India is strengthening its push into the global semiconductor race with a major update to its Semiconductor Policy India 2025. This revamped strategy introduces a more aggressive and streamlined approach to supporting domestic chip fabrication, design, and assembly units. The revised policy framework aims to reduce import dependency, attract global investment, and position India as a reliable hub in the semiconductor supply chain.
Here’s a closer look at what the new policy changes mean, how they enhance existing incentives, and what stakeholders can expect in the coming years.
Strategic Focus of Semiconductor Policy India 2025
The updated Semiconductor Policy India 2025 is driven by two primary goals:
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Strengthening Indigenous Capacity: India currently imports over 90% of its semiconductors. The new policy prioritizes building domestic fabrication (fab) plants and chip design capabilities.
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Securing the Electronics Supply Chain: By boosting local production, India aims to insulate its electronics and automotive industries from global supply shocks, as witnessed during the pandemic.
The policy now reflects a more aggressive and focused approach, directly addressing infrastructure gaps, skill development, and long project gestation timelines.
Revised Chip Manufacturing Subsidy Structure
One of the core pillars of the policy expansion is the overhaul of the chip manufacturing subsidy mechanism. The government has simplified the application process, increased the subsidy cap, and broadened eligibility.
Key Changes:
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Uniform Incentive Rate: The government will now offer up to 75% capital expenditure subsidy for establishing semiconductor fabs, regardless of node size (including advanced nodes like 28nm and below).
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Design-Linked Incentive (DLI) Enhancement: The DLI scheme now covers up to 50% of eligible R&D expenditure for chip design companies and startups.
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Operational Support: Firms will receive production-linked incentives (PLIs) on an annual basis for five years based on output value.
This revamped structure aims to reduce entry barriers and improve the commercial viability of high-cost projects.
Focus on Global Partnerships and Technology Transfers
India’s new semiconductor policy also puts strong emphasis on international collaboration. The government is actively courting leading global semiconductor giants to enter joint ventures with Indian firms.
Examples include:
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Micron’s memory chip facility in Gujarat, already under construction with government support.
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Partnership talks with TSMC and Intel, signaling India’s ambition to bring in advanced process technology.
To ensure success, the government is offering land at concessional rates, tax breaks, and fast-track environmental clearances to joint ventures and strategic tech transfer agreements.
Infrastructure and Talent Development
Recognizing that semiconductors require a robust ecosystem, the policy includes major provisions for infrastructure and talent:
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Semicon India FutureSkills Program: A national initiative to train over 85,000 engineers in VLSI design, cleanroom operations, and nanotechnology.
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Dedicated Semiconductor Clusters: Development of industrial clusters with uninterrupted power, water, and logistics access in states like Tamil Nadu, Karnataka, and Gujarat.
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University Partnerships: Grants for academic institutions to build advanced labs and research centers focused on semiconductor materials and device physics.
This ecosystem-first approach is vital to support the full lifecycle of chip manufacturing—from concept to final packaging.
Why This Matters for India’s Economic Future
With the global semiconductor industry projected to hit $1 trillion by 2030, India’s timely expansion of the Semiconductor Policy India 2025 is a strategic move. It positions the country to attract high-tech investments, generate employment, and reduce its massive electronics import bill, which crossed $100 billion in 2024.
The policy doesn’t just target large-scale production but aims to create an end-to-end semiconductor ecosystem that supports innovation, entrepreneurship, and export competitiveness.
FAQs
Q1: What is the objective of the Semiconductor Policy India 2025?
A: The policy aims to build a complete domestic semiconductor ecosystem, covering design, fabrication, and packaging, while reducing reliance on imports and boosting India’s strategic and economic security.
Q2: Who is eligible for the chip manufacturing subsidy under the revised policy?
A: Any domestic or foreign entity setting up a semiconductor fab or design unit in India is eligible, including startups and joint ventures, subject to technical and financial qualifications.
Q3: How much financial support is available under the new subsidy rules?
A: Up to 75% of the capital expenditure for setting up fabs and up to 50% of eligible R&D expenses for design units.
Q4: Are there any new educational initiatives linked to the policy?
A: Yes, the Semicon India FutureSkills Program aims to train over 85,000 professionals, ensuring a skilled workforce for the industry.
Q5: Which Indian states are leading in semiconductor investments?
A: Gujarat, Tamil Nadu, Karnataka, and Maharashtra are emerging as key states with special industrial zones and investor-friendly policies tailored for semiconductor projects.
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