India’s semiconductor ambitions have taken center stage in recent weeks, as the country ramps up efforts to carve out a significant niche in the global chip supply chain. With the world still reeling from pandemic-era shortages and geopolitical uncertainties, New Delhi is betting big on mature-node manufacturing—specifically, chips in the 28nm to 65nm range—targeting the robust demand from automotive, telecom, and industrial electronics sectors. But just as India’s plans gather momentum, a new challenge looms from across the Pacific: U.S. President Donald Trump’s proposed tariffs on steel and semiconductors threaten to disrupt global trade flows and could deal a blow to India’s budding chip ecosystem.
On August 16, 2025, the Indian government made headlines by clearing four new semiconductor projects worth ₹4,600 crore in Odisha, Andhra Pradesh, and Punjab, according to reports from The Tribune and ANI. These approvals bring the total number of projects under the India Semiconductor Mission (ISM) to ten, spread across six states and attracting cumulative investments of ₹1.6 lakh crore since the launch of the ₹76,000 crore Semicon India Programme in 2021. The government’s strategy is clear: focus on mature-node chips—those workhorse semiconductors that power everything from cars to smartphones—rather than attempting to leapfrog into advanced nodes like 5nm or 3nm, which remain the domain of giants like TSMC and Samsung.
Bastion Research, cited by both The Tribune and other outlets, draws a compelling parallel between India’s current trajectory and the early days of Taiwan and South Korea’s semiconductor industries in the 1970s and 1990s. "India’s semiconductor ambitions are taking shape with a strategic focus on mature-node manufacturing, a smart move considering the vast demand for 28nm–65nm chips," the report noted. The analysis also highlights India’s rapidly evolving role in system integration—embedding chips into complex products for automotive, telecom, and medical sectors—where a deep talent pool and cost advantages are positioning the country as a trusted global partner.
System integration is no small feat. As Bastion Research points out, India’s ability to match global standards in both capability and talent, combined with the powerful global trend of the 'China +1' strategy, has made the country an increasingly attractive alternative for companies seeking to diversify their supply chains. The result? India is not just assembling chips, but integrating them into high-value products, from advanced automobiles to next-generation telecom equipment.
Yet, even as the country celebrates these milestones, a storm is brewing on the international trade front. On the same day as India’s project approvals, reports surfaced that President Trump plans to impose tariffs on steel and semiconductor chips, part of his administration’s renewed "America First" push. According to coverage by Financial Express and other outlets, the tariffs are designed to boost U.S. domestic manufacturing. They will start low, giving companies time to relocate production to the United States, but will rise sharply for those who don’t comply. The plan includes a potential 100% tariff on semiconductor chips, with exemptions for firms investing in U.S. manufacturing.
This move has sent shockwaves through the global market. Steel and semiconductors are two of the world’s most valuable industries, and high tariffs could upend established trade relationships. For India, the stakes are high: experts warn that the new tariffs could hurt India’s steel exports and "hamper the growth of its budding semiconductor industry," as reported by Financial Express. The timing couldn’t be more sensitive, with Apple also announcing an additional $100 billion investment in the United States, signaling a possible shift in global manufacturing priorities.
The politics behind India’s semiconductor ambitions are as heated as the economic stakes. Prime Minister Narendra Modi, in his August 15 Independence Day speech from the Red Fort, declared that made-in-India semiconductor chips would hit the market by the end of this year—a symbolic milestone for the country’s technological aspirations. But the announcement quickly reignited old political rivalries. BJP leader Amit Malviya, referencing a 1989 fire at the Semiconductor Complex Ltd (SCL) in Mohali, accused the previous Congress government of decades of neglect and bureaucratic apathy. "With it, India’s semiconductor dream went up in smoke. What followed was worse—decades of political neglect and bureaucratic apathy, with revival decisions and funding stalled," Malviya charged, attaching a parliamentary question that estimated the loss from the SCL fire at about Rs 60 crore.
Congress, for its part, pushed back. Senior leader Jairam Ramesh argued that India’s first semiconductor complex was established in Chandigarh in the early 1980s, and criticized what he called repeated, unfulfilled promises of a "Made-in-India" chip. "The promise of a ‘Made-in-India’ semiconductor chip has been made countless times – each time with fanfare, each time without results," Ramesh wrote, questioning the government’s narrative of a historic breakthrough.
Despite the political sparring, there’s no denying that India’s semiconductor push is gathering steam. The country’s sixth fab was approved in May 2025 for Jewar, Uttar Pradesh, as a joint venture between HCL Group and Taiwan’s Foxconn. Of the other five fabs, four are in Gujarat—projects by Tata Electronics with PSMC, CG Power with Renesas, Micron Technology, and Kaynes Semicon—while Tata’s Semiconductor Assembly and Test unit is coming up in Assam. The government’s focus on building not just fabrication plants but also OSAT (Outsourced Semiconductor Assembly and Test) and ATMP (Assembly, Testing, Marking, and Packaging) units aims to create a domestic supply chain and reduce reliance on imports.
India’s approach is pragmatic. By focusing on mature-node chips, the country is sidestepping the fierce competition for cutting-edge technology and instead plugging a critical gap in the global supply chain. As Bastion Research observes, "India is wisely positioning itself to manufacture mature nodes and filling a big gap." The hope is that, much like Taiwan and South Korea before it, India can leverage this foothold to climb up the value chain over time.
Still, the road ahead is fraught with uncertainty. Trump’s tariffs, if implemented, could force a rethink of global chip supply routes and investment decisions. For India, which is just beginning to attract major investments and build a domestic ecosystem, the impact could be profound—especially if global giants decide to double down on U.S. manufacturing to avoid tariffs.
As the world watches, India’s semiconductor story is unfolding at the intersection of domestic ambition, international competition, and geopolitical turbulence. The outcome will shape not just the country’s technological future, but the balance of power in a world increasingly defined by who controls the chips.
