For most of its post-independence history, India watched the semiconductor industry from the sidelines. Chips were designed in California, fabricated in Taiwan, and assembled in Malaysia — India was a consumer at every stage, not a producer. That is now changing, and changing fast. In 2026, India is not merely aspiring to enter the global semiconductor supply chain. It is executing — with capital, policy, and strategic partnerships that would have seemed implausible even five years ago.

The question is no longer whether India will play a role in the global chip economy. The question is how large and how consequential that role becomes — and whether India can carve out a position of genuine strategic weight in a sector that defines national power in the 21st century.

From Intent to Execution

The India Semiconductor Mission, launched in 2021 with a $10 billion incentive package, has moved from vision to ground-level reality. Four semiconductor manufacturing facilities are entering commercial production in 2026 — Micron Technology, CG Power, Kaynes Technology, and Tata Electronics — marking India's formal transition from a chip-importing nation to a chip-producing one.

Micron's $2.75 billion assembly and testing facility in Sanand, Gujarat, began full-scale commercial production in February 2026 — the first major global semiconductor success story of the Make in India initiative. Simultaneously, Tata Electronics' mega-fab at Dholera — a $10.9 billion facility developed in partnership with Taiwan's PSMC — has begun high-volume trial runs and process validation for 300mm wafers, with commercial wafers in the 28nm to 110nm range expected by late 2026.

These are not incremental developments. The speed of execution at both Sanand and Dholera has surprised even industry sceptics. The ability to manage the extreme environmental controls and ultra-pure water systems required for semiconductor fabrication — long considered India's Achilles' heel — has been demonstrated. The proof of concept is in place.

The government has not stopped at ISM 1.0. Budget 2026 signalled the launch of ISM 2.0, with a fresh allocation of ₹1,000 crore for 2026–27. Where the first phase concentrated on attracting fabrication and assembly units, ISM 2.0 broadens the ambition — promoting domestic production of semiconductor equipment, speciality chemicals, industrial gases, and wafers currently imported; strengthening chip design and intellectual property; and embedding research institutions directly into manufacturing clusters.

The Taiwan Comparison — Unfair, but Instructive

It is tempting — and fashionable — to benchmark India against Taiwan. TSMC alone accounts for over 90% of the world's most advanced chips. Taiwan has spent five decades building an ecosystem of foundries, suppliers, engineers, equipment makers, and design firms that is essentially irreplaceable at scale. Comparing India's nascent semiconductor industry to Taiwan's is, in some ways, the wrong question.

But the comparison is nonetheless instructive — not as a measure of where India stands today, but as a map of where it needs to go.

Taiwan's semiconductor dominance was not accidental. It was the product of deliberate state policy, anchor investments, and the patient construction of an ecosystem over decades. India is now attempting something similar, but in a compressed timeframe and with the advantage of learning from Taiwan, South Korea, and the United States. The lesson from these geographies is clear: no single fab makes a semiconductor power. What makes a semiconductor power is a cluster — a dense web of foundries, suppliers, research institutions, and skilled engineers operating in proximity.

India is beginning to build this. Gujarat is emerging as the anchor hub, with multiple facilities across Sanand and Dholera. Karnataka and Tamil Nadu host deep design and engineering talent through institutions like IISc, IITs, and a thriving fabless startup ecosystem — firms like Mindgrove, Signalchip, and Saankhya Labs are developing AI-driven and automotive chip architectures that are genuinely world-class. India's electronics manufacturing output has already crossed $100 billion, with exports surging. The foundation is real.

Strategic Positioning — Beyond Manufacturing

India's semiconductor strategy is not purely about manufacturing. It is about positioning India at multiple nodes of the global chip value chain — design, fabrication, packaging, and the intellectual property that underlies all of it.

This matters because the global semiconductor supply chain is under structural stress. US export restrictions on advanced chips — most recently on NVIDIA's B200 and B300 series — have accelerated every major economy's push for supply chain diversification. India, uniquely, is positioned to benefit from this fragmentation. It is a trusted partner of the United States in technology supply chains, a member of the Quad, and a country that both Washington and global corporations see as a credible alternative to China-dependent manufacturing.

The $400 million investment by Applied Materials in an India engineering centre, Lam Research's $25 million semiconductor training lab, AMD's $400 million R&D expansion — these are not charity. They are strategic bets on India as a long-term player in the global chip economy. When global semiconductor equipment and design giants plant roots in a country, they are signalling confidence that the ecosystem will mature.

India's ISM 2.0 push into compound semiconductors — silicon carbide and gallium nitride, critical for electric vehicles and next-generation telecommunications — is particularly shrewd. These are not commodity chips. They are high-value, strategically significant materials where India can build genuine expertise without having to compete directly with TSMC's leading-edge nodes. The Rohm-Tata partnership, focused on power semiconductors for automotive and industrial use, exemplifies this approach: India entering the chip economy not through the crowded front door, but through a high-value side entrance.

What Remains to Be Done

India's semiconductor story in 2026 is one of genuine progress — but also of honest reckoning with what remains unbuilt. Wafer fabrication at advanced nodes remains years away. The talent gap is real: thousands of specialised engineers are needed to operate these facilities, and while training programmes have begun, the pipeline takes time to fill. Infrastructure — power, water, logistics — must be built in parallel with the fabs themselves, not as an afterthought.

ISM 2.0's focus on embedding IITs, IISc, and industry-backed Centres of Excellence into semiconductor clusters is the right instinct. The United States built its semiconductor dominance by co-locating universities with fabs — Arizona State University's engineering expansion was synchronised with Intel and TSMC hiring cycles. India must do the same, and do it faster.

The target — a 20–25% share of the global semiconductor value chain by 2047 — is ambitious. But for the first time, it is not merely aspirational. India is producing chips. It is attracting global investment. It is building the ecosystem. The trajectory is real.

Competing with Taiwan in leading-edge fabrication may not be India's immediate goal — nor does it need to be. What India is building is something arguably more durable: a diversified, strategically positioned semiconductor economy that serves its own growing market, anchors global supply chain resilience, and gives India genuine leverage in the technology diplomacy of the coming decades. That is not a consolation prize. For a country of India's scale and ambition, it is exactly the right prize to pursue.

The Hind covers policy, power, and strategic affairs from India's perspective. Views expressed are analytical and editorial.