Nasscom Vice-Chairman Srikanth Velamakanni emphasized that India must build stronger hardware capabilities and deep-tech architecture as AI reshapes software development. Speaking at a Nasscom event, he noted that "the low-hanging fruit of software services is gone as AI and agentic AI have made coding easier and thus made software easier to develop. There is an abundance of it now." The industry faces challenges in the deep-tech sector, with Nasscom President Rajesh Nambiar acknowledging that while startup funding at the seed stage remains a challenge, the industry is closer than ever to solving the problem. As per Nasscom, total deep-tech funding climbed to $1.6 billion in 2025, up from $1.1 billion in 2023, though the number of funding rounds fell to 274 from 350 over the same period, indicating investors are becoming more selective.
India is advancing its semiconductor manufacturing capabilities with Odisha recently signing a framework agreement with Intel and 3DGS to establish an advanced glass-core substrate manufacturing facility near Bhubaneswar. According to government sources, this project represents one of the country's largest high-technology manufacturing investments, though financial details have not yet been disclosed. The facility will introduce domestic capability in glass-core substrates, a key technology used in advanced semiconductor packaging, marking a significant step in India's efforts to build complete electronics manufacturing capabilities.
L&T Semiconductor Technologies (LTSCT) has made a significant strategic decision to shift its outsourced semiconductor assembly and test (OSAT) operations from overseas to India, marking another milestone in the country's journey towards becoming a global semiconductor hub. According to Sandeep Kumar, Chief Executive Officer of LTSCT, Indian OSAT facilities have become globally competitive in terms of cost, making the transition a commercially viable decision. The company has already started working with domestic partners, including Tata Electronics, as India's chip packaging and testing capabilities continue to expand. While the backend packaging process is shifting to India, chip fabrication remains overseas for now, with LTSCT currently manufacturing its semiconductor designs at fabrication plants in Taiwan, Japan and the United States. Kumar indicated that the company would be open to manufacturing chips in India once domestic fabrication facilities, such as Tata Electronics' upcoming semiconductor fab, become operational.
The government has launched several initiatives to boost the semiconductor ecosystem, including the Central government's approval of the Startup India Fund of Funds 2.0 with a total corpus of ₹10,000 crore to mobilize venture capital for the country's startup ecosystem. Additionally, the India Deep Tech Alliance (IDTA) has been established as a consortium of venture capital funds and large corporates such as Nvidia and Qualcomm, which will look to invest about $10-15 million in startups across space, semiconductors, artificial intelligence and defence. This follows the government's earlier approval of CG Semi's commercial production facility in Gujarat following an investment of more than ₹7,600 crore (~US$797 million) and Suchi Semicon's new OSAT project in Surat worth ₹3,936 crore (~US$413 million).
Ramgopal Rao, Vice-Chancellor of BITS Pilani, highlighted that India ranks 86th globally in industry-academia collaboration, significantly behind the US and China. As per Rao, "Academia identifies its own problems and solves them by writing papers. But many of these solutions are good only up to the proof-of-concept (PoC) stage, beyond which scaling becomes a problem." He emphasized the need for "translation centres between the two, where industry identifies the problem and finds people in academia who are working in those areas to solve it." This collaboration gap represents a crucial challenge in developing India's deep-tech ecosystem, with the government and venture capital ecosystem attempting to improve funding for sectors such as space technology and defence technology.
LTSCT has invested nearly $100 million in developing semiconductor products, with each chip requiring an average investment of around $30 million. The company expects to achieve operational break-even within the next two years and is targeting revenues of $150-200 million during that period. The company's product strategy focuses on three major segments—power electronics, compute products and mixed-signal devices—which are witnessing growing demand across industrial and automotive applications. Its products are sold across multiple international markets, including India, the United States, Japan, Europe and Taiwan, where it competes with leading global semiconductor companies. Interestingly, India contributes nearly 30 percent of LTSCT's business despite accounting for only about 10 percent of global semiconductor demand, highlighting the country's growing importance as a market for advanced semiconductor solutions.
India's electronics manufacturing industry has grown rapidly, with electronics production reaching nearly ₹13 lakh crore (~US$13.5 billion). According to government figures, smartphones have become the country's largest export commodity, demonstrating the sector's significant growth potential. However, domestic value addition in electronics manufacturing is estimated at about 18% to 20%, indicating considerable room for improvement. Under the Electronics Component Manufacturing Scheme (ECMS), the government is targeting investments in PCBs, passive components, camera modules, electromechanical components, and manufacturing equipment. Against an original investment target of ₹59,350 crore (about US$6.2 billion), the scheme has already received investment commitments worth ₹1.15 lakh crore (about US$12.1 billion), prompting the government to increase the scheme's budget allocation from ₹22,919 crore (about US$2.4 billion) to ₹40,000 crore (about US$4.2 billion).
