A report by Equirus Securities highlights that India's semiconductor ambitions are hindered by execution challenges, primarily due to heavy reliance on imported equipment and supply chain gaps. While the country is building capabilities in chip fabrication, packaging, and testing, the report emphasizes that execution remains the biggest hurdle.
Strategy Borrows from Asian Leaders
The report notes that India's semiconductor strategy combines successful elements from leading Asian chip-making nations rather than creating a new model. It has avoided the Chinese approach, instead adopting government-backed research and development from Taiwan, FDI-led manufacturing from Malaysia, domestic champions from South Korea, and capital discipline from Singapore.
Execution Over Strategy
According to the report, India's main challenge is execution, not strategy. The country must build a skilled workforce, strengthen domestic supply chains, and achieve globally competitive quality standards within a short period. India is focusing on areas where it has a competitive advantage, supported by nearly three lakh chip designers, accounting for about one-fifth of the global talent pool.
Focus on Mature Nodes and OSAT
India's strategy is centered on OSAT (Outsourced Semiconductor Assembly and Test) and mature nodes between 28nm and 110nm, which account for a large share of global wafer capacity and are widely used in automotive, industrial, and consumer applications. The report states, "Demand-led import substitution underpins the case, with chip consumption set to more than double to about USD 155 billion by CY31."
Heavy Import Dependence
However, India will continue to import more than 90 per cent of its semiconductor equipment, along with most specialty chemicals and electronic-grade gases. The report identifies dependence on imports for upstream equipment and materials as the biggest weakness in India's semiconductor ambitions. It estimates that the country will import more than 90 per cent of chip-making equipment and 85-90 per cent of specialty chemicals and electronic-grade gases.
Workforce Gaps
While India has a strong base of chip designers, it lacks enough process engineers, metrology specialists, yield engineers, and cleanroom technicians needed for manufacturing. The target of creating 85,000 industry-ready engineers by CY27 is ambitious but achievable, citing Micron's Sanand ATMP facility, which became operational with around 2,000 trained workers within three years of construction.
Policy Credibility and Gaps
The report says India's semiconductor policy is among its most credible industrial initiatives but highlights several gaps. These include the need for higher design incentives, the absence of a strong equipment and materials ecosystem, and limited prospects for sub-28nm manufacturing in the near future. It adds that Dholera's planned 28nm fabrication facility will remain a mature-node project by global standards even after reaching scale.
