Muslim World Report

India's Semiconductor Mission: Promises vs. Reality

Dr. Anthony Lindsay | Jun 23, 2025 10:10 AM | 6 min read | 1109 words

TL;DR: India’s Semiconductor Mission, backed by an investment of approximately ₹80,000 crore, seeks to establish a significant position in global semiconductor manufacturing. However, the focus on outsourced semiconductor assembly and testing (OSAT) facilities over genuine fabrication plants raises concerns about sustainability and self-reliance. The success or failure of this initiative could drastically shape India’s technological landscape and geopolitical standing.

India’s Semiconductor Mission: A False Dawn in Self-Reliance

India’s ambitious Semiconductor Mission, backed by an estimated investment of approximately ₹80,000 crore, aspires to carve out a significant presence in the global semiconductor landscape. However, this initiative has garnered substantial scrutiny due to its pronounced emphasis on outsourced semiconductor assembly and testing (OSAT) facilities rather than the establishment of genuine semiconductor fabrication plants (fabs). Here are the main points of concern:

  • Limited Fabs: Out of the six planned facilities, only one—a true fab operated by Tata in Dholera—stands as a beacon of hope.
  • Insufficient Development: Critics argue that the remaining five facilities are inadequate for nurturing India’s own intellectual property or developing a competitive edge in the industry (Saxenian, 2002).
  • Long-term Ambitions in Question: This misallocation of resources raises urgent questions about India’s long-term ambitions in semiconductor manufacturing, especially as it seeks to position itself as a self-reliant global player.

The Stakes of Semiconductor Manufacturing

The stakes are incredibly high, given the integral role of semiconductors in modern economies. They influence various sectors, including:

  • Consumer electronics
  • National defense technologies

Global Context

Countries around the world are scrambling to secure semiconductor supply chains amid escalating global tensions. Thus, India’s progress is not merely a national concern; it is pivotal in terms of international strategic importance.

Challenges Ahead

While Taiwan has successfully established itself as a leader in semiconductor technology, India’s challenges in creating a sustainable, high-value manufacturing ecosystem are daunting. The existing gaps in:

  • Talent
  • Infrastructure
  • Regulatory frameworks

only serve to exacerbate these challenges.

Although the initial influx of foreign investment may provide superficial political cover, it often prioritizes corporate interests over the welfare of the broader Indian populace, leading to ethical concerns regarding governance (Patanakul et al., 2012). Without the development of robust indigenous capabilities, the Semiconductor Mission risks devolving into a costly exercise in optics rather than a pathway to substantive progress.

What If Scenarios: Potential Outcomes of the Semiconductor Mission

What if India’s Semiconductor Mission Fails to Deliver?

The ramifications of failing to establish a robust semiconductor manufacturing ecosystem could be profound:

  • Excessive Reliance on Foreign Suppliers: This dependency could undermine India’s ambitions for strategic autonomy (Hayashi, 2020).
  • Economic Repercussions: A failure to establish a competitive semiconductor industry could hinder job creation, perpetuating India’s role as a mere consumer of technology rather than a producer (Levy & Egan, 2003).
  • Regional Inequalities: Investments tends to concentrate in specific areas, neglecting others.
  • Declining International Confidence: This could deter future foreign direct investment and complicate India’s efforts to forge essential technology-sharing partnerships.

What if the Semiconductor Mission Succeeds Beyond Expectations?

Conversely, if India’s Semiconductor Mission exceeds expectations, it could herald a transformative shift in the country’s economic landscape:

  • Positioning India: Establishing multiple state-of-the-art semiconductor fabs would position India as a crucial player in the global semiconductor supply chain.
  • Attracting Investment: Success would attract further foreign investment and foster a resilient homegrown ecosystem, driving innovation (Cunningham, 2009).
  • Job Growth: The initiative could catalyze significant job creation in high-skilled sectors, revitalizing education and training systems.
  • Technological Sovereignty: This success would reduce reliance on external suppliers and bolster national security.

While realizing this optimistic scenario presents significant challenges, it is imperative for policymakers to ensure that growth remains inclusive and equitable (Khalique et al., 2021).

What if the Current Model Continues?

If India maintains its current trajectory—prioritizing OSAT facilities over comprehensive fab capabilities—consequences could be grave:

  • Short-sighted Approach: While OSAT facilities may provide immediate employment opportunities, they may not contribute to long-term economic resilience.
  • Stagnant Wages: India risks being relegated to the lower tiers of the semiconductor value chain.
  • Investor Alienation: Inconsistent policies and a lack of cohesive strategy may alienate potential investors.

To avoid these pitfalls, India must urgently reassess its priorities. A cohesive strategy centered on comprehensive development across the semiconductor ecosystem is essential—aiming for more than mere short-term gains (Patanakul et al., 2012).

Strategic Maneuvers: Towards a Sustainable Semiconductor Ecosystem

Addressing the challenges and opportunities within India’s Semiconductor Mission necessitates a multifaceted, collaborative strategy among stakeholders, including the Indian government, private sector partners, and educational institutions.

Policy Prioritization

  1. Incentivize Fabrication Facilities: Policies should prioritize genuine fabrication facilities over OSATs. Offering grants or tax breaks for companies investing in fabs and R&D could attract crucial industry players (Levy & Egan, 2003).

Building Strategic Partnerships

  1. Collaborative Efforts: Strong partnerships with leading semiconductor firms are vital for technology transfer and access to cutting-edge processes.

Education and Workforce Development

  1. Invest in Talent: Tailored education and training programs are essential to ensure graduates possess the necessary skills for high-tech manufacturing environments.

Regulatory Framework Improvements

  1. Streamline Regulations: Simplifying bureaucratic processes will create a more attractive business climate, bolstering both domestic and foreign investments.

Community Engagement and Transparency

  1. Promote Dialogue: Transparent dialogue with local communities can address concerns surrounding land acquisition and environmental impacts, ensuring that local populations benefit from economic development.

Conclusion

India’s Semiconductor Mission stands as a significant opportunity amid formidable challenges. While it holds potential for economic resurgence and geopolitical advancement, navigating the path forward demands a carefully crafted strategy. Balancing foreign investment with the development of local capabilities is crucial. Through a commitment to genuine self-reliance, inclusive growth, and technological innovation, India can aspire to secure its place as a formidable player in the semiconductor arena.

References

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