V Technology Geopolitics & AISouth Asia
Self-Criticism from New Delhi: India's Chip Strategy Cannot See Beyond the Fab
- Institution
- Observer Research Foundation (ORF)
- Author
- Amal Chandra
- Country · language
- India · English
- Affiliation
- Independent think tank (New Delhi)
Summary
The assessment published by ORF on 8 September 2026 lists the gaps in India's semiconductor push rather than celebrating it. The article reads the 1.275 trillion rupee budget of the Semicon 2.0 programme, approved by the cabinet on 15 July 2026, as a continuation of the earlier 76,000 crore rupee programme; cumulative commitments across the twelve approved semiconductor projects have reached 1.64 trillion rupees. It reports that electronics manufacturing rose from 1.9 trillion rupees in 2014-15 to 12 trillion rupees in 2024-25, that nine ATMP/OSAT projects have been approved, that 24 design-focused projects are being supported, that 105 companies have been given access to advanced EDA tools, and that 38,000 GPUs had been connected to the shared computing infrastructure as of March 2026.
On the education side it notes that 100,000 engineers have been trained, 68,000 of them going directly into chip design, and that 20% of the global chip design workforce is already in India. The author's main objection is to treating fab investment as a strategy in itself: although bringing global semiconductor executives together in New Delhi on 16 September 2026 carries showcase value, the argument is that outside dependence will persist unless the gap between design strength and manufacturing, advanced materials and equipment supply is closed. The text accepts that full autarky is not realistic and proposes selective technological autonomy in the links where vulnerability is disproportionate.
Blind spot
The article relays India's own official programme figures without independent verification: how many of the twelve approved projects have actually entered production, yield rates and unit cost comparisons are all missing. Because rival manufacturing centres' progress over the same period is not measured, India's relative position stays invisible. ORF's closeness to Indian industry and policy circles frames the critique as 'more and more selective support' rather than 'we are on the wrong track'.
Talay assessment
Bottom line
In Indian chip policy the debate no longer turns on whether the investment exists but on whether design superiority is converting into manufacturing. The 1.275 trillion rupee Semicon 2.0 and the 1.64 trillion rupees of project commitments strengthen the input side; the bottleneck remains in materials, equipment and advanced nodes. The most likely direction is visible progress in packaging and test and at mature nodes, while outside dependence persists at the advanced node.
Likely effects
- Supply chainUncertain1–6 months
Nine ATMP/OSAT projects are expanding packaging and test capacity; as advanced materials and equipment remain imported, fragility persists in the critical link.
- Skills and employmentPositiveWeeks
68,000 chip design engineers and a 20% share of the global design workforce give India an advantage in design services before manufacturing.
- Public financesNegative6 months+
The 1.275 trillion rupee incentive would leave a lasting burden on the budget if output is delayed; how much of the 1.64 trillion rupee commitment turns into cash will be decisive.
Possibilities, ranked
- 1Fast in packaging, slow at the advanced node55%
ATMP/OSAT and mature node production come to the fore while the advanced node proceeds through partnership; design exports keep growing.
Watch: The number of the twelve approved projects that actually reach shipment and the first commercial output announcements from ATMP plants
- 2Incentives widen, output slips30%
The Semicon 2.0 budget grows with additional packages but production timetables slip; the debate turns to the efficiency of the incentive.
Watch: The number of new approvals announced under Semicon 2.0 and the slippage in plant opening timetables
- 3The design-manufacturing disconnect becomes permanent15%
India grows as a design centre while its manufacturing share stays symbolic, and the 38,000-GPU computing infrastructure largely serves the software side.
Watch: The published share of domestically manufactured chips set against the growth in electronics manufacturing turnover
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Original publication: orfonline.org · 8 September 2026
This page summarises the institution's view and does not reflect the view of Talay Insight. No direct quotation is used.