India is gearing up to strengthen its role in the global semiconductor supply chain with a proposed $20 billion incentive package, highlighting the country’s ambition to become a key player in the chip industry. The plan, spearheaded by the Ministry of Electronics and Information Technology (MeitY), has been sent to the finance ministry for approval, with a Cabinet decision expected by the end of 2025. The new package aims to build on the first phase of the India Semiconductor Mission (ISM), which focused on creating a foundational ecosystem for semiconductor manufacturing and design. Officials hope the initiative will serve as a bridge toward deeper integration into global semiconductor value chains over the next decade.

MeitY is currently evaluating the results of the ISM’s initial phase, including progress on fabrication units, assembly and testing facilities, chip design capabilities, and both domestic and international interest. This assessment also compares India’s approach with global semiconductor incentive programs such as the U.S. CHIPS Act and the European Union’s €43 billion initiative. While India’s financial commitment is smaller than those of countries like the U.S., EU, South Korea, Japan, and China, the government is focusing on predictability, long-term regulatory assurance, and phased fiscal support rather than one-off grants. The finance ministry is reviewing projected outcomes, including job creation, foreign investment, technology transfer, and benefits to sectors like electronics, automotive, telecom, and defense.

The $20 billion plan is expected to include subsidies for fabrication plants, incentives for assembly, testing, marking, and packaging (ATMP) facilities, and grants for chip design and next-generation research. It may also introduce a “first-in-location” bonus for strategic investors and streamline regulatory approvals. Additional support will target upstream supply chains, including specialty chemicals, silicon wafers, and semiconductor-grade gases, as well as skill development to create a semiconductor-ready workforce.

Beyond economic goals, the package underscores India’s strategic ambitions. With global efforts to diversify semiconductor supply chains away from China, India aims to position itself as a reliable alternative partner in Asia, leveraging its market size, operational stability, and alignment with Western strategic objectives. Experts note that timing will be critical. Successfully executing the incentive package could anchor leading fabs in India, spur domestic start-ups, and attract private investment in infrastructure. Delays or underwhelming support, however, could weaken India’s position in a sector where global capacity is already being secured. The Cabinet’s final decision in late 2025 will be pivotal in determining whether India emerges as a significant player in the global semiconductor landscape or remains a secondary participant in the shadow of larger subsidizing economies.