India: Proposes New $11 Billion Fund to Support Domestic Chip Manufacturing Industry

India is planning to launch a semiconductor industry special fund of over 1 trillion rupees (approximately $108 billion USD), aimed at supporting domestic chip design, manufacturing equipment procurement, and supply chain development through subsidies, further solidifying its strategic goal of becoming a global manufacturing hub.

On March 12, according to Bloomberg, citing informed sources, the fund is expected to be officially launched within two to three months, covering multiple aspects such as chip design, manufacturing equipment procurement, and supply chain construction. The related plans are still under discussion.

This move is the latest effort by Prime Minister Modi to accelerate the development of India’s domestic chip strategy. Currently, India’s semiconductor industry is still in its early stages, with few major projects underway. The new fund will work in conjunction with existing federal government policies on smartphone and component subsidies to jointly promote the enhancement of local manufacturing capabilities and export growth. The Ministry of Electronics and Information Technology will oversee the operation of the fund.

According to Bloomberg, the core of India’s strategy is to combine its strong engineering and design talent pool with financial subsidies to attract major global chip manufacturers to establish operations in India. This approach is similar to the previous strategy that attracted Apple to expand in India—Apple now assembles about 25% of its iPhones in India.

Building on the 2021 billion-dollar incentive plan, attracting giants like Micron and Tata

The newly announced fund will further extend the 10 billion USD chip incentive plan launched in India in 2021. This plan previously committed to covering half of the costs for chip project development and successfully attracted US memory chip manufacturer Micron Technology to establish a packaging and testing plant in Gujarat, western India.

Indian conglomerate Tata Group is also building a semiconductor wafer fabrication plant in Gujarat, Modi’s hometown, and is simultaneously advancing an independent chip packaging project. Additionally, multiple chip manufacturing and packaging projects, including Foxconn’s testing and packaging facilities, have been announced under the government incentive framework.

Starting from low-end chips, aiming to compete with major producing countries by 2032

Although the early projects currently underway in India mainly focus on less mature chip technologies, the long-term goal is to develop advanced process semiconductors in the upstream value chain.

According to Bloomberg, Indian Union Minister of Electronics and Information Technology Ashwini Vaishnaw stated in November last year that India aims to elevate its chip manufacturing capacity to a level comparable to major global producers like South Korea and the United States by 2032. Governments worldwide are increasingly supporting their domestic chip industries to enhance supply chain independence and meet the rising demand for chips in AI, smartphones, automobiles, and home appliances.

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