India’s ambitions to become a global semiconductor powerhouse are gathering steam, as a flurry of government-backed projects, private investments, and international partnerships reshape the nation’s high-tech landscape. From Prime Minister Narendra Modi’s Independence Day announcement of the country’s first indigenously developed chip to Tata Electronics’ high-stakes negotiations with German chemicals giant Merck, the momentum behind India’s semiconductor ecosystem is unmistakable.
On August 15, 2025, Prime Minister Modi electrified the nation by declaring, “By year-end, chips made in India, by Indians, will reach the market.” According to The Economic Times, this milestone comes after decades of missed opportunities since the late 1960s, when semiconductor manufacturing was first discussed in India. Modi emphasized that while other countries forged ahead, India lagged behind—until now. Today, six semiconductor units are operational, and four more projects have received the green light, signaling a dramatic reversal of fortunes for the sector.
The numbers behind this transformation are staggering. India’s semiconductor market, valued at ₹4.5 lakh crore in 2024, is projected to surpass ₹8.9 lakh crore by 2030, according to MoneyControl. Industry analysts estimate the market will more than double to USD 100–110 billion by the end of the decade, up from about USD 45–50 billion in 2024–25. This growth is fueled by the India Semiconductor Mission (ISM), a government initiative launched in December 2021 that earmarked ₹76,000 crore to support chip fabrication, design, and manufacturing.
One of the most ambitious projects under this mission is Tata Electronics’ upcoming Dholera fab, a ₹91,000 crore (approximately $11 billion) joint venture with Taiwan’s Powerchip Semiconductor Manufacturing Corp (PSMC). The facility, expected to begin production by 2026, is positioned as a cornerstone of India’s drive to establish a robust domestic semiconductor supply chain. But building a fab is only half the battle; securing a reliable supply of specialty chemicals is equally critical.
That’s where Tata Electronics’ ongoing negotiations with Merck come into play. As reported by ETtech, the two companies are in talks for a potential exclusive long-term agreement that would make Merck the primary supplier of specialty chemicals and materials for the Dholera facility. Semiconductor manufacturing is notoriously complex, requiring more than 150 chemicals and over 30 gases and minerals in its processes. An exclusive partnership would ensure Tata Electronics a stable, prioritized, and uninterrupted supply of these critical materials, mitigating the supply chain risks that have plagued the global industry in recent years.
Neil Shah, vice president of research at Counterpoint Research, told ETtech, “An exclusive agreement between Merck and Tata Electronics would create significant strategic advantages for both companies. For Tata Electronics, it would mean a consistent supply of critical materials, often with a special price lock-in. For Merck, partnering with Tata Electronics provides significant scale and a strong foothold in India’s emerging semiconductor landscape.”
Merck, for its part, is cautiously optimistic. “We have been monitoring semiconductor manufacturing developments in India for the past couple of years,” a Merck spokesperson said. “We believe that India is becoming an increasingly important partner in the global semiconductor ecosystem. However, at this time it is too early to talk about concrete plans for India. We continue to closely follow opportunities that align with our strategic goals.”
Of course, a successful chemicals plant in Gujarat will require more than just contracts. Merck will need a robust ecosystem, including reliable infrastructure—electricity, water, security, logistics—and a well-developed upstream supply chain with local partners for everything from raw materials to packaging. The challenge is steep, but the potential rewards are even greater, especially as India’s role in the global chip supply chain expands.
Meanwhile, India’s semiconductor sector is seeing a surge of new projects and investments. The Union Cabinet recently approved four new semiconductor projects with a combined investment of Rs 4,594 crore across Odisha, Andhra Pradesh, and Punjab. Among them is a Rs 1,943 crore 3D glass semiconductor packaging unit by 3D Glass Solutions Inc, backed by technology giants such as Intel, Lockheed Martin, and Applied Materials. This facility will have the capacity to produce 5 crore units annually.
Another landmark project is SiCsem’s fabrication plant in Bhubaneswar, India’s first commercial silicon carbide semiconductor facility, with an investment of Rs 2,066 crore and an expected annual output of 9.6 crore chips. In Andhra Pradesh, Advanced System in Package Technologies is setting up a Rs 468 crore packaging facility with a similar capacity. Continental Device India Ltd (CDIL) will establish a new semiconductor unit in Punjab, targeting a production of 15.8 crore units each year.
These expansions mean India will soon have 10 semiconductor plants in operation, representing nearly Rs 1.6 lakh crore in collective investment. Looking ahead, even larger projects are in the pipeline: a Rs 22,516 crore packaging unit by Micron Technology, a Rs 27,000 crore assembly and testing plant by Tata Semiconductor Assembly and Test (TSAT), and significant ventures by CG Power & Industrial Solutions with Renesas and Stars (Rs 7,600 crore), Kaynes Semicon (Rs 3,307 crore), and the HCL–Foxconn joint venture (Rs 3,700 crore).
Kaynes Technology, for example, is setting up a ₹3,300 crore Outsourced Semiconductor Assembly and Test (OSAT) facility and an HDI bare-board manufacturing unit at Sanand, Gujarat. The pilot product line began in June 2025, with a daily capacity of 60 lakh chips. The company has signed a five-year agreement with Alpha & Omega Semiconductor, which will utilize 60% of the first-phase production. Kaynes reported a profit before tax of ₹96 crore in Q1 of financial year 2026, a 49.9% year-on-year increase, and an operating profit margin of 17%.
CG Power and Industrial Solutions, in a joint venture with Renesas and Stars Microelectronics, is investing ₹7,600 crore over five years to set up an OSAT facility at Sanand, with a chip production capacity of 1.5 crore per day. The India Semiconductor Mission has approved a subsidy grant of ₹3,501 crore for capital expenditure support.
Supporting all this activity is India’s push for ancillary industries. VA Tech Wabag, a leader in water treatment and desalination, is eyeing opportunities to supply ultra-pure water—essential for chip fabrication—to semiconductor plants in Gujarat. While not yet a direct supplier to the sector, Wabag’s strategic positioning and expertise in ultra-pure water could soon make it a key player.
What’s driving this explosion of activity? According to MoneyControl, global semiconductor dynamics are shifting. The ongoing US-China tech standoff and rising geopolitical risks in Taiwan are prompting chipmakers to diversify their supply chains. India’s government incentives and policy push under the ISM align perfectly with this global “China+1” strategy, positioning the country as a compelling alternative for global manufacturers.
As India prepares to launch its first homegrown chip and mega-projects like Tata’s Dholera fab move closer to reality, the nation stands at the threshold of a new era. The coming years will determine whether India can not only catch up but also carve out a lasting place in the world’s semiconductor hierarchy.
