example is Tata Electronics’ $10.44 billion joint venture with Powerchip in Gujarat. This facility, designed to produce 50,000 wafers per month, will serve the automotive, computing, and artificial intelligence sectors. But the success of such projects hinges on more than just physical infrastructure—it depends on the invisible yet vital backbone of ultra-pure chemicals. These materials, essential for wafer fabrication, etching, and packaging, must be of the highest purity. Even the smallest impurity can render a semiconductor chip useless.
Traditionally, India has relied on imports from Japan and the United States for these chemicals. But that’s changing, and fast. Tata Chemicals is now expanding its capacity to produce high-purity hydrofluoric acid and ammonium hydroxide, both critical for wafer cleaning. Deepak Nitrite, another Indian firm, is ramping up production of sulfuric acid and hydrogen peroxide, used in etching and oxidation processes. As reported by AInvest, domestic suppliers are projected to capture 30% of the semiconductor-grade materials market by 2025—up from less than 5% just three years ago. This is more than a cost-saving measure; it’s a strategic move to build a resilient, self-sufficient ecosystem.
These efforts are bolstered by robust international partnerships. The U.S.-India collaboration under the ITSI Fund and the India-Singapore semiconductor cluster agreements are accelerating technology transfer and talent development. Global heavyweights like Merck, Linde, and Air Liquide have become key partners, supplying ultra-high-purity nitrogen and argon to India’s new fabrication plants. Their involvement ensures access to cutting-edge technologies, like 3D glass packaging and silicon carbide semiconductors. According to AInvest, these collaborations have driven a 200% increase in foreign direct investment in India’s semiconductor sector.
Meanwhile, the government is investing $1 billion to modernize the Semiconductor Laboratory in Mohali, aiming to further cement India’s position in the global supply chain. For investors, the chemical sector—especially firms like Tata Chemicals and Deepak Nitrite—offers a unique mix of defensive stability and growth potential. Smaller players, such as Inox, are also expanding rapidly, particularly in the industrial gas supply space.
But the story doesn’t end with manufacturing. On the same day, Tamil Nadu made headlines by launching a new wave of subsidies and prototyping grants for fabless semiconductor design firms. As reported by Bisinfotech and corroborated by multiple sources, the scheme aims to support local innovation and intellectual property creation, reducing barriers for entry and helping startups scale up in the high-stakes chip design market.
The Tamil Nadu Industrial Development Corporation (TIDCO) will spearhead the creation of Centres of Excellence (CoEs), in partnership with academic institutions and private players. These centers will offer advanced infrastructure for chip design, validation, and testing, while also becoming hubs for skilling the next generation of engineers. The India Semiconductor Workforce Development Programme (ISWDP), a key component, aims to train over 1,000 engineering students. Select candidates will have opportunities for advanced study both within India and at prestigious institutions abroad, feeding directly into the talent pipeline needed for the state’s growing semiconductor and electronics sectors.
Infrastructure plans under the Tamil Nadu Semiconductor Mission (TNSM) 2030 are equally ambitious. Two semiconductor equipment manufacturing parks are slated for Sulur and Palladam in Coimbatore, each spanning 100 acres. Additionally, a small-scale R&D-focused fabrication unit is being developed with support from IITs and industry partners, providing facilities for prototyping and technician training.
TNSM 2030 is structured around five strategic pillars: fabless chip design promotion, design and testing infrastructure, Centres of Excellence, semiconductor equipment manufacturing parks, and workforce development with pilot fabrication capabilities. The state’s vision is clear—create a self-sustaining value chain that can compete on the global stage.
State Industries Minister TRB Rajaa emphasized, “The scheme aims to promote research, industry–academia collaboration, and skill development, along with subsidies.” Industries Secretary V Arun Roy described the mission as “a full ecosystem blueprint,” combining financial aid, infrastructure, and skill development to make Tamil Nadu a frontrunner in India’s race to become a global semiconductor powerhouse. He added that the mission “laid out a clear plan combining incentives, infrastructure, a pilot fabrication facility, and workforce training to build a self-sustaining semiconductor ecosystem.”
The convergence of these national and state-level initiatives is creating a fertile ground for innovation, investment, and job creation. The risks—such as supply chain disruptions, regulatory hurdles, or technological bottlenecks—are real, but the scale of government support and private-sector commitment suggests that India is well-positioned to overcome them. The integration of ultra-pure chemical production, advanced manufacturing, workforce development, and international collaboration is turning India into a strategic hub for semiconductor innovation.
For investors, the message is clear: the companies enabling and benefiting from this transformation—whether chemical suppliers, design firms, or infrastructure builders—are poised for outsized growth as India climbs the semiconductor value chain. The country’s semiconductor revolution is not just a story of catching up, but of leading the next wave of global technology innovation.
