India To Launch $11 Billion Fund To Accelerate Chipmaking Push

India is preparing to launch a new fund worth over ₹1 trillion (about $10.8 billion) to strengthen its domestic semiconductor industry as the government pushes to position the country as a global manufacturing hub.

According to people familiar with the discussions, the proposed fund could be unveiled within the next two to three months. The programme will provide subsidies to chip design development, semiconductor manufacturing equipment, and supply chain development to speed up the development of India’s chip ecosystem.

The move forms part of the government’s broader strategy to build semiconductor capabilities comparable to those of leading global producers by 2032.

Why Is India Launching A New Semiconductor Fund?

Governments around the world are increasingly supporting their domestic semiconductor industries to secure supply chains and meet rising sector demand. These are artificial intelligence, smartphones, automobiles, and consumer electronics.

India’s effort mirrors similar initiatives in other major economies. For example, the $52 billion CHIPS and Science Act in the United States funds the expansion of domestic chipmaking capacity.

In China, authorities support chip companies through large state-backed investment vehicles that channel capital into key firms across the semiconductor ecosystem.

This initiative by India is to assume a similar strategy by subsidising and incentivising policies. It will also give investment assistance in order to develop domestic chip design, manufacturing, and supply chain capabilities within the next 10 years.

How Does This Fit Into India’s Existing Semiconductor Push?

The new fund will build on India’s $10 billion semiconductor incentive programme announced in 2021, which offered to cover up to 50% of project costs for chip manufacturing facilities.

That programme has already attracted several major investments. Micron Technology is setting up a chip assembly and testing facility in Gujarat, while the Tata Group is developing a semiconductor fabrication plant and a separate chip packaging unit in the same state.

Other projects linked to semiconductor testing and packaging have also been announced by companies, including Foxconn Technology Group.

Moreover, the government aims to gradually move up the value chain and build a more advanced semiconductor ecosystem. Indian technology Minister Ashwini Vaishnaw has stated before that the country hopes to have semiconductor capabilities equal to those of the top manufacturers, including Taiwan, South Korea, and the United States, by 2032.

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What Does This Mean For Investors?

To investors, the proposed fund is an indication that the government remains dedicated to developing a local semiconductor ecosystem. This may open up long-term prospects in electronics manufacturing, designing of chips, and the supply chain.

Firms engaged in semiconductor manufacturing, packaging, manufacturing services of electronics, and the supply of components can have an advantage as India develops its systems in manufacturing chips. In the long term, a long-term policy could assist in creating the country as a major alternative source of manufacturing in the semiconductor supply chain.

Sources:

Economic Times

Bloomberg