India's ₹1.27 lakh crore Semicon 2.0 scheme is expected to generate at least 200 chip design companies, according to Union Minister for Electronics and Information Technology Ashwini Vaishnaw. Speaking during a fireside chat, Vaishnaw described this emergence as a 'game changer' for the country, as the country's design capability rooted in the IT industry and global capability centres now extends into the semiconductor sector. The minister noted that the first phase of support for chip-design startups in ISM 1.0 focused on addressing the high cost of Electronic Design Automation (EDA) tools, with more than 105 chip design startups gaining access to state-of-the-art EDA tools and 20 startups receiving venture capital funding. However, as per recent analysis, the hard part has just begun - while India has attracted significant manufacturing investment, the challenge now lies in converting this presence into Indian-owned intellectual property, domestic suppliers and globally competitive firms.
India wants its semiconductor capabilities to reach into everyday products such as cars, televisions, refrigerators, and power infrastructure within the next five years, as outlined by Vaishnaw. The minister emphasized that many chips which go into automobiles, cars, scooters and motorcycles are currently manufactured in India, but the country should be designing and manufacturing these chips domestically. In the consumer electronics space, Vaishnaw highlighted that many chips used in televisions, refrigerators and other household appliances should also be designed and manufactured in India. He described semiconductors as the 'brain' and 'heart' of a television, noting that while consumers don't see the chip inside finished products, it drives the entire system. The government recently received about ₹1 lakh crore in investor interest under the second phase of the semiconductor scheme, with significant announcements including Applied Materials' USD 5-billion India plan through 2035 and Lam Research's proposed ₹10,000-crore investment.
The government is developing similar capabilities in the power sector, including chips used in transmission lines, transformers and converters, according to Vaishnaw. He noted that many chips which go into power sector infrastructure should be manufactured in India. The minister cited a display-control module plant coming up in Uttar Pradesh as an example of the capabilities India is seeking to build. The module controls how televisions display final pictures and will be manufactured domestically, representing the 'heart and brain' of the television. Vaishnaw also pointed to the planned LED display fabrication facility by Crystal Matrix, which has advanced to a complex level of 40 microns from 90 microns and is setting up a research and development facility in India, enabling all large screens and LED screens to be manufactured and designed in India.
With Semicon 2.0, the government is implementing a strategic shift from chip design towards system design, as highlighted by Vaishnaw during the fireside chat at Semicon 26. According to the minister, system design would mean that students who pass through that course will be extremely sought after in the industry, addressing the current demand for skilled talent. India's semiconductor manufacturing has advanced rapidly, with 12 units approved and 5 currently in production by 2026, compared to having no commercial chip plant in 2021. The sector's progress, including chips being developed for products, has encouraged the programme's expansion and greater participation from larger companies and Indian-origin engineers working globally. However, as recent analysis notes, chip assembly and chip design are two separate activities with a greater difference between Indians designing chips and Indian companies owning the technology.
Semicon India 2026 has witnessed significant international interest, with roundtables held by more than half a dozen countries showing government support for their companies to expand operations in India. According to Vaishnaw, semiconductor ecosystem companies from the US, Japan, the Netherlands, Finland, Singapore, South Korea and Japan have held roundtables with Indian companies and government representatives to evaluate partnership opportunities. The minister highlighted that Japan and Singapore have 30-plus companies participating in their pavilions, with the overall response being very encouraging. State governments including Andhra Pradesh, Kerala, Gujarat, Uttar Pradesh, and Odisha have also pitched their strengths to attract investments, with Vaishnaw noting that all states are aligning their policies with the Centre's framework.
The electronics manufacturing ecosystem has helped develop precision manufacturing capabilities, particularly among MSMEs, which are now supporting multiple sectors including electronics, mobile manufacturing, aerospace, aviation, defence and semiconductors. Vaishnaw emphasized that the next focus should be on applied R&D within manufacturing plants, aimed at improving product quality and manufacturing processes. In response to concerns about water consumption by data centres and semiconductor companies, the minister noted that most companies are using closed-loop data centres where the coolant is basically circulating within the cooling circuit, rather than consuming large quantities of water. He highlighted that India has 52% power generation capacity from renewable energy out of its 500 gigawatt power energy capacity, demonstrating the country's commitment to environmental technology.
