New Delhi: India’s race to build a semiconductor ecosystem has triggered a wave of state-level policies promising land, power, water and fiscal support to attract chipmakers and testing units. An essay in the Centre for Technology, Innovation and Economic Research 2025 handbook finds that states should prioritise talent building for India’s semiconductor ecosystem.
A review of state policies shows that 13 states have either introduced dedicated semiconductor policies or embedded semiconductor incentives within broader electronics policies. These include Andhra Pradesh, Assam, Gujarat, Haryana, Karnataka, Madhya Pradesh, Maharashtra, Odisha, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh and West Bengal. While infrastructure incentives dominate, there is far less clarity on how states plan to develop the skilled workforce the sector urgently needs.
At the national level, this push sits within a much larger framework: The India Semiconductor Mission (ISM), launched in 2021 with a $10 billion allocation for design-linked incentives, fabrication support, and Assembly, Testing, Marking, and Packaging (ATMP) and Outsourced Semiconductor Assembly and Test (OSAT) facilities. The Centre has also set aside nearly $1 billion to modernise SCL Mohali and in line with this has recently granted a tender worth $0.5 billion to Tata Semiconductor, Cyient Semiconductor, and Applied Materials.
A heavy infra push
Most states offer generous benefits for fabrication and ATMP/OSAT units: Land rebates, subsidised power, uninterrupted water supply and capital support. Tamil Nadu, for instance, exempts new manufacturing units from electricity tax for five years, while Odisha promises assured potable water at fixed rates for a decade. Several states also offer preferential land parcels dedicated to semiconductor projects.
But these incentives are largely time-bound. Their commitments expire in five to ten years, even though fabs and ATMP units demand ultrapure water, cleanroom-grade air, uninterrupted high-quality power, and a strong logistics backbone for decades.
States such as Gujarat, Assam, Odisha and UP already have projects underway in partnership with industry. These include notable efforts like the $11 billion Tata-PSMC fabrication facility planned in Dholera, Gujarat; Micron’s ATMP project in Gujarat; Tata Electronics’ ATMP facility in Assam; and a silicon carbide (SiC) fabrication MoU in Andhra Pradesh with Japanese partners.
While these are significant moves, they do not reduce the enormous long-term resource demands that manufacturing places on states.
Globally, India already contributes about 20 per cent of the world’s semiconductor design talent. CTIER analysis shows that around half of the major global companies with a semiconductor presence in India engage in design-related work here. Of the 120 Indian semiconductor startups identified by CTIER, nearly 90 per cent are design-focused.
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The missing piece
While several state policies mention talent development, few explain implementation pathways.
Odisha talks of updating electronics curricula and launching VLSI (Very Large Scale Integration) training for 25 institutions, but offers no criteria for selecting these institutes. Tamil Nadu aims to create a talent pool of two lakh workers by 2030, but provides no roadmap beyond training subsidies. Uttar Pradesh offers incentives for industrial housing and skill development workshops, but details remain thin.
This matters because India is projected to face a shortage of nearly three lakh semiconductor professionals by 2027. Without a coherent talent strategy, states risk creating infrastructure without a workforce to operate it.
The essay highlights other areas like R&D, startups and IPR wherein states are promising incentives. R&D support is mainly in the form of grants and through establishment of Centres of Excellence (CoEs). CoEs and higher education institutions are being nudged to support entrepreneurs in this field. Patent registration related incentives are being offered within IPR support. But these too lack clarity on implementation timelines, budgets or institutional frameworks.
India’s priority
Beyond immediate policy incentives, the essay outlines strategic areas where India can build global competitiveness:
- Designing specialised chips for Generative AI, LLMs and diffusion models
- Developing ASICs and sensors for IoT, diagnostics and security
- Leveraging open-source chip architectures to reduce dependence on proprietary IP
- Expanding work on compound semiconductors such as silicon carbide (SiC) and gallium nitride (GaN)
These areas require high-end research and skilled engineers.
India has already signed key semiconductor MoUs with Singapore, the US, Taiwan and Japan. These agreements will include talent exchange, research collaboration, industry-academia partnerships and workforce upskilling.
Road ahead
As states compete to attract high-value semiconductor projects, a manufacturing-first approach may prove unsustainable without parallel investment in people. The essay notes that building a meaningful semiconductor ecosystem will require continuous annual investments of $10-20 billion for at least a decade. But not every state needs to chase fabs. Some can specialise in design talent, others in research, training or niche manufacturing.
What is clear is that India’s semiconductor ambitions will depend less on how much land or water states can offer and far more on whether they can produce the engineers, researchers and technicians who make such an ecosystem possible.
The author is an alum of batch four of ThePrint School of Journalism and a Research Analyst at Centre for Technology, Innovation and Economic Research (CTIER).
(Edited by Stella Dey)